LONDON-Hot climates are not exactly a UK mainstay, but the sizzling business sector here has allowed its capital city to top the European Regional Economic Growth Index for the second year in a row. Published annually since 1998 by LaSalle Investment Management, the proprietary ranking of 91 continental municipalities in 27 countries aims to identify the best locales for commercial real estate.

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.