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London takes top spot from Paris in Jones Lang LaSalle’s new European Regional Growth Barometer Printer Friendly Version
 

London, 7 November 2006 – London has moved into the number one position in Jones Lang LaSalle’s European Regional Growth Index (E-REGI), ahead of Paris which is now occupying the number two spot, according to the new report released today. London is expected to see improved levels of GDP and employment growth over the next five years accompanied by increased wealth.  Dublin retained third place and continues to be one of Western Europe’s most dynamic city economies, while Helsinki and Munich have been replaced in the top five by Madrid and Stockholm.

Nigel Roberts, Chairman of European Research at Jones Lang LaSalle said: “With Europe’s real estate investment markets achieving ever higher capital values it is increasingly important for investors to be able to asses the relative strength of the underlying occupier markets across the region.  Whilst there are clear signs of improving occupier fundamentals across Europe, occupier demand conditions vary significantly.  E-REGI provides a unique reference tool to provide insights into the property markets across Europe bringing to light those cities which demonstrate strong demand prospects for the future.”
Sue Foxley, Head of UK Research at Jones Lang LaSalle commented: “London is set to benefit from the UK’s solid economic growth prospects and also from the country’s favourable policies towards foreign investment and private enterprise.  The diversity of London, in terms of economic activity and population make-up (both youth and ethnicity) have also improved the city’s rankings.  The Olympics 2012 win is expected to boost the construction industry, regenerate some relatively underdeveloped parts of east London and lead to the modernisation and upgrading of communication links across the city from Heathrow in the west to the Olympic site in the east.”

Highlights
France: Following sluggish results in 2005, most French cities fell in the E-REGI rankings. Paris lost its top position this year due to a fall in growth forecasts and diminishing relative wealth. However, in second place, it remains one of the most attractive European locations for business and property investment. The exceptions are Lyon and Toulouse; up one place each to number 13 and 28 respectively. The uplift is mainly caused by improved employment growth expectations combined with higher output growth than previously expected.
Ireland: Dublin (3) has been the most rapidly growing city in Europe over the last 25 years and has one of the most favourable inward foreign investment policy regimes in Europe.  The main drivers of economic growth in Ireland are domestic demand, construction and the currently booming housing market, which has had knock-on effects on the financial services and retailing sectors.
Spain: All the Spanish E-REGI cities improved or retained their positions over the year but the brightest star of them all was the capital Madrid, keeping ahead of Barcelona (6) for the second year running and advancing two places to fourth. Madrid has the highest income per capita in the country and is expecting the strongest employment growth of all of the European E-REGI cities in 2006 – 2010. Madrid is also the principal destination for foreign investment into Spain, in particular for transport and construction projects.
Sweden: Stockholm was the leading Nordic city and replaced Munich at number 5, up from 9 last year. Sweden’s capital has the second strongest GDP growth forecast outside Central and Eastern Europe. This is mainly driven by rising export demand and growth in the ICT sector, boosting manufacturing businesses.
Germany: The German economy is showing clear signs of recovery, although growth still is held back by low domestic demand. This may be further affected by the planned 3% increase in the VAT rate.  However, economic forecasts for 2006-2010 are much improved and business confidence levels are high.  Munich and Stuttgart have among the five highest R&D expenditure levels of the E-REGI cities. Thanks to revised output figures Stuttgart advanced to number 11 from 13 in the ranking, while Munich dropped two places to number 7, placing them and Frankfurt (down one place to number 18) as the most successful German cities in the overall E-REGI ranking.
Benelux: Amsterdam was the only city in the region to make progress in 2006: five places up to number 15.  The buoyant climate is expected to accelerate in 2006 and 2007 and stay strong until 2010.  Luxembourg dropped three places to number 10 due to an expected softening of output growth in 2005 and onwards. However, the most detrimental impact on Luxembourg’s ranking was its agreement to conform its tax regime on holding companies with EU standards by the end of 2010.
Central & Eastern Europe: In E-REGI 2005 the majority of the CEE cities were boosted by EU accession. However, all the CEE cities that improved their rankings last year, except for Bratislava, fell back again in 2006.  Bratislava has climbed thirty five E-REGI places in two years and is now the top performing CEE city at number 37. This is thanks to a healthy labour market, sustained strong output growth and the expectation of Slovakia joining the euro in 2009.
Italy: Italy has experienced years of slow economic growth and even though there are signs of a recovery, Milan was the only Italian city to advance in this year’s E-REGI ranking: up nine places to number 21. Milan is Italy’s commercial centre and active in a balanced mix of industries, of which finance, fashion, electronics and ICT are the most important ones. Output growth is expected to recover across all these sectors in 2006 and accelerate up to the end of 2008.





Contact:  Madeleine Little
Tel:  +44 (0)20 7852 4868
Email:  madeleine.little@eu.jll.com
 
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