London and Paris are the top two European cities for projected real-estate occupier demand, according to LaSalle Investment Management’s European Cities Growth Index (ECGI).
These two cities are expected to drive growth in the next decade, generating over 30% of all economic output in their respective countries and accounting for a sixth of European absolute growth.
Thanks to its growing technology sector, Paris has overtaken London as the main destination for venture capital funding for the first time since 2006.
The Nordic region should also experience strong growth in the coming years. This is driven by the region's world-leading exporters in industries such as life sciences, wind power infrastructure, and industrial tech. Stockholm, Copenhagen, and Helsinki are all performing well in the ECGI, with Stockholm ranking third and Copenhagen and Helsinki joining the top five and 20 respectively for the first time.
German cities have also performed well in the index, despite slow population growth. Munich is Germany's top city for projected real-estate occupier demand, and Berlin has reached its highest score ever on the index.
LaSalle's ECGI is calculated based on a weighted data set, with economic growth, human capital factors, business risk, and extreme heat days all taken into account. Rome is the city most impacted by the new extreme heat metric in this year's index, with other Italian cities such as Palermo and Florence also affected.
Prague and Warsaw are two up-and-coming cities in the index. They are both benefiting from a return of expats and high-skilled workers, which is leading to their highest scores since the global financial crisis. Warsaw is also becoming an attractive place for employment in the technology sector, and Prague is forecast to benefit from a jobs boom.
The report also highlights that the gap between leading and lagging cities in ECGI has risen to a record spread, with expected growth more concentrated than ever.
In addition, there is wide polarization between London and UK regional cities with exception of Bristol and its improving economic profile.
The ECGI Index covers 30 countries, 270 European regions and ranks 95 cities.