Pandemic drives polarisation in European cities’ performance as London tops LaSalle’s European Cities Growth Index

LONDON (December 01, 2021) — London ranks as Europe’s leading city for projected real-estate occupier demand for the fifth year running in the latest annual edition of the newly named European Cities Growth Index (“ECGI”), published by LaSalle Investment Management (“LaSalle”), the global real estate investment manager. Post-pandemic Paris, however, has closed the gap with its main rival since the 2020 edition, thanks to persistently strong human capital in Paris combined with softening prospects in service sector employment in London.

Top-performing European cities, London and Paris included, showed strength and resilience during the recent downturn triggered by the pandemic, displaying stable scores on average. Other top-performing cities such as Stockholm (fourth), Luxembourg (fifth) and Munich (sixth) recorded scores close to their 2019 pre-pandemic equivalents. The recovery in Spanish cities such as Madrid (rising to third place in the rankings), Barcelona (seventh) and Seville (fourteenth) exceeded most cities in Europe.

By contrast, the lower-ranking cities are getting weaker on a relative basis. 49 of the 93 European cities tracked by LaSalle in the ECGI recorded a year-on-year decline in score in 2021 – the highest number of decreases since 2009. As a result, the polarisation between the best- and worst-performing cities is getting wider.

Brian Klinksiek, Head of European Research and Global Portfolio Strategies at LaSalle, said: “This latest edition of the ECGI underlines the resilience of the London and Paris city markets, which has seen these ‘Big Two’ dominate the rankings since their launch in 2000. This is a highly challenging macroeconomic environment, with the largest number of cities seeing a downgrade in their growth prospects since the global financial crisis. Despite this, and the impact of a harder Brexit deal than previously anticipated, both London and Paris remain distinguished by their high-calibre workforces, strong GDP and employment growth prospects and comparatively low levels of business risk.”

“While the pandemic upturned many longstanding assumptions about the function of different real estate property types, we remain convinced that the growth metrics tracked in the ECGI will continue to provide a valuable tool in identifying real estate markets with room for outperformance, allowing investors to optimise portfolio construction when considered alongside supply-side information and relative pricing. It’s exciting this year to see multiple Spanish cities emerging as potentially attractive investment destinations on account of their strong recovery from the pandemic.”

Uwe Rempis, Managing Director and Fund Manager of LaSalle E-REGI, added: “This flagship piece of market research has been a crucial input for the investment process of LaSalle E-REGI over the last decade; on the back of this we have constructed a strong, diversified portfolio. This year’s theme of a widening polarisation between the best and worst performers post-pandemic is something that I have also seen on the ground across regions, micro-locations and individual assets. Our Fund’s focus will therefore remain on building portfolios with exposure to Europe’s most resilient city markets.”

The European Cities Growth Index has been renamed from the European Regional Economic Growth Index (“E-REGI”), the name under which LaSalle has previously published this annual research since 2000. The index identifies the European regions and cities with the best combination of growth prospects (in terms of GDP, service employment and human capital), current wealth and business environment. Together these can serve as a proxy for occupier demand and a framework for real estate portfolio construction. LaSalle continually refines its methodology and this year incorporated transparency around areas such as investment performance, regulatory landscape and sustainability into its assessment criteria.

About LaSalle Investment Management 
LaSalle Investment Management is one of the world's leading real estate investment managers. On a global basis, we manage approximately $73 billion of assets in private equity, debt and public real estate investments as of Q2 2021. The firm sponsors a complete range of investment vehicles including open- and closed-end funds, separate accounts and indirect investments. Our diverse client base includes public and private pension funds, insurance companies, governments, corporations, endowments and private individuals from across the globe. For more information please visit and LinkedIn.

NOTE: This information discussed above is based on the market analysis and expectations of LaSalle and should not be relied upon by the reader as research or investment advice regarding LaSalle funds or any issuer or security in particular. The information presented herein is for illustrative and educational purposes and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy in any jurisdiction where prohibited by law or where contrary to local law or regulation. Any such offer to invest, if made, will only be made to certain qualified investors by means of a private placement memorandum or applicable offering document and in accordance with applicable laws and regulations. Past performance is not indicative of future results, nor should any statements herein be construed as a prediction or guarantee of future results.

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