Moscow has overtaken Berlin in Western Europe as the number six city in Europe for property investment.
And Paris became the number one city in Europe in the second half of 2011 (H2 2011) in terms of property investment, overtaking Central London to lead global property adviser CBRE's top 10 list of European investment markets for the first time.
Christopher Peters, Director of Research, CBRE in Russia, said: "With the onset of the financial crisis in Q3 2008, foreign investors largely abandoned Russia, and have not since returned in significant numbers: domestic investors account for the majority of commercial real estate investment in Russia.
"Once foreign investors recover their appetite for Russia, we can expect Russia's place in this table to rise further, not least as it is one of Europe's three megapolises (together with London and Istanbul)."
The Russian real estate investment market as a whole recorded 1.684 billion of activity in Q4 2011. Together with Q2 2011 (1.790 billion), these were the highest quarterly volumes seen in real estate investment since Q3 2008 before the onset of the financial crisis.
A surge in investment activity in the final quarter of 2011 (Q4 2011) meant that investment in Paris jumped from 3.6 billion in H1 2011 to 7.9 billion in H2 2011, resulting in the first change in the top two of the rankings since CBRE began compiling the list in 2004.
Investment in Central London in H2 2011 was far from subdued at 7.8 billion. Although failing to match the very high total recorded in H2 2010, total investment activity was virtually identical with H1 2011.
The French real estate investment market as a whole recorded 6.5 billion of activity in Q4 2011. This was the highest quarterly turnover for France since Q3 2007 and was ahead of every other market in Europe during Q4 2011 except the UK, which saw an estimated 8.3 billion of investment activity. Investment activity in France was heavily biased towards the Paris office sector and included large portfolio and single-asset deals.
Jonathan Hull, EMEA Head of Capital Markets, commented: "Investor sentiment in Europe has been heavily influenced by the sovereign credit rating downgrades and the lack of a solution to the Eurozone crisis. This has driven European investment activity towards the Nordic markets and German cities in particular.
"Despite this trend, the Paris and Central London markets remain central to Europe's investment market and the degree of foreign investment from outside of Europe is testament to the enduring attractiveness key cities."
The other European markets in CBRE's top 10 closely match the economic trends that have been seen across Europe recently. Three German cities featured (Munich, Frankfurt, Berlin), reflecting the strong (relative to the rest of Europe) economic growth that has been seen in Germany over the last couple of years. Another German city (Hamburg) was in eleventh place on CBRE's list.
The Nordic region also outperformed in terms of economic growth, with three cities (Stockholm, Oslo and Copenhagen) featuring in the top 10 as Scandinavian investment and that from elsewhere in Europe increased significantly, while investors from Australia and Canada were also prominent.
Strong investor interest in the Central & Eastern European (CEE) region has resulted in both Moscow and Warsaw featuring in the top 10, as was also the case in H1 2011.
Direct commercial real estate investment in Europe in H2 2011 reached 62.9 billion, just shy of the 63.1 billion that transacted in H2 2010, but 14% up on the first half of the year. Total investment activity in Europe reached 118 billion in 2011, a 7% increase on 2010, with a pick-up in cross-border activity (41% of the market in H2 compared with 35% in H1) in the second half of the year contributing to the increase.