Germany boasts five cities in CBRE’s ranking of Europe’s ten largest commercial real estate investment destinations for the first time, according to the latest research from global property advisor CBRE.

While activity by non-European buyers has increased in H1 2013, commercial real estate investment remains concentrated in a small number of European cities. The mature markets of London and Paris continue to lead in terms of their share of the European market and are ranked first and second respectively, while Moscow is now in third position.

A high level of interest from both international and domestic real estate investors has led to increased activity in several German cities, with Dusseldorf (+210%), Frankfurt (+72%), Hamburg (+52%) and Berlin (+24%) all experiencing significant growth compared to the same period in 2012. Munich (+2%) continues to be the preferred investment destination in Germany and one of the most preferred in Europe overall.

German investors have been highly focused on their home market in recent years and this focus intensified in H1 2013 with 76% of acquisitions by German investors in Europe being in their domestic markets (compared to 53% in 2007-2009). The number of foreign buyers targeting the German market has also increased, with international investors from 21 different countries making acquisitions in Germany so far in 2013. Frankfurt, in particular, has seen a substantial proportion of investment from outside of Europe (39% of the total).

Fabian Klein, Head of Investment CBRE Germany, commented:

“Following high investment volumes by North American and Korean investors in German real estate, we expect international interest to continue with Asian sovereign wealth funds and institutional investors actively looking for new opportunities beyond their national borders, with a particular interest from Chinese insurance funds. German real estate is an attractive proposition for investors as they look for international markets that can combine attractive yield levels with stability and transparency to satisfy risk requirements for their asset allocations.”

London and Moscow stand out as having attracted the highest proportion of cross-regional investment, with over 60% of transactions in both cities completed by non-European buyers. This increase in investment from outside Europe is a major driver of the market as non-European buyers accounted for 28% of transactions in H1 2013 up from 22%% in H1 2012.

As one of the three largest cities in Europe by population (London and Paris are the largest respectively), Moscow’s rise as a real estate investment destination is long overdue; with a 63% increase in activity in H1 2012 driving the city to third position on the rankings. Population on its own is clearly not a driver of investment activity, but it does serve as a proxy for economic importance of a city. High influx of international, predominantly North American capital, was the main reason behind Moscow’s rise in the H1 2013 investment ranking.

The first six months of 2013 saw a slight fall in activity in Paris, although the city is still a highly attractive investment destination, ranking second in the overall list. While investment in Paris from outside the region has remained broadly consistent, cross-border investment from within Europe was much lower than normal at 17% of total investment in H1 compared to a long term average of 30%, although this was countered by a high proportion of investment from local French investors.