Skip to main content
utility-drawer__close
0
Add funds
Fund 1
Fund 2
Fund 3
Fund 4
Confirm your location and role
location select
language select
Real Estate

European cities: The Unsung Heroes of Grenoble, Wiesbaden and Coventry

Stefan Wundrak
Head of Research, Real Estate, Europe
A fountain in a European city

The property world loves to rank cities, it’s a powerful method to condense the complexities of cities into a single metric. The usual ways of doing that come with a flaw, all too often absolute variables are used with the predictable result that the biggest cities lead the pack. But learning that a large Australian city like Sydney has more start-ups than little Wagga Wagga is not a great insight. Correcting that with per capita metrics makes rankings more meaningful but can produce questionable results as well. If the 56,442 inhabitants of Wagga Wagga produce only one start-up, they will have beaten Sydney on a per capita basis.

Absolute comparisons and per capita measures miss that cities’ urban socioeconomic indicators scale with population along super linear power laws with exponents of about 1.15. This means larger cities are disproportionally producing good things like innovation, wealth and art, but on the flip side also disproportionally of negative effect such as crime, health problems or pollution. There are two reasons why cities scale super linearly or have an ever increasing edge the bigger they are: Firstly, cities enjoy economies of scale with regards to infrastructure. For example, if a city population doubles, the road network does not need to double as well but only grow by roughly 85%. More importantly, however, cities benefit from social network effects. With the number of people increasing the connections between people grow exponentially. That is the effect which leads to disproportionally more innovation and ultimately wealth the bigger a city gets. This network booster is behind the success of extraordinary tech clusters like Silicon Valley or the innovative power of mega cities like Tokyo. 

The interesting question arising from this is to ask, which cities live up to their scale? Applying the 1.15 exponent scaling factor one can analyse which cities truly punch above their weight. Such comparisons are easiest done on an economic level playing field; hence most studies have used U.S. cities. In this analysis we have examined GDP levels across the three biggest economies in Europe: Germany, France and Britain. We use end 2019 data to exclude the pandemic effects and because at that time the U.K. was still in the EU. However, the odds are stacked in favour of German cities, as GDP per capita as of 2019 was $56,000 in Germany versus $49,000 in France and $48,000 in the U.K., making Germany about 17% more affluent than the U.K. The order of cities within one of the countries is not affected by that.*

The ranking is expressed as a Scale-Adjusted Metropolitan Indicator (SAMI), which measures a cities’ successes or failures relative to other cities, independent of city size. The methodology provides a more meaningful ranking of urban areas, compared to per capita indicators. In this analysis they allow direct comparison between any two cities by conditioning the rise or fall in GDP by the rise or fall in city size adjusted by the scalar effects.  

The results interpreted by SAMIs and what we can learn from this ranking:

Our application of the SAMI concept to rank cities in the three largest European economies sheds some new light on some rarely talked about places. It highlights that it can be worthwhile to look beyond the gateway cities in the never-ending quest to identify the best cities for real estate investments.

GDP based Scale-Adjusted Metropolitan Indicator (SAMI) for the three biggest European economies, Germany, France and Britain

COUNTRY CITY RANK SAMI
Flag of Germany Munich 1
Flag of Germany Wiesbaden 2
Flag of Germany Düsseldorf 3
Flag of Germany Braunschweig-Wolfsburg 4
Flag of Great Britain Cambridge 5
Flag of Germany Karlsruhe 6
Flag of Germany Mainz 7
Flag of Great Britain Aberdeen 8
Flag of Germany Münster 9
Flag of Germany Frankfurt 10
Flag of Germany Stuttgart 11
Flag of Germany Nürnberg 12
Flag of Germany Bonn 13
Flag of Germany Cologne 14
Flag of Great Britain Edinburgh 15
Flag of Germany Mannheim-Ludwigshafen 16
Flag of Germany Hanover 17
Flag of Great Britain Oxford 18
Flag of Germany Aachen 19
Flag of Great Britain Coventry 20
Flag of Germany Hamburg 21
Flag of Germany Freiburg 22
Flag of France Paris 23
Flag of Great Britain Bristol 24
Flag of France Grenoble 25
Flag of France Lyon 26
Flag of Germany Augsburg 27
Flag of Great Britain Northampton 28
Flag of France Rennes 29
Flag of France Toulouse 30
Flag of France Nantes 31
Flag of Great Britain London 32
Flag of France Dijon 33
Flag of France Orleans 34
Flag of France Nice 35
Flag of France Strasbourg 36
Flag of Germany Kiel 37
Flag of Great Britain Southampton 38
Flag of Germany Bremen 39
Flag of Germany Halle 40
Flag of Germany Erfurt 41
Flag of Great Britain Belfast 42
Flag of France Tours 43
Flag of France Caen 44
Flag of France Bordeaux 45
Flag of Great Britain Bournemouth 46
Flag of France Clermont-Ferrand 47
Flag of Great Britain Derby 48
Flag of Great Britain Brighton and Hove 49
Flag of France Nancy 50
Flag of France Montpellier 51
Flag of France Rouen 52
Flag of France Lille 53
Flag of Germany Leipzig 54
Flag of France Saint-Etienne 55
Flag of France Marseille 56
Flag of Great Britain Portsmouth 57
Flag of Germany Dresden 58
Flag of Great Britain Cardiff 59
Flag of Great Britain Leicester 60
Flag of Great Britain Kingston upon Hull 61
Flag of Great Britain Nottingham 62
Flag of Germany Berlin 63
Flag of France Toulon 64
Flag of Great Britain Manchester 65
Flag of Great Britain Liverpool 66
Flag of Great Britain Glasgow 67
Flag of Great Britain Leeds 68
Flag of Germany Ruhr (Essen-Dortmund-Duisburg) 69
Flag of Great Britain Birmingham 70
Flag of Great Britain Newcastle 71
Flag of Great Britain Sheffield 72
Related articles
Real Estate Top 5 reasons to consider an allocation exposure to direct real estate
Investors today are re-evaluating risk and reward in their portfolios. Real estate can fulfill a need for stability, diversification, performance, and yield, in a world starved of income.
Real Estate U.S. commercial real estate debt: Discovering beneficial routes of exposure
Investors are increasingly viewing Commercial Real Estate (CRE) debt as a benefit to the CRE market, which was already the case prior to elevated interest rates.
Real Estate Real estate outlook 2024
We have identified key themes and opportunities for compelling investments across global markets and sectors for 2024, focusing on a mix of long-term structural tailwinds and bottom-up analysis.
* In order to correct for the distortions that the cities compete in different economies we have based it on purchasing power parity GDP estimates. Purchasing power parity $ adjust for currency effects.
Aerial view of the ocean shore

You are on the site for: Financial Professionals and Individual Investors. You can switch to the site for: Institutional Investors or Global Investors

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Global Cities REIT

You are leaving the Nuveen website.

You are leaving the Nuveen website and going to the website of the MI 529 Advisor Plan, distributed by Nuveen Securities, LLC.

The Nuveen website for institutional investors is available for you.

You are about to access our website for visitors outside of the United States.

You are about to access our website for Nuveen Churchill Private Capital Income Fund (“NC - PCAP”)

Contact us
Contact us
Back to Top