Winter Issue 2022 - 74

European Top 10 Cities for
Investment
SECTOR PROSPECTS
London comes in at the top overall for investment
and development prospects in European
city rankings, ahead of second-place Berlin
and reversing last year's top two positions.
Paris remains in third place.
The U.K. capital benefits from the depth
of its market and undoubted gateway status,
but this year a widely perceived yield gap
of around 1 percent between London offices
and their continental equivalents gives it an
advantage in value for the money. Berlin, in
second place, shares the robust economy and
transparency of the other German cities in the
top 10 while having its own distinct appeal,
particularly for international investors. Like
last year, Paris ranks third, for its gateway
status.
Sector Prospects in 2022
The pandemic has reinforced the trend of
investors targeting sectors that profit from
megatrends, operate anticyclically, and
continue to generate resilient income. From
a traditional sector perspective, this favors
logistics and most forms of housing. Niche
sectors have dominated, topped by new
energy infrastructure followed by life sciences
and data centers.
At the same time, no consensus exists yet
on the future of offices, with some respondents
enthusiastic about the future of flexible
prime assets, while others envisage an inevitable
contraction in overall demand. There will
be a lasting increase in time worked remotely,
according to 85 percent of respondents, while
82 percent see a continuing role for headquarters
buildings in conveying culture and attracting talent, and
74 percent see a growing valuation gap between primary and
secondary offices.
Organizational Change Key Priority
In recent years, Emerging Trends Europe has identified the
growing importance of operational assets but also the need
for far greater emphasis on customer service, reputation,
technology, an increasingly pressing ESG agenda, and
diversity in the workplace.
With all these changes in flux, this year's survey showed
that organizational transformation is a key five-year priority
for 68 percent of respondents, driven by evolving relationships
between landlords and tenants in every sector. The
72
URBAN LAND
WINTER 2022
strongest influences are real estate as a service and changing
customer demands, both cited by 89 percent of respondents.
The third-ranked influence with 81 percent is the ESG agenda.
However, despite a need to attract new skills to the industry,
only 49 percent of respondents see the " war for talent "
as a driver, but expansion of the skills base is seen as fundamental
to a meaningful and lasting organizational change
by 73 percent. Interviewees said that talent is needed from
outside the real estate industry to integrate technology, ESG,
and service culture.
Technology itself is seen as critical to transformation by
an even higher 92 percent of respondents. Greater diversity
should be a natural consequence of importing new skills,
with 70 percent regarding it as important in transformation. UL
Winter Issue 2022

Table of Contents for the Digital Edition of Winter Issue 2022
