If population and GDP growth are key indicators of prospects for investors in a city's real estate, then Zurich, Geneva, Leipzig are among the leaders in the German-speaking areas of Europe according to a new research report.

The survey examines age structure, income, education and debt of 46 real estate markets in the DACH region (Germany, Austria and Switzerland). While vacancy rates and rent levels can provide a snapshot of property market prospects to enable comparison between different cities, the report's author, Professor Steffen Metzner, head of research at Zug- headquartered Empira Group, said that for long-term institutional investors in particular, "it is crucial to understand structural factors for future value development in the real estate market".

Among the reports conclusions, Empira found that: young and high-income cities grow fastest; all shrinking cities are low-income, but not all low-income cities are shrinking; unemployment and economic growth are overestimated as factors for population growth; and a high proportion of graduates correlates with strong future economic structure and positive market forecasts.

Metzner explained that the aim of the study was to determine upstream indicators of real estate market development and to categorise the markets into structurally similar clusters. The research looked at characteristics such as the local age and economic structure, demographic development, public debt, disposable income, unemployment , absolute and per capita GDP.

The study revealed that while the forecast is positive for most of the cities surveyed in terms of economic and population growth, there are significant differences between the locations and there is consequently enormous diversi cation potential for investors.

Popular indicators may not tell whole story
"Typically used indicators such as vacancy rates and rent levels can, based on our experience, change quite quickly, while aspects such as the academic level or the share of public sector employees are very stable," Metzner said.

"In addition, our clustering reveals one or two markets outside the top seven that are structurally similar to the popular target markets, but perhaps are even cheaper to buy," he added.

Of the 46 cities surveyed, ten have a negative population forecast up to 2035. Of these, Bremen and Halle (Saale) are located in northern and eastern Germany, while the other eight cities are all located in North Rhine-Westphalia.

The particularly high-growth cities are located in Switzerland and Austria where all six markets analysed - Vienna, Linz, Graz, Basel, Zurich, Geneva, are in the top ten of the largest expected population gainers along with German top-seven cities Frankfurt, Cologne and B- cities Leipzig and Hanover.

"The enormous variation in local economic, age and population structures in the DACH region allows for diversi cation potentials that are largely unique in Europe. One city may be particularly suitable for student housing, another for exible of ce uses," said Empira Group board member Lahcen Knapp.