London is the most attractive property investment market for the second consecutive year on an index of European cities.
The British capital has kept long-term leader Paris off the top spot for the second year, according to the ninth annual index by LaSalle Investment Management.
Its European regional economic growth index identifies those European cities out of 91 analysed that are expected to be in greatest demand among occupiers over the medium term.
LaSalle said the overall outlook for European property appeared good, despite the global credit crisis which has hit money markets and resulted in banks becoming more cautious, putting pressure on over-stretched homeowners and highly leveraged investors.
The top 10 cities where property investors could expect the best returns have remained unchanged in the past year, but the order has changed significantly, the report shows.
Although London has retained its number one ranking -- mainly driven by high gross domestic product, employment growth and the financial sector -- Munich has moved into second place ahead of Paris, pushing Dublin down to fourth, while Madrid has fallen out of the top five into 10th place.
Stockholm is in fifth place, followed by Luxembourg, Helsinki, Stuttgart and Oslo.
Robin Goodchild, head of European research at LaSalle real estate manager, said the index had consistently identified an inner core of cities where property investors can expect robust returns: London, Paris, Munich, Dublin, Helsinki, Stockholm and Madrid.
With market fundamentals positive and large volumes of capital still targeting European real estate, these cities can expect to take a large share of the transaction volume, notwithstanding the credit crisis, he added.