The allure of European cities for international property buyers

For those considering a European property purchase, either for personal use, investment or more permanent relocation, urban life has an increasingly compelling attraction. Today, opting for a city home abroad is far from a rarity.

“In turbulent times global cities provide a safe haven for those seeking a sensible investment,” says Mark Harvey, Head of International Residential at Knight Frank. “At the same time, they can offer a sound lifestyle with all that implies: a pleasing way to live, good access to transport and health services, parks, security and of course excellent culture. The changing demographics of wealth creation have meant that, for some time, many purchasers are younger than in the past and they want the inspiration and activities that good cities provide.”

For those considering a city home, what cities should be on their radar to provide the lifestyle and investment potential they want?

The European Lifestyle Report 2024

The European Lifestyle Report highlighted the “seismic political and economic shifts” causing the world’s wealthy to vote with their feet and consider relocation. Driven predominantly by security and privacy rather than tax benefits, their increased mobility has also been influenced by new hybrid working models and an increase in numbers among those in their 50s choosing early or semi-retirement.

The report’s European Lifestyle Monitor combined extensive data from sources including Oxford Economics and the European Commission to offer a comprehensive comparison for high-net-worth individuals considering relocation. It evaluates 10 cities across five key metrics: economy, human capital, quality of life, environment and infrastructure and mobility.

We analyse the lifestyle appeal and property market in five of these ten cities here.

Paris

5 bedroom apartment in 7th arrondissement, Paris

The French capital, fresh from its successful hosting of the 2024 Olympics, scored well for economy and human capital and was mid-table for infrastructure and mobility, an area currently undergoing a huge transformation. The Grand Paris Project is Europe’s largest transport infrastructure project, a €38 billion scheme to make Paris a ‘city of the future’, adding 68 new Metro stations and four new Metro lines by 2030.

Brexit played a part in making Paris the gateway city of choice to the EU for property buyers says Alison Ashby, co-founder and sales director of Junot Fine Properties, Knight Frank’s associates in Paris. Consulting firm EY claimed that by 2022, Paris had already lured 2,800 financial services jobs from London, outpacing its main competitors Frankfurt and Dublin, who gained 1,800 and 1,200 respectively.

2 bedroom apartment overlooking the Seine and the Louvre in Paris

While the number one buyers of prime Parisian homes are French buyers, Ashby also registered strong interest from Asian buyers looking for a family base and buyers from Europe and the USA. “Fully furnished and renovated homes are a priority and also architecturally inspired residences with bespoke furnishings, classic in style, featuring views across the River Seine or the Eiffel Tower,” Ashby says.

Prime property prices in Paris rose 2.5 per cent last year, significantly above the mainstream market which saw a 6 per cent drop, with Hôtel Particuliers, large historic townhouses with gardens which can sell for up to €80 million, performing best of all, registered a 6.5 per cent increase in value.

Madrid

The Spanish capital, with its handsome architecture and brilliant blue skies, has consistently flown below the radar, often overshadowed internationally by Spain’s rather more flamboyant second city of Barcelona. In recent years, that has changed, as buyers from around the world, and North and South America in particular, hone in on Madrid’s charms and value. International five-star hospitality names have also arrived in numbers, led by Four Seasons and Mandarin Oriental.

3-4 bedroom apartment in Serrano, Salamanca

Prime locations include neighbourhoods around beautiful Retiro Park, Recoletas in Salamanca and Jeronimos where two-bedroom apartments in period buildings start from around €2 million. The Wealth Report 2024 showed the value on offer, with US$1 million buying three times as much space in Madrid as it would in London and twice as much as in Paris.

“Nowhere in Europe is the prime market growing faster than in Madrid, growth that reflects a longer-term trend that has been taking shape since Q3 2021,” says Carlos Zamora, Head of Knight Frank Madrid, who predicts a 6.5 per increase in prime property prices in 2024. “Since that point, year-on-year growth has hovered between 2 and 6 per cent in every quarter.”

Barcelona

The laid-back lifestyle of a vibrant and artistic city by the sea combined with a thriving tech and entrepreneurial scene makes Barcelona an enticing option. The city ranks among the top three most popular start-up cities in Europe and welcomes those looking to relocate as well as anyone looking for a culture-heavy holiday home.

3 bedroom apartment in Antares, Barcelona

Barcelona scored well in the European Lifestyle Monitor for infrastructure and mobility, human capital and quality of life. Along with the sea and sand, the city has a fabulous culinary reputation. That includes being home to the currently best restaurant in the world according to ‘The World’s 50 Best Restaurants,’ who placed three Michelin-starred Disfrutar at the very top of their 2024 list.  

The city’s rental yields are reported to be among the best in Spain – although beware tight and rigorously applied restrictions on short-term and Airbnb type rentals for many properties. Prime property prices rose by 2.7% last year while sales to non-Spanish buyers in the first quarter of 2024 defied the fall in the wider Catalan market to rise by 17.5%.

Lisbon

3 bedroom apartment in Estrela, Lisbon

Lisbon has enjoyed an extended period in the sun, seeing property prices soar as buyers discover the value and lifestyle of the Portuguese capital, yet it remains good value compared with many other European cities. Prime prices there range from €9,500 to €10,500 per square metre, substantially below London (from €26,500), Paris (from €21,400) and Berlin (from €12,100).

5 bedroom apartment in Chiado, Lisbon

Wonderful weather, an affordable cost of living and good international connections make Lisbon’s quality of life a pleasing one, balancing an infrastructure and economy that in general lags behind the other cities in the index. As one of Europe’s fastest growing tech hubs, home to regional tech centres of firms including Google, Microsoft and Cisco, and with local start-ups escalating in value times three times in five years, the city becoming known as Europe’s answer to Silicon Valley looks set for a promising future.

Berlin

Stirring art and culture, a good value lifestyle, a thriving tech eco-structure and excellent local transport, are all reasons why the German capital shone in the Lifestyle Monitor for human capital and quality of life, coming out on top of the ten for infrastructure and mobility.

2 bedroom apartment in the historic core of Berlin

Pre-Covid Berlin registered dynamic population growth, welcoming 50,000 new arrivals every year, most of whom were well-educated and young and today, that group continues to see the opportunities in the city. And as the European Lifestyle Report shows, it’s not just the younger demographic who are eyeing up Berlin. In our survey of over 700 high-net-worth individuals from 11 different countries covering 28 nationalities, when asked to give their preferences for the 10 city destinations covered in the report, Berlin was a top two choice for four of the six high-net-worth age groups surveyed.

“Informed decisions yield the best outcomes, especially when guided by robust data,” concludes Ellen Soberman, Global Research Manager at Knight Frank who worked on the European Lifestyle Report. “These rankings in the Lifestyle Monitor underscore the diverse strengths of Europe’s leading cities, making them attractive options for discerning individuals seeking to relocate.”

Register to download the European Lifestyle Report for more expert insights.