Having emerged in recent years as Europe's financial center, London excels in all three categories rated by E-REGI, easily outdistancing competitors in growth prospects while measuring high in wealth accretion and business environment. Munich is another big winner, moving up five spots from 2006 to second place. That spurt pushes a declining Paris and still-vibrant Dublin each down a spot. Stockholm retained the fifth position, reflecting another strong year throughout the Nordic region. Helsinki and Oslo, for example, both moved up in the top 10 to seventh and ninth, respectively. Luxembourg scored sixth, Stuttgart is eighth and Madrid earns the 10th place ranking.

"With market fundamentals positive and large volumes of capital still targeting European real estate, these cities can expect to take a large share of the transaction volume," says Robin Goodchild, head of European research for LaSalle. Known primarily for its global financial strength, London was also credited for a diversified economy that now includes high-tech companies and impressive inroads into the life sciences arena, says E-REGI. The 2012 Olympics is another boost, says E-REGI, with London's infrastructure being upgraded to meet the demand.

The tenor of this year's E-REGI seems to be cautiously optimistic. Citing a European Commission survey putting corporate sentiment at its most ebullient since 2000, E-REGI says the economic upswing in the European Union that started in 2006 should linger through 2008. "Occupier demand is increasing in virtually every market and availability is being squeezed," E-REGI reports, pushing rental growth ahead of expectations and encouraging construction of new space, albeit "at manageable levels."