MOSCOW AND Istanbul ranked first and second, respectively, as this year's top real estate markets in Europe for both investment and development prospects, according to a new report by Urban Land Institute and PwC.

Hamburg and Munich filled the third and fourth spots as top investment markets while Paris, which held the top investment rating in the past, slipped to fifth place.

According to the report, the overall changes suggest that market professionals want to branch out of "old Europe" and investigate new markets.

The report also shows that Dublin has fallen from the top 10 ranked cities. Despite the slippage, between 60 and 70 per cent of those questioned recommended a "hold" strategy for many sectors (retail, hotels, industrial and offices) which suggests that commercial property is still viewed as a solid investment.

Enda Faughnan of PwC says the report seems to indicate that property in Dublin offers relatively less value in terms of investment return than can be achieved, compared to other European cities. But the report also indicates that there are continued opportunities in Dublin, and all of Ireland, particularly for commercial property.

One of the sharpest rating drops among the European markets occurred with London, a long time favourite that fell to 15th place for investment prospects and 13th place for development prospects. That city, more than other markets in the report, is experiencing declining economic conditions similar to those in the US.

Tim O'Rahilly, PwC Ireland, says the story is very different depending on where in Europe you are looking to invest and your appetite for risk. At one end of the scale Russia and Turkey are booming, at the other end London has fallen out of favour with many investors. "We are seeing the emergence of very different real estate markets in Europe. As investors look for returns in a volatile market, they need to understand the complexities of the markets they are moving into."