Investment should be determined by cities and their real estate characteristics, not by a country’s borders, according to research from Patrizia.
“In today’s world, it’s not about investing in countries, it’s about investing in cities,” said Dr Marcus Cieleback, head of research at Patrizia.
Launching Patrizia’s Insight: European Residential Markets report at EXPO REAL, he said cities could be split into seven investment types, ranging from outperformers to stabilisers to laggards, depending on asset management intentions.
He said: “You can then work out what you want as an investor depending on your asset management intensity.
“Do you want an active trading portfolio? Then you can look at the more liquid markets. Do you want a long-term standing portfolio? You can be willing to take first mover risks because you have a 15- to 20-year horizon.
“That is the reason we think that investors should separate themselves much more based on a city’s characteristics.”
Outperformers in the research include London and Paris, joined by Stockholm and Hamburg.
Patrizia measured 119 cities on a huge number of metrics, from student numbers to property prices to quality of life and connectivity.
Cieleback said, however, that these factors were only part of the story. Liquidity was also an issue.
“If an investor commits capital to a product, he also wants to invest his money. It does not make any sense to be in a successful city but be unable to deploy the capital you want to invest.”
Berlin was found to have the highest number of transactions at an institutional level, making it the most liquid city.
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