Where in Europe is it most expensive to live and work?

The cost of accommodating an employee in London is more than four times the cost of accommodating the same worker in Berlin, according to Savills Live/Work Index, which measures the combined cost of residential and office space per person per year.

The average total cost of accommodating a worker in the 20 cities measured - a combination of established world cities and their dynamic up and coming ‘upstart’ rivals - is US$56,855. However, due to London, the average cost across the four European cities analysed is US $63,800, ranging from $112,800 in London, followed by Paris at $78,200, Dublin at $36,500 and Berlin at $27,700.

See the full Live/Work city rankings here. 

While they are still relatively cheap compared to their peers, both Dublin and Berlin have seen significant increases in costs since 2010: accommodation overheads in Dublin have increased by 28% and Berlin by 20%, whilst in London they are up by 18%. Paris, meanwhile, has seen an increase of only 1%.

Dublin and Berlin move onto the world stage

Since the Global Financial Crash recovery in Europe’s real estate markets has not been universal, but rather concentrated in the cities favoured by occupants and investors in the growing digital and creative economies, says Savills. This means some relatively small cities, such as Berlin (population 4.3 million) and Dublin (1.7 million) are fast moving into the realm of world class city status and competing with the giants in a new digital age. With the magic formula of high quality urban environment, favourable regulatory environment and low property costs, Berlin and Dublin have emerged as havens for Gen Y, footloose creative talent.

Berlin’s offer is dominated by online, e-commerce and software-driven tech, from music cloud storage platform Soundcloud, to the early stage incubator Rocket Internet. In Dublin, Ireland’s corporate tax rate of just 12.5% initially made it an attractive location for large US tech firms for their European headquarters. Google, Facebook and LinkedIn, based in Dublin’s Docklands, or ‘Silicon Docks’, have been a catalyst for the wider industry, building confidence among local start-ups and attracting attention from investors. Real estate investment deals in Dublin hit US$3.8bn in 2015 – up 7,113% on 2009 when activity was at a low due to the GFC – whilst in Berlin they reached $12.5bn – up 455% in the same period.

The digital industry has fuelled job growth in both cities. The number of jobs in the information and communication sector grew by 23.3% in Dublin between 2005 and 2015, at a time when total employment in the city increased by just 3%. Further growth of 25.9% is forecast in the next ten years. Berlin saw similar levels of employment growth in the sector, up 20.5% in the last decade, against a Eurozone average of 9.8%. The information and communication sector has outperformed across Europe, but it is in cities such as Berlin and Dublin where the growth has been most marked.

Yolande Barnes, Director, Savills world research, says:
“The productivity of cities and their value to global businesses clearly has a pronounced effect on demand and hence rental costs. The highest ranking global cities, London and New York, are also the most expensive for businesses and workers to occupy.

“However, world cities can become a victim of their own success when rents rise to the point where affordability becomes an issue. Rapid urbanisation demands supply elasticity – the test for the top world cities is to supply new business quarters and residential neighbourhoods while capturing the characteristics that made the city attractive in the first place. Meanwhile European cities such as Dublin and Berlin have established themselves as top destinations.”

Read Savills full 12 Cities report here.