Moscow has been named Europe’s most attractive city for real estate investment in a new report by LaSalle Investment Management, taking over the first place position from London, which dropped to second place this year.

In its annual European Regional Economic Growth Index, LaSalle found that medium-term demand for European real estate will remain highest in large city regions, as well as cities that boast strong fundamentals and high levels of wealth, such as London, Paris and Munich.

London lost its first place position due to a reversal of last year’s gains in GDP and employment growth as well as renewed global financial concerns, which have indirectly impacted the UK’s capital, LaSalle said, despite its wealth and business environment still exceeding those of Moscow, which is ranked first on the basis of its growth potential.

Munich kept its third place and remains ahead of number four, Paris, due to its marginally higher growth and business environment score, despite a slightly lower level of wealth. Istanbul moves up from twenty-fifth to fifth place, while Luxembourg moved from four places up to sixth place. Stockholm’s and Oslo’s rankings fell two places each to seventh and eight place, respectively. Copenhagen and Stuttgart made up the top ten.

Simon Marrison, European CEO at LaSalle Investment Management, said: “The polarisation in Europe is the strongest since before the adoption of the single euro currency. The competitive economies of the Nordics, Germany and emerging eastern European markets are forecasted to fare relatively well over the next few years, while the highly-indebted southern European and certain emerging markets are likely to lag.

“Despite losing its top spot, London is a mature, dynamic and resilient economy which continues to set the pace for the rest of Western Europe. The 2012 Olympic Games will provide a welcome boost through job opportunities, local regeneration and by aiding the hospitality industry.”

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