London is no longer the most lucrative European city for real estate investment, a new report by a top property fund manager suggests.
After four years at the top of the league tables for commercial property prospects, the capital has now been overtaken by Munich and Paris.
Property values in London have roughly halved over the last two years, with the finance sector being particularly badly hit.
The study took a medium-term approach, and factored in expectations of economic growth and employment in the calculations. With a fragile and halting recovery on the cards for the UK, demand for office and retail space is likely to be lower in London than in other cities better poised to benefit from the end of the recession.
Nevertheless, the assessment has not stopped a huge influx of foreign capital into the London property market in recent months.