Though Paris is the most attractive European city for property investors in 2020, Spain doesn’t do badly with two cities in the top ten, according to an annual ranking produced by professional services company PwC and the Urban Land Institute.

The annual ranking in the ‘Emerging Trends in Real Estate: Europe 2020’ report is based on a survey of more than 900 professional real estate investors from 22 European countries, who answer questions about their investment criteria and preferences each year.

Madrid is in 5th place, down from 4th last year, and Barcelona is in 9th place, an improvement on last year when it didn’t make the top ten. Portuguese capital Lisbon went from number one last year to number ten this year.

Paris was picked for the top spot by investors this year because of the 2024 Olympic Games and its Grand Paris urban development plan to extend the city and create new districts through a fundamental redrawing of the city’s transit system. It was also “noted by survey respondents as the most desirable market given its ability to attract capital of all kinds from around the world,” explain the report’s authors. Last year it wasn’t in the top ten.

Germany dominates the ranking for another year, with four cities in the top ten – Berlin (2), Frankfurt (3), Munich (7), and Hamburg (8).

London jumped into 4th place in the ranking, having been left outside the top ten last year. While many investors have taken a wait-and-see approach to London following ongoing uncertainty around Brexit, it continues to be seen as a favored long term investment location . “It would be quite gutsy to invest in London over the coming year,” a German institution said. At the same time, “London has staying power. London has culture, it has arts and education, it has a rule of law,” a global investment banker said.

Housing affordability a growing problem

International and national politics, and environmental issues are the main concerns of investors, as is the growing problem of housing affordability in many cities around the world. Housing affordability is the signature issue of Barcelona’s left wing mayoress Ada Colau, who came to power promising better access to housing, and is now pushing hard for powers to control rents in the city. “Industry concerns over housing affordability are rising,” explain the report’s authors, “ but the interviews also reveal widespread frustration at state and local authorities imposing rent controls as a way of dealing with housing affordability. In the eyes of many interviewees, this is counter-productive, adding political risk to residential investment while not adding more housing which is mostly needed.”