September 2018

Magnify: M&G European Urban Connectivity RankingFor Investment Professionals only

• Oxford, Munich, Leipzig, Hamburg and Düsseldorf join the group of markets that achieve enabler and effect scores above 50

• Among the 15 markets that achieve enabler and effect scores above 50, five offer yields above 4% including Helsinki, Gothenburg and Malmo

• Paris and Berlin, both advanced providers of urban transport infrastructure, hold onto their 1st and 2nd positions, Stockholm climbs to 3rd, and Helsinki joins the top 10

• Greatest rank improvers include Cologne and Düsseldorf (both moving up 23 positions), driven by improvements in digital technology

Executive summary

03

Framing the urban connectivity agendaIn the current low yielding environment, the launch of the 2018 ranking comes at a time when understanding

urban connectivity can help investors capitalise on relative-value opportunities to future proof their investments.

• The European Commission (EC) supports the connectivity agenda through its Digital Single Market initiative,

rolled out across all European Union (EU) member states throughout 2016-17

• The EC proposes that by 2025, all transport hubs should have access to internet connections with download/

upload speeds of 1 Gigabit of data per second

• An efficient urban transport network plays a crucial role in supporting a city’s economy and the demand for real

estate, by facilitating interactions between businesses, residents and visitors

• New technologies are allowing cities to develop transport networks cheaply and efficiently by providing more

real-time information than ever before

• Thus, advancements in the physical and digital infrastructure of an urban network are key to distinguishing

between cities that are more likely to provide rental growth opportunities, in turn, justifying a lower yield

Key findings: M&G UCR 2018The M&G Urban Connectivity Ranking (M&G UCR) reveals continued improvements in both physical and digital

infrastructure with a 6% increase in total weighted connectivity scores since the first edition (from 2,346 to 2,481).

The scores are further split into enablers (inputs) and effects (outputs). Enabler indicators measure connectivity

maturity while effect indicators, measure connectivity performance. The overall performance was driven by effect

(+13% to 1,062) followed by enabler (+1% to 1,419) scores.

These encouraging results highlight the continued efforts on behalf of city leaders to improve urban transport

networks through smart densification, social inclusion and technology in order to attract and retain innovative

businesses.

Key changes• Top 10: Paris and Berlin retain the top two rank positions while Stockholm climbs into 3rd

– Besides Helsinki, the top 10 cities have moved by no more than three rank positions

– Helsinki’s climb by 11 positions was boosted by a number of enabler indicators

– New entrants in the top 10 ranking include Helsinki and Hamburg

• Positions 11-30: Cities moved by a larger number of positions ranging between -16 and +23

– Cologne’s climb of 23 positions was boosted by a number of effect indicators

– Düsseldorf also moved up the rank by 23 places, driven by a number of enabler indicators

– New entrants from the top group include Bremen and from the bottom group include Leipzig and Espoo

• Positions 31-64: Select cities in this group improved their rank significantly

– Birmingham (+18) and Edinburgh (+17) climbed the most positions

04

Figure 1: M&G European Urban Connectivity Ranking 2018

City Total rank

Rank movement

(+/- 64) 2016-’18

Paris 1 = 0

Berlin 2 = 0

Stockholm 3 2

Stuttgart 4 -1

Zurich 5 -1

Munich 6 1

Amsterdam 7 -1

London 8 = 0

Hamburg 9 2

Helsinki 10 11

Bremen 11 -2

Barcelona 12 3

Vienna 13 = 0

Frankfurt 14 4

Copenhagen 15 4

Düsseldorf 16 23

Dublin 17 -1

Malmo 18 -4

Lisbon 19 5

Hannover 20 7

Oxford 21 1

Rotterdam 22 -5

Gothenburg 23 -3

Leipzig 24 17

Lyon 25 -13

Luxembourg 26 -16

Utrecht 27 1

Espoo 28 10

Nantes 29 -6

Cologne 30 23

Cambridge 31 4

Warsaw 32 -7

City Total rank

Rank movement

(+/- 64) 2016-’18

Madrid 33 -3

Edinburgh 34 17

Bristol 35 10

Dresden 36 -7

Birmingham 37 18

Oslo 38 -2

Manchester 39 8

Brussels 40 -3

Toulouse 41 -15

Antwerp 42 14

Mannheim 43 = 0

Valencia 44 = 0

Milan 45 -13

The Hague 46 8

Aberdeen 47 -13

Lille 48 -15

Dortmund 49 -3

Glasgow 50 8

Prague 51 6

Eindhoven 52 -12

Guildford 53 -1

Bologna 54 -23

Leeds 55 6

Århus 56 4

Rome 57 -15

Nice 58 -9

Bordeaux 59 -9

Seville 60 2

Marseille 61 -13

Nuremberg 62 2

Naples 63 -4

Montpellier 64 -1

Source: M&G Real Estate, April 2018.

05

2018 Methodology overviewThe second edition of the M&G UCR ranking includes the most comprehensive European city comparison of physical and digital

urban transport infrastructure. The ranking is updated every two years and covers 64 markets and a total of 18 indicators.

Figure 2: M&G European Urban Connectivity Ranking components

Public Physical• % journeys to work using green

transport modes• Length of dedicated cycle paths• Urban mobility strategy• Transport infrastructure spend

Private Physical• Electrical vehicle chargers• Car-sharing schemes• Ride-sharing schemes

Digital• WiFi speed• Free Hotspots• Transit web apps

• Affordability• Transport carbon emissions• Passenger satisfaction• Awards• Public transport speed• Commute time to work• Hours spent in traffic• Safety & security

Composite score

Enablers Effects

Source: M&G Real Estate, April 2018.

In 2018, we were able to introduce greater granularity across a

number of measures owing to improved availability of data at city

level. The more representative data sets underpin some changes

in scores between 2016 and 2018. For example, we noted that

Union Internationale des Transports Publics (UITP) provides urban

transport speed data for a larger set of our study markets and

therefore we changed the data source for select study markets.

The same rationale applied to the affordability indicator, noting

that Expatisan provided the cost of a monthly public transport

ticket for a larger share of the study markets. Lastly, our carbon

emission data sources, CDP and C40, now only isolate the

transport-related component for select cities. Across all indicators,

where data was not available, we adopted a country average.

In order to reflect the evolving urban transport landscape, we

considered adding additional evaluation metrics to our analysis

such as driverless cars. Uber driverless cars were first introduced in

May 2017 in the US city of Pittsburgh, followed by San Francisco

and Toronto. Earlier this year, however, the service was withdrawn

following a car crash in Tempe, Arizona. In Europe, Volvo engineers

have been testing autonomous car models in Gothenburg since

2014 while in Kista, the IT cluster in northwest Stockholm, driverless

buses have been available since January 2018 for passengers to

ride for free along a stretch of road just over a kilometre long. As

this technology develops and is more widely adopted, we may

consider adding availability of autonomous vehicles in our third

edition of the M&G UCR.

The complete connectivity rankings and weighted percentile scores

broken down into enabler and effect components can be found

in Appendix 1. A complete description of the metrics and score

rationale, including sources and weightings, is set out in Appendix 2.

Urban connectivity and ‘good’ urban density

While urbanisation is not a new trend, the scale of this growth

poses a significant challenge for urban development and land use.

In Europe, it is estimated that the region’s population residing in

settlements of more than 10 million people will increase to c.7%

by 2030.

Figure 3: Europe’s population distribution

Source: The World Cities in 2016, United Nations.

2016 2030

10 million or more

500,000 to 1 million

5 to 10 million

Fewer than 500,000

1 to 5 million

Rural

% p

op

ula

tio

n

0

10

20

30

40

50

60

70

80

90

100

The density of the built environment will need to increase

in many cities to sustainably accommodate the growth of

urban populations. The Urban Land Institute (ULI) previously

commissioned two reports exploring the meaning of “density” and

how it has been delivered in different cities globally. The reports

found that dense development creates opportunities to improve the

economic, social and environmental performance of cities, but also

risks. It can enable the more efficient provision of public services,

reduce the need for travel and increase opportunities for making

journeys on foot, which also brings environmental and health

benefits. However, efficiently accommodating more people within a

city needs careful planning and management to avoid the potential

negative effects of increased density, which can include congestion

and loss of green space.

Figure 4: ULI’s good and bad density framework

Outcomes of Bad Density

Mixed Use Connected Planned Spacious

Incremental Designed Green Appropriate

Liveable Cohesive

Monotonous Isolated Unmanaged Unliveable

Segregated Inflexible Ugly Polluting

Crowded ConspicuousOutcomes of Good Density

Densification

Technology CapitalUrban Form and

Design

Infrastructure and

Connectivity

Source: Clark & Moir 2015. Density: Drivers, dividends and debates. London: Urban Land Institute Europe.

The M&G UCR was inspired by ULI’s definition of good urban

density. The analysis focuses on the connectivity element of

its framework to identify cities that embrace the principles of

good density through transport infrastructure projects and offer

relative-value opportunities to real estate investors.

Since 2015, ULI has revised its definition of good density to include

an element of governance. We agree that this new component

underpins all good density elements. Successful city leadership

and transport policy integration is reflected in the M&G UCR urban

mobility strategy (enabler) and award (effect) indicators.

ULI’s latest density report was launched in June 2018 and explores

revised characteristics of the urban form that influence good

density. The work was commissioned by ULI and the Coalition for

Urban Transitions (a special initiative of NCE), and supported by

a steering group consisting of global real estate and infrastructure

fund managers and investors including M&G Real Estate.

The report reviews the characteristics that make up good density

within urban areas and how these relate to investment returns

and carbon emissions. It seeks to identify the extent to which the

interests of real estate investors align with those of the state and

therefore opportunities to align public policy and private finance

to deliver more prosperous, liveable cities and better risk-adjusted

investment returns.

Figure 5: Good urban density drivers

Clustering

Structure

Economic/

Employment

Infrastructure

Built

Infrastructure

Green/Blue

Infrastructure

Governance

Infrastructure

Real Estate

Investment

Returns

Carbon

Dioxide (CO2)

Emissions

Source: ULI 2018.

06

07

Key findings by rankTop 10

This group saw the fewest rank position movements since our first

report. Paris and Berlin held their top positions, highlighting their

already more advanced urban transport infrastructure provision

relative to other study markets. The group is also characterised by

the prevalence of German cities (four out of ten), driven by RTPI

app coverage (enabler score) and given these are some of the most

affordable (effect score) cities in Europe.

Stockholm moved up the ranking by two places to reach third

place, owing to modest improvements across both enabler and

effect scores, including Wi-Fi speed (+12% to 33Mbps), RTPI app

coverage (City Mapper added since 2016) and urban transport

speed (29km/hour).

New entrants in the top 10 ranking include Helsinki and Hamburg.

Hamburg’s modest improvement by two rank positions was boosted

by a mix of enabler and effect indicators. For example, Wi-Fi speed

improved by 24% to 25Mbps and hours wasted commuting in

traffic improved by 2% to 44 hours per annum.

Besides Helsinki, the top 10 cities moved by no more than three

rank positions. Helsinki’s climb by 11 positions was driven by an

improvement in a number of enabler indicators, namely Wi-Fi speed

(+33% to 27Mbps), RTPI app coverage (Whim added since 2016) and

an increased share of trips completed using green transport modes

(from 62% to 68%). The first two enabler indicators, together account

for a quarter of the rank weighting.

Positions 11 to 30

Cities ranking between 11 to 30 moved by a relatively larger number

of positions compared to the top tier, ranging between -16 and

+23. Of note, Cologne and Düsseldorf both climbed by 23 places,

representing the best overall rank improvers since 2016. Cologne’s

ranking was boosted by a number of effect indicators, including

affordability (the cost of a combined monthly ticket- including all

modes of public transport- equal to €87) and commute time to work

(average 50 minutes). Düsseldorf ’s performance was driven by a

number of enabler indicators: Wi-Fi speed (+45% to 29Mbps), RTPI

app coverage (City Mapper added since 2016) and an improved

offering of car-sharing schemes (Car2go added since 2016). New

entrants dropping into this middle tier from the top group include Bremen and climbing from the bottom group Leipzig and Espoo.

Positions 31 to 64

While select cities in this group improved by double digit

rank positions albeit remaining in the same group, including

Birmingham (+18) and Edinburgh (+17), many of them also

moved down the rank by up to -23 positions, giving way to the

best improvers in this group as highlighted above.

Key findings by composite componentsEnablers

Wi-Fi speed

Since 2016, the average download speed has stayed the same

at 24 Mbps across all 64 study markets. The city with the highest

download speed is Stuttgart (63Mbps) followed by Paris (59 Mbps)

and Amsterdam (50Mbps). The best improver is Cologne with a

download speed of 5.9 Mbps representing a 119% improvement

from 2.7 Mbps. Conversely, download speed slowed to 29Mbps

from 55Mbps (-48%) in Bremen.

Free Hotspots

The city with the most registered free hotspots is Berlin (73)

followed by Vienna (62) and Hamburg (60). The best improver is

Prague, registering an increase in free hotspots from 1 to 37 while

Bordeaux lost the highest share of free hotspots from 3 to 2 (-33%).

Real-time transport apps

Vienna, Montpellier, Seville, Edinburgh and Glasgow are

now available on the Moovit app while Copenhagen, Cologne,

Düsseldorf and Stockholm are now available on City Mapper. Of

note is the availability of the Whim app now in Helsinki, Espoo as

well as Birmingham and Antwerp albeit on a pilot basis. Whim was

highlighted in the first edition of our report for its unique feature of

combining both private and public modes of transport on the same

app, showing the fastest and cheapest route. Today, City Mapper also

provides the same feature, suggesting Uber as a potential transport

mode for the requested journey.

Figure 6: Availability of Real-time Passenger Information

(RTPI) apps

Google Transit Moovit ALLY City Mapper Whim

RT

PI

ap

p c

ove

rag

e, %

stu

dy

citi

es

2016 2018

0

10

20

30

40

50

60

70

80

90

100

Source: Various apps, M&G Real Estate, April 2018.

Share of journeys to work using green transport modes

At 83%, Paris continues to offer the highest share of trips

completed using green transport modes. With the €26 billion

Grand Paris project due to deliver six new metro lines by 2030,

we could see the share rise further in future years. Based on this

indicator, Leeds and Helsinki are the biggest improvers with

increases in share of green trips from 28% to 33% and from 61%

to 68% respectively. Since our last report, Leeds has supported bus

passengers through improved quality bus corridors, developed City

Connect – new high-quality cycling infrastructure – and invested

in significant junction improvements. Helsinki’s performance has

been boosted by the launch of the RTPI Whim app. This highlights

the impact of digital advancements in boosting the use of green

transport modes (see case study).

Figure 7: Share of trips using green transport modes (%)

0 10 20 30 40 50 60 70 80 90

Share of trips using green transport modes (%)

Paris

Amsterdam

Warsaw

Zurich

Copenhagen

Barcelona

Helsinki

London

Munich

Rotterdam

The Hague

Cambridge

Berlin

Oslo

Frankfurt

Hannover

Oxford

Madrid

Dublin

Hamburg

Malmo

Gothenburg

Stockholm

Bremen

Edinburgh

Stuttgart

Düsseldorf

Lisbon

Cologne

Dresden

Brussels

Leipzig

Vienna

Mannheim

Nuremberg

Espoo

Valencia

Glasgow

Bologna

Lyon

Seville

Antwerp

Milan

Eindhoven

Utrecht

Naples

Bristol

Marseille

Toulouse

Nice

Montpellier

Nantes

Dortmund

Birmingham

Aberdeen

Bordeaux

Lille

Leeds

Guildford

Manchester

Rome

Luxembourg

Prague

Source: Eurostat Urban Audit, M&G Real Estate, April 2018.

08

Length of dedicated cycle paths/km2

Notable improvers in this enabler category include a 10% increase

to 640km in Lille, generating a provision of 1.1km of dedicated

cycle paths per km2. More modest improvements include Vienna

(+8% to 3.1km/km2) and Munich (+1% to 3.1km/km2). Provision

changes in the remaining study markets remained stable.

Urban mobility strategy

To effectively facilitate the drivers of future change in cities,

we believe strong urban governance is essential. Successful city

leadership and transport policy integration is reflected in the

M&G UCR mobility strategy indicator. We monitor cities that join

the CIVITAS European city network aimed at implementing clean

urban transport strategies. The latest 2017-2020 programme was

adopted by Antwerp, Munich, Madrid, Stockholm and Aberdeen.

Transport infrastructure spend per capita

The most notable changes in transport infrastructure investment

and maintenance spend occurred in the Czech Republic (+109% to

€2.1 billion) and Poland (-33% to €1.8 billion). At a city level, London

(€24.7 million), Paris (€19.8 million), and Munich (€5.3 million),

continue to top the ranking.

Electric vehicle charge points per car

On a country basis, the market uptake of electrically-chargeable

vehicles (ECVs) is highest in Norway (29%), followed by the

Netherlands (6%) and Sweden (3.6%). On a per car basis, however,

the number of charge points within a 10km radius of the city

centre is highest in Lisbon (0.46) followed by Paris (0.44) and

Amsterdam (0.39).

Figure 8: Market uptake of electrically-chargeable

vehicles (ECVs)

Source: European Automobile Manufacturers Association, 2017.

Ride-sharing schemes

Since the first edition of the M&G UCR, Uber is now available in

Montpellier and Madrid. Uber was forced out of Madrid in 2014

following protests, then reintroduced in 2016. Uber is also available

in The Hague, Eindhoven and Utrecht albeit serviced by the

Rotterdam and Amsterdam services.

Car-sharing schemes

Since the first edition of M&G UCR, Car2go is now available in

Cologne and Düsseldorf. Drive Now and Uberpool have not

extended their service to any additional study market.

City in Focus: Helsinki

Helsinki comes tenth in our ranking. Since the last edition of our report, the city government rewrote legislation to bring the laws

covering different modes of transport into harmony. This enabled the launch of the RTPI Whim app, developed by MaaS Global

(short for Mobility as a Service). The residents of Helsinki are now able to use it to travel across the city.

Whim mixes and matches a variety of participating public and private transport services. For example, Whim could suggest a bicycle

from the city’s bike-share scheme (if one is near your front door), followed by a train and then a taxi; or an on-demand bus (“hail” it

on the app and it will come and pick you up); or a one-way car-share to a tram and a rented “e-bike” with a small electric motor. Once

a route has been chosen. it will make all the bookings needed, as well as ensure that hire vehicles are available and public transport

options are running on time. Costs are displayed for every option, identifying the trade-offs between speed, comfort and price.

Customers are able to buy one-off journeys or ‘bundles’ modelled on mobile phone contracts, allowing for a certain amount of travel

each month. €95 a month offers up to 100km of local taxi use, 500km of car rental and 1,500km on national public transport.

Whim is precisely the type of technology that is changing the way we interact with the urban landscape, with implications for real estate

investors. And it could soon be coming to a city near you, with Antwerp and Birmingham currently in the pilot phase of adopting the app.

09

0% 0.5% 1.5% 5% 10% 30%

Effects

Affordability

The cost of a combined monthly public transport ticket when

compared to GDP per capita is most affordable in the UK cities

of Cambridge (€60), Guildford and Oxford (both €68).

Transport-related carbon emissions

Urban areas produce up to 76% of energy-related greenhouse gas

emissions.2 Managing carbon emissions is essential to support

sustainable economies of scale. Across the 64 study cities,

transport-related carbon emissions average 30% of the total. The

share is lowest in Dublin (10%) and highest in Luxembourg (67%).

Satisfaction with urban transport network

The biannual Quality of Life in European Cities survey, last

published by Eurostat in 2017, highlighted that on average, 36%

of residents are ‘very satisfied’ with their urban transport network,

representing a modest fall since 2015 (37%). The share is highest

in Zurich (79%) and lowest in Rome (4%).

Figure 9: Urban Transport network: % share of ‘very satisfied’ people surveyed

0 10 20 30 40 50 60 70 80 90

Share of 'very satisfied' people surveyed (%)

ZurichVienna

RotterdamMunich

EspooHelsinki

ManchesterBerlin

DortmundHamburg

LondonLeeds

OsloNurembergMannheim

HannoverDresdenBremen

StuttgartFrankfurt

DüsseldorfCologne

PragueEindhoven

UtrechtThe Hague

GlasgowLeipzigBristol

GuildfordOxford

AberdeenCambridgeEdinburgh

BirminghamAmsterdam

BordeauxDublin

LuxembourgToulouse

NiceNantes

MontpellierLyon

ÅrhusStockholm

CopenhagenGothenburg

LilleMalmoSeville

MadridValencia

BarcelonaWarsawAntwerp

ParisBologna

MarseilleBrussels

MilanLisbonNaplesRome

Source: Eurostat, 2017.

CIVITAS and European Mobility Week (EMW) awards

To effectively cope with drivers of future change in cities, we believe

strong urban governance is essential. Successful city leadership and

transport policy integration is reflected in the awards indicator. We

monitor cities that win either the annual CIVITAS or EMW awards,

run by these networks that share learnings on clean transport

solutions. Since our first report edition, Bologna won the CIVITAS

award among 52 European cities across 17 countries for its novel

use of online applications to assess cyclists' needs, including

feedback and other metrics. Malmo’s efforts to promote cycling

as a sustainable means of transport led the Swedish city to win the

EMW award, beating competition from Lisbon, the runner-up.

Public transport speed

The average speed for urban buses, trams, metro and commuter

trains across our study markets is 20km/hour. At 31km/hour,

transport is fastest in Malmo and Gothenburg and slowest in

Barcelona (12km/hour). The findings are strongly correlated to

density. The Swedish cities fall into our ‘low’ density category of

study markets (up to 1,999 residents per km2) while Barcelona, tops

the rank with 16,380 residents per km2 (See Appendix 3).

Commute time to work

The average commute time to work across our study submarkets

is 53 minutes. The fastest trip occurs in Vienna (26 minutes) whilst

the slowest occurs in Birmingham (94 minutes).

Hours wasted in traffic per annum

At an average of 31 hours, time wasted in traffic per annum has

remained broadly stable across our study markets since our first

edition of the report (30 hours). Passengers spend the least time

in traffic congestion per annum in Malmo (10 hours) and the most

in London (73 hours).

Safety and security

Since the first edition of our report, the average number of people

killed in road accidents per 10,000 population has remained stable

at 0.24. The most perilous roads are in Bologna (0.65) while the

safest are in Edinburgh (0.06). There is no clear trend since our last

report edition with road accidents increasing as much as 246% to

0.23 in Glasgow and decreasing by 76% to 0.13 in Valencia.

City in focus: Düsseldorf

Düsseldorf is the capital of North Rhine Westphalia, the largest German federal state by inhabitants and economic power, and has

advanced transport connectivity. For the enabler scores, measuring connectivity maturity, there were improvements in WiFi speed

(increase from 20 to 30 mbps), RTPI app coverage (up from 50% to 60% with City Mapper added since 2016) and higher infrastructure

investment (€100m more than in 2016). This coupled with affordable public transport makes for strong urban mobility. Greener transport

has been improved with more electric car charging points and a new car-sharing scheme, Car2go joining Drive Now. The carbon emissions

attributable to transport has, therefore, improved slightly. Urban transport speed has increased from 10km/hour to 19km/hour, while the

hours wasted in traffic per annum has fallen from 50 to 33. The speed and breadth of transport infrastructure supports city economic

productivity. This boosts demand for office space and rental growth prospects, underpinned by the presence of international businesses.

Urban Connectivity in action: how the UCR is used in the investment decision-making processOur research suggests that when determining where to invest, real

estate investors should not only consider prospective returns driven

by projected supply and demand fundamentals in their appraisals,

but also factors related to whether a city manifests good density

characteristics.

We believe that efficient, affordable and reliable transport systems

contribute to lowering potential costs associated with air pollution

and congestion that could impact on a city’s social and economic

performance, and therefore the appeal of its real estate market.

Cities with the most visionary connectivity policies are more likely

to continue to attract talented people despite rising density

pressures like traffic congestion and carbon emissions. In this

study context, we believe cities that achieve enabler and effect

scores above 50 meet this criteria.

Since the first edition of our study, five new cities have joined

this space including Oxford, Munich, Leipzig, Hamburg and

Düsseldorf. None of these markets are associated with high density

or high liquidity characteristics such as Paris, London or Madrid.

Therefore, the chart on the next page helps to identify investment

opportunities beyond traditional gateway markets.

11

2 ULI, 'Supporting Smart Urban Growth: Successful Investing in Density' report, 2018.

Figure 10: Enabler vs Effect scores

City density category

High Above 5,000 residents per square km

Medium Between 2,001 and 4,999 residents per square km

Low Up to 2,000 residents per square km

Source: M&G Real Estate 2018.

Where is the value?

Among the 15 markets within the top right-hand quadrant of the

above chart, five offer prime office yields above 4% including

Helsinki, Gothenburg and Malmo.3 Broadly, prospective

investments in cities without a developed transport system should

be higher yielding than cities with efficient transport networks and

forward-looking mobility strategies in place.

The chart on the next page illustrates this relationship, with study

markets offering lower yields as their connectivity percentile

scores increase. Among high density cities, top quartile percentile

scores (above 75), are achieved by Paris, London, Barcelona and

Copenhagen. Of these, Copenhagen offers the highest yield

at 3.8%. Among medium density cities in the same top quartile,

Amsterdam, Vienna and Düsseldorf offer the highest yields

at 3.8%. Finally, among low density cities, Bremen and Helsinki achieve a top quartile connectivity score, with the former offering

the most attractive yield at 4.7%. These cities offer relative-value

opportunities, supported by attractive connectivity characteristics

driving good density.

100

90

80

70

60

50

40

30

20

10

0

0 40302010 50 60 70 80 90 100

Effects score

En

ab

lers

sco

re

High Density Medium Density Low Density

Barcelona

Paris

Naples

Copenhagen

Brussels

Milan

Rome

Lisbon

Valencia

Madrid

London

Seville

Amsterdam

StockholmMunichZurich

Vienna

Birmingham

Berlin

Glasgow

Utrecht

Oxford

Warsaw

Rotterdam

Stuttgart

FrankfurtDüsseldorf

Bologna

Nuremberg

Lyon

Cologne

Hannover

Prague

Antwerp

Eindhoven

Hamburg

Manchester

Bordeaux

Dortmund Mannheim

Malmo

Luxembourg

Lille

BristolEdinburgh

Leipzig

Marseille

Bremen

Dresden

Toulouse

Leeds

Oslo

Dublin

Aberdeen

NantesNice

Gothenburg

Montpellier

Helsinki

The Hague

Århus

Guildford Espoo

Cambridge

12

3 Source: PMA. Net yields at end of December 2017.

Figure 11: Prime office yields vs weighted percentile connectivity score

City density category

High Above 5,000 residents per square km

Medium Between 2,001 and 4,999 residents per square km

Low Up to 2,000 residents per square km

Source: M&G Real Estate 2018.

ConclusionIn summary, we believe that demand for real estate space is boosted

in cities where efficient transport networks play a major role in

enhancing economic growth. Paris and Berlin top the overall 2018

ranking, but second tier cities such as Helsinki, Gothenburg and

Malmo also achieve a healthy combination of enabler and effect

scores alongside offering investors a relatively higher yield and so

better value.

In the long run, good connectivity benefits property fundamentals

by making occupiers more likely to want to locate there, boosting

rental growth potential, which in turn justifies a lower yield. M&G

Real Estate has developed the necessary tools to identify such cities

that offer the highest potential risk-adjusted returns, from

a connectivity perspective, for the most attractive value.

7.5

6.5

5.5

4.5

3.5

2.5

0 40302010 50 60 70 80 90 100

Weighted connectivity percentile score

Pri

me

offi

ce y

ield

% (

En

d 2

01

7)

High Density Medium Density Low Density

Vienna

Birmingham

Warsaw

Rotterdam

Cologne

HannoverPrague

Manchester

Dortmund

Mannheim

Malmo

Bristol

Edinburgh

LeipzigBremen

Dresden

Toulouse

Oslo

Dublin

Barcelona Paris

Copenhagen

Brussels

Milan

Lisbon

Madrid

London

Amsterdam

Stockholm

Munich

Zurich

Berlin

Glasgow

Utrecht

StuttgartFrankfurt

Düsseldorf

Bologna

Nuremberg Lyon

Antwerp

Hamburg

Rome

Bordeaux

Luxembourg

Lille

Marseille

Leeds

Aberdeen Nantes

Gothenburg

Montpellier

Helsinki

The Hague

Guildford

Espoo

Cambridge

13

14

Country City

Density

Category

Total

Rank

Rank movement (+/- 64)

2016-’18

Enabler

Rank

Rank movement (+/- 64)

2016-’18

Effect

Rank

Rank movement

(+/- 64)

2016-’18

France Paris High 1 = 0 1 = 0 62 -6

Germany Berlin Medium 2 = 0 3 -1 39 -8

Sweden Stockholm Medium 3 2 4 4 16 -1

Germany Stuttgart Medium 4 -1 7 -4 10 18

Switzerland Zurich Medium 5 -1 5 = 0 24 -10

Germany Munich Medium 6 1 6 = 0 30 9

Netherlands Amsterdam Medium 7 -1 8 -1 44 -8

UK London High 8 = 0 2 2 63 -1

Germany Hamburg Medium 9 2 9 1 32 5

Finland Helsinki Low 10 11 14 14 7 = 0

Germany Bremen Low 11 -2 23 -12 2 3

Spain Barcelona High 12 3 11 -2 47 12

Austria Vienna Medium 13 = 0 16 -1 8 = 0

Germany Frankfurt Medium 14 4 15 -1 9 21

Denmark Copenhagen High 15 4 12 9 46 -30

Germany Düsseldorf Medium 16 23 18 20 17 15

Ireland Dublin Low 17 -1 10 2 59 -17

Sweden Malmo Low 18 -4 31 -7 1 2

Portugal Lisbon High 19 5 13 3 51 -4

Germany Hannover Medium 20 7 17 8 35 = 0

UK Oxford Medium 21 1 19 = 0 27 7

Netherlands Rotterdam Medium 22 -5 20 -3 23 -6

Sweden Gothenburg Low 23 -3 24 -4 11 11

Germany Leipzig Low 24 17 27 6 13 36

France Lyon Medium 25 -13 26 -13 34 -22

Luxembourg Luxembourg Medium 26 -16 21 -3 45 -41

Netherlands Utrecht Medium 27 1 39 = 0 5 4

Finland Espoo Low 28 10 44 17 4 -3

France Nantes Low 29 -6 50 -9 3 -1

Germany Cologne Medium 30 23 37 11 15 36

UK Cambridge Low 31 4 35 2 25 = 0

Poland Warsaw Medium 32 -7 30 -3 41 -15

Spain Madrid High 33 -3 22 = 0 54 -10

UK Edinburgh Low 34 17 33 9 40 10

UK Bristol Low 35 10 38 -6 28 27

Germany Dresden Low 36 -7 46 -15 6 13

Appendix 1

15

Percentile score

movement

(+/- 100)

Total weighted

percentile

score

Total

weighted

score

Percentile

score movement

(+/- 100)

Enabler weighted

percentile

score

Total

weighted

enabler score

Percentile score

movement

(+/- 100)

Effect weighted

percentile

score

Total weighted

effects

score

0 100 60 0 100 47 -10 3 13

0 98 55 -2 97 39 -13 40 16

3 97 55 6 95 37 -2 76 18

-2 95 54 -6 90 35 29 86 18

-2 94 53 0 94 36 -16 63 18

2 92 53 0 92 36 14 54 17

-2 90 51 -2 89 35 -13 32 16

0 89 51 3 98 40 -2 2 10

3 87 48 2 87 31 8 51 17

18 86 46 22 79 26 0 90 19

-3 84 45 -19 65 23 5 98 22

5 83 45 -3 84 30 19 27 15

0 81 45 -2 76 26 0 89 19

6 79 45 -2 78 26 33 87 19

6 78 45 14 83 29 -48 29 16

37 76 43 32 73 25 24 75 18

-2 75 43 3 86 30 -27 8 13

-6 73 43 -11 52 21 3 100 22

8 71 43 5 81 28 -6 21 14

11 70 42 13 75 26 0 46 17

2 68 42 0 71 24 11 59 17

-8 67 42 -5 70 24 -10 65 18

-5 65 42 -6 63 23 17 84 18

27 63 41 9 59 23 57 81 18

-21 62 40 -21 60 23 -35 48 17

-25 60 39 -5 68 24 -65 30 16

2 59 39 0 40 19 6 94 20

16 57 38 27 32 17 -5 95 21

-9 56 38 -14 22 17 -2 97 21

37 54 38 18 43 20 57 78 18

6 52 38 3 46 20 0 62 17

-11 51 38 -5 54 21 -24 37 16

-5 49 37 0 67 24 -16 16 14

27 48 37 14 49 21 16 38 16

16 46 37 -10 41 20 43 57 17

-11 44 37 -24 29 17 21 92 20

Appendix 1

Country City

Density

Category

Total

Rank

Rank movement (+/- 64)

2016-’18

Enabler

Rank

Rank movement (+/- 64)

2016-’18

Effect

Rank

Rank movement

(+/- 64)

2016-’18

UK Birmingham Medium 37 18 25 15 57 7

Norway Oslo Low 38 -2 41 2 18 2

UK Manchester Medium 39 8 29 6 55 2

Belgium Brussels High 40 -3 28 1 58 -10

France Toulouse Low 41 -15 43 -13 22 -4

Belgium Antwerp Medium 42 14 36 14 48 5

Germany Mannheim Medium 43 = 0 49 -3 21 6

Spain Valencia High 44 = 0 45 -11 31 23

Italy Milan High 45 -13 32 -9 60 -8

Netherlands The Hague Low 46 8 51 = 0 26 17

UK Aberdeen Low 47 -13 48 -3 38 -28

France Lille Low 48 -15 47 -11 43 -22

Germany Dortmund Medium 49 -3 52 -5 29 4

UK Glasgow Medium 50 8 42 15 49 -8

Czech Republic Prague Medium 51 6 55 8 12 1

Netherlands Eindhoven Medium 52 -12 53 1 33 -22

UK Guildford Low 53 -1 40 13 53 -15

Italy Bologna Medium 54 -23 56 -12 20 -14

UK Leeds Low 55 6 54 2 42 19

Denmark Århus Low 56 4 59 1 14 32

Italy Rome Medium 57 -15 34 -8 64 -1

France Nice Low 58 -9 57 -5 50 -26

France Bordeaux Medium 59 -9 60 -5 37 -14

Spain Seville Medium 60 2 61 -2 36 24

France Marseille Low 61 -13 58 -9 52 -23

Germany Nuremberg Medium 62 2 64 = 0 19 21

Italy Naples High 63 -4 62 -4 56 -11

France Montpellier Low 64 -1 63 -1 61 -3

Source: M&G Real Estate, April 2018.

16

Percentile score

movement

(+/- 100)

Total weighted

percentile

score

Total

weighted

score

Percentile

score movement

(+/- 100)

Enabler weighted

percentile

score

Total

weighted

enabler score

Percentile score

movement

(+/- 100)

Effect weighted

percentile

score

Total weighted

effects

score

29 43 36 24 62 23 11 11 13

-3 41 36 3 37 18 3 73 18

13 40 36 10 56 22 3 14 14

-5 38 35 2 57 22 -16 10 13

-24 37 35 -21 33 18 -6 67 18

22 35 35 22 44 20 8 25 15

0 33 35 -5 24 17 10 68 18

0 32 34 -18 30 17 37 52 17

-21 30 34 -14 51 21 -13 6 13

13 29 34 0 21 17 27 60 17

-21 27 33 -5 25 17 -45 41 16

-24 25 33 -18 27 17 -35 33 16

-5 24 33 -8 19 16 6 56 17

13 22 33 24 35 18 -13 24 15

10 21 33 13 14 15 2 83 18

-19 19 33 2 17 16 -35 49 17

-2 17 32 21 38 19 -24 17 14

-37 16 32 -19 13 14 -22 70 18

10 14 31 3 16 15 30 35 16

6 13 30 2 8 12 51 79 18

-24 11 30 -13 48 20 -1 1 10

-14 10 29 -8 11 14 -41 22 15

-14 8 29 -8 6 12 -22 43 16

3 6 29 -3 5 12 38 44 16

-21 5 27 -14 10 13 -37 19 14

3 3 26 1 1 8 33 71 18

-6 2 25 -6 3 12 -18 13 14

-1 1 25 -2 2 12 -5 5 13

2018 Score sums 2,481 1,419 1,062

2016 Score sums 2,346 1,409 937

% Change 6% 1% 13%

17

Appendix 2

Enabler indicator Weighting Unit of measure Score rational Data source

Digital

1 WiFi speed 12.5% Broadband average download speed Mbps The higher the better Hyperoptic study/

Speed test, Testmy.

net

2 Free hotspots 7.5% Free registered hotspots per 10,000 residents The higher the better Free hotspot locations

3 Transit web apps 12.5% Availability of Real-time Passenger

Information (RTPI) apps eg City mapper, Ally,

Moovit, Whim

The more coverage

the better

City Mapper, Moovit,

Ally App, Google

Transit, Whim

Public Transport

4 Share of journeys to work

using ‘green’ modes

10.0% % of journeys by public transport,

walking and cycling

The higher the better Eurostat Urban Audit

5 Length of dedicated cycle

paths/LAU

5.0% Length of bicycle network (dedicated cycle

paths) - km/Local Administrative Unit (LAU)

The higher the better Eurostat Urban Audit

6 Urban mobility strategy 5.0% CIVITAS membership: Demonstration

(co-financed by the EU) or network

(self-financed) city + cities that host

‘European Mobility Weeks’

Point scored if city is

a CIVITAS member/

EMW host

CIVITAS, European

Mobility Week

7 Infrastructure spend

per capita

7.5% OECD transport infrastructure investment and

maintenance spending per capita

The higher the better OECD

Private Transport

8 Electric vehicle chargers 2.5% Number of charge points within a 10km

radius, per cars per 1,000 residents

The higher the better Open Charge Map,

Eurostat Urban Audit

9 Ride-sharing 5.0% Membership of ride-sharing schemes eg Uber The earlier joined the

better

Uber

10 Car-sharing 2.5% Membership of car-sharing schemes eg

UberPool

The earlier joined the

better

Uberpool

70%

Effects indicator Weighting Unit of measure Score rational Data source

1 Affordability 5.0% Cost of a combined monthly ticket (all modes

of public transport) EUR/GDP per capita

The lower the better Eurostat Urban Audit,

Expatisan

2 Transport emissions 2.5% % share carbon emissions related to transport The lower the better CDP, C40 Cities

Climate Leadership

Group, World Bank

3 Satisfaction with transport

network

2.5% % share of 'very satisfied' people surveyed The higher the better European

Commission

4 Awards 5.0% Winner/finalist of the CIVITAS/ European

Mobility Week awards

Number of times

received the better

CIVITAS, European

Mobility Week

5 Public transport speed 2.5% Urban bus speed (km/hour) Tram speed (km/

hour)

The higher the better Various municipal

transport authorities,

EMTA barometer,

UITP

6 Commute time to work 5.0% Minutes The lower the better Urban Transport Fact

Book, moovit

7 Traffic congestion 2.5% Annual hours wasted in traffic The lower the better INRIX

8 Safety & security 5.0% People killed in road accidents per 10,000 pop. The lower the better Eurostat Urban Audit

30%

Notes: Sources shown in bold are new in the 2018 ranking.

18

Appendix 3

City Density Classification

Country CityDensity (LAU

population/LAU)*

Density

category

Spain Barcelona 16,380 High

France Paris 8,861 High

Italy Naples 8,343 High

Denmark Copenhagen 7,664 High

Italy Milan 7,344 High

Belgium Brussels 7,279 High

Portugal Lisbon 5,996 High

Spain Valencia 5,870 High

UK London 5,397 High

Spain Madrid 5,226 High

Netherlands Amsterdam 4,888 Medium

Spain Seville 4,887 Medium

Germany Munich 4,601 Medium

Sweden Stockholm 4,596 Medium

Switzerland Zurich 4,423 Medium

Austria Vienna 4,257 Medium

UK Birmingham 4,175 Medium

Germany Berlin 3,891 Medium

UK Oxford 3,518 Medium

UK Glasgow 3,490 Medium

Netherlands Utrecht 3,467 Medium

Poland Warsaw 3,355 Medium

Netherlands Rotterdam 2,961 Medium

Germany Stuttgart 2,954 Medium

Germany Frankfurt 2,890 Medium

Germany Düsseldorf 2,781 Medium

Italy Bologna 2,744 Medium

Germany Nuremberg 2,689 Medium

France Lyon 2,662 Medium

Germany Cologne 2,583 Medium

Germany Hannover 2,565 Medium

Czech Republic Prague 2,555 Medium

Netherlands Eindhoven 2,519 Medium

Belgium Antwerp 2,505 Medium

Germany Hamburg 2,334 Medium

Luxembourg Luxembourg 2,217 Medium

Italy Rome 2,196 Medium

France Bordeaux 2,145 Medium

Germany Mannheim 2,068 Medium

Germany Dortmund 2,068 Medium

City Density Classification

Country CityDensity (LAU

population/LAU)*

Density

category

Sweden Malmo 1,947 Low

UK Bristol 1,920 Low

France Lille 1,919 Low

UK Edinburgh 1,905 Low

Germany Leipzig 1,831 Low

France Marseille 1,743 Low

Germany Bremen 1,696 Low

Germany Dresden 1,634 Low

France Toulouse 1,630 Low

Ireland Dublin 1,440 Low

UK Leeds 1,410 Low

Norway Oslo 1,374 Low

UK Aberdeen 1,237 Low

France Nantes 1,215 Low

France Nice 1,176 Low

Sweden Gothenburg 1,155 Low

France Montpellier 1,067 Low

Finland Helsinki 878 Low

Netherlands The Hague 842 Low

Denmark Århus 682 Low

UK Guildford 543 Low

Finland Espoo 511 Low

UK Manchester 412 Low

UK Cambridge 323 Low

19

* Local Administrative Unit (LAU) as defined by Eurostat. A city is an LAU when the majority of the population lives in an urban centre of at least 50,000 inhabitants.

Source: Eurostat, M&G Real Estate April 2018.

Contact

Vanessa Muscarà Associate Director: Property Research +44 (0)20 7548 6714

vanessa.muscara@mandg.com

Richard Gwilliam Head of Property Research +44 (0)20 7548 6863

richard.gwilliam@mandg.com

Stefan Cornelissen Director of Institutional Business Benelux, Nordics and Switzerland +31 (0)20 799 7680

stefan.cornelissen@mandg.co.uk

Lucy Williams Director, Institutional Business UK and Europe, Real Estate +44 (0)20 7548 6585

lucy.williams@mandg.com

Manuele de Gennaro Head of Institutional Distribution, Switzerland

+41 (0)43 443 8206

manuele.degennaro@mandg.com

Robert Heaney Director, Institutional Business, Nordics +46 7 0266 4424

robert.heaney@mandg.co.uk

Costanza Morea Associate Director, Italy +39 3440 408 396 costanza.morea@mandg.com

Florent Delorme Associate Director, France +33 (0)1 71 703088

florent.delorme@mandg.fr

Alicia Garcia Sales Director, Spain +34 915 615 257

alicia.garcia@mandg.com

www.mandgrealestate.com

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