Introducing Europe’s Cities in 2021

Oliver Banks Senior Negotiator, European Residential Cities

Europe’s major cities have always been an attractive hub for investment, with people drawn by the lifestyle, culture and property available. But over the past year, the market has really been bolstered by domestic interest, with people moving around in search of more space. Developers are also picking up on the power of the domestic market. Whereas a lot of developers may have previously been focusing outwards towards the needs of international purchasers, they are now noticing that successful expansion stems from looking after domestic purchasers. If you appeal to the domestic market, then the international investors will follow suit.

Real travel may be restricted at the moment – but we hope this virtual whistle-stop tour is both informative and offers a flavour of just what is waiting to be discovered.

Oliver Banks

Demand changes As European cities have come in and out of lockdown, we've seen consequent waves of transactions from local buyers particularly, but also an increase in people thinking about relocating and considering which city they see their future in. Naturally we’re also seeing a lot of pent up demand being built up and then released in tandem with lockdowns, and currently a huge amount of international built-up demand as people wait for travel restrictions to ease. As priorities and lifestyle change, I think we're also going to see a big rise in co-primary residences in Europe, with people still wanting and needing access to the amenities provided in cities.

Pandemic response Residential developers have responded to the trends that were already beginning to emerge pre-Covid, but for which the pandemic have catapulted into the spotlight. For instance, transport and sustainability were already big news, but I think even post-pandemic people will be looking to cut down on regular commutes and cycle opposed to taking public transport to work and school, and therefore developers will be paying close attention to facilities like bike lockers and electric scooter storage.

European outlook The outlook for Europe’s cities is undeniably strong. While some sectors of the market are coming under pressure, prime residential properties in Europe’s traditional safe haven cities are expected to remain resilient in the face of the pandemic, providing added security from an investment perspective. Knight Frank’s annual assessment of prime residential prices in 100 of the world’s most desirable locations, the PIRI 100, saw growth of 1.9% in 2020, outpacing its performance in 2019. European cities performed strongly with Zurich in 11th place the region’s frontrunner followed by Stockholm, Edinburgh, Frankfurt, Geneva and Monaco. For global investors looking to diversify their portfolios both in geographical and currency terms, European cities will be high on their wish lists. Cities that have firm economic fundamentals– strong tenant demand, burgeoning tech sectors and innovation-led economies will continue to draw interest. People are feeling buoyed by this and will feel more comfortable purchasing in these markets.

Liquid assets Buyers, more than ever, are looking for liquid assets but are also really engaging with finding a property that matches modern needs. For example, the quality of the layout of a property, as well as the location and the view. We’ve had a lot of clients enquiring whether a development will have good views, particularly in cities where this isn’t always guaranteed. I think this is all mainly because buyers want to make sure that their investment is more fluid, so if they do come into financial difficulty then they can they know that their asset is highly desirable: either very easy to rent out or easy to sell.

Key cities We’ve put together an interactive map that highlights 11 cities in Europe that we’ve identified as investment hotspots; places with great culture, lifestyle and economic possibilities. Real travel may be restricted at the moment – but we hope this virtual whistle-stop tour is both informative and offers a flavour of just what is waiting to be discovered.