Dublin is among the top five European cities for property investment, the fourth time it has made the list in as many years.

The Irish city lost out to Berlin, Hamburg and Frankfurt in the top three places, with Munich coming in fifth.

According to the Emerging Trends in Real Estate Europe report published jointly by PwC and the Urban Land Institute (ULI), Dublin generated €4 billion in property activity in the 12 months to the end of September.

The city slipped one place in the rankings compared to last year. However, its attractiveness could be fuelled in coming months by post-Brexit investment as UK financial services firms consider setting up elsewhere to maintain access to the single market.

London found itself in 27th place, down from 11th, but the city remained attractive for global capital, with €31 billion in capital flowing in over the 12 months.

“With an economy performing well over the average EU GDP level, a young fast-growing population, the most business-friendly tax regime in Europe and many multinationals based here, Dublin remains a highly regarded location for real estate development and investment,” Joanne Kelly, PwC Ireland real estate leader, said.

Shortage of residential property

But she also warned about the potential impact on investment of a shortage of residential property.

“Demand in the Dublin residential rental sector is significant. This demand is partly due to the lack of supply which has driven rents up to an all-time high, but also due to an expanding population and an economy that is growing,” she said. “Ireland needs to be careful that the shortage of accommodation does not negatively impact future foreign direct investment. Government and the industry need to continue to work together to plan for the future housing needs of our people.”

In Europe, political instability may be a significant challenge, with upcoming elections in France, Germany and the Netherlands stoking fears. Some 89 per cent of respondents to the survey listed it as their top concern for the year.

It is unlikely to get any better in the short term, with 45 per cent expecting the migration crisis to worsen in the coming year, and nearly two-thirds expecting political uncertainty in Europe to get worse over the coming three years.

That uncertainty hasn’t dampened business prospects too severely though; just under half of respondents said they expected no change to confidence, profitability or headcount.

“Given the timing of this report, in a period in which Europe’s real estate industry participants are coming to terms with the result of the UK’s referendum vote to exit the EU, it was inevitable that Brexit would be a focus point for the industry’s uncertain view of the future,” Ms Kelly said.

“But what is clear after taking the pulse of the real estate industry’s leaders, is that below the surface, there are complex and significant influences at play beyond today’s geopolitical issues. These are changes which are altering society and our industry’s view of the future role of the built environment.”