Defence, climate, and energy influence real estate in Europe

LaSalle’s 2025 European Cities Growth Index (ECGI) highlights the significant influence of new factors on real estate demand. 

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Increased defence spending has boosted the rankings of cities like Munich, Bristol, and Lyon, while helping Stockholm maintain its strong position due to the regional geography of defence production.
For the first time, the index also ranks polycentric conurbations such as Randstad, Øresund, and the Manchester-Liverpool area as single, integrated markets. These combined regions are among the biggest climbers in this update, reflecting their true economic weight.
Energy prices have become a new economic tailwind for cities like Madrid, which benefits from inexpensive solar power, helping it secure a top 10 spot alongside strong GDP and job growth. Oslo also gains from low-cost hydroelectric power.
A small number of major European cities are expected to drive one-third of all future growth, highlighting a concentration of population increase.
Germany leads with 15 "Strong" and "Very Strong" regions, followed by the UK with 12, demonstrating widespread growth across 19 countries. However, eight countries in the Baltics and Southeast Europe lack top-tier regions, partly due to lower real estate transparency and demographics.
Conversely, some cities saw their rankings drop. Dublin's decline is partly attributed to its high GDP volatility, a consequence of its reliance on offshore tech. Luxembourg, Brussels, and Swiss markets also retreated, suggesting that smaller markets might be more vulnerable in a challenging global trade environment.
The 2025 update also included a slight adjustment to factor weighting, placing more emphasis on relative growth (e.g., percentage employment growth) over absolute growth (number of jobs). This change particularly benefited medium-sized markets, with Warsaw emerging as a major gainer due to its consistently strong demand and GDP growth record.
Despite these adjustments, London and Paris continue to dominate the rankings, maintaining their top positions due to their unparalleled scale and concentrated growth, a testament to their consistent performance in 16 out of 25 ECGI editions.
Greater London and Paris continue to dominate, with London showing exceptional employment growth and Paris excelling in human capital. Stockholm holds third place. Munich re-enters the top five, boosted by defence spending, and the new Randstad region also secures a top-five spot with strong GDP and employment growth. While Copenhagen-Malmö and Oslo remain strong, Warsaw enters the top 10 for the first time since 2010 due to its robust GDP growth outlook. Madrid maintains its top 10 position, but Dublin dropped due to less benefit from defence spending.
Strong historical and projected economic growth has propelled Warsaw into the top ranks, joined by climbers like Bordeaux, Manchester-Liverpool, Cambridge-Norwich, and Nuremberg.
LaSalle's 25th annual European Cities Growth Index (ECGI) for 2025 evaluated real estate demand growth in 93 European metro areas, incorporating new factors like defense spending, climate change, and energy.