Birmingham is among the top ten European locations for prime industrial, office and retail activity, according to research compiled by Knight Frank.
The global report, which is produced annually, ranks Birmingham fifth for prime office yield, sixth in the European offices table, seventh in European retail and ninth in industrial.
Globally, the city ranks 12th in the office asking rents category, just behind New York in a table which was topped overall by London's West End.
Using this data, Knight Frank calculates a European office market strength forecast position in which Birmingham ranks at number eight.
The company's annual Global Real Estate Forecast ranks European markets against 22 separate economic, demographic and prop-erty variables to determine the strength of the office market for 2006.
Each of the major property sectors reflects the strong performance of the global economy - and continued economic growth will provide a sound underpinning f or further improvements, according to Catherine Penman, head of research at Knight Frank.
"Improving business conditions, reflected in particular by recruitment within the banking and financial sectors, has led to a strengthening of occupier demand within London and regional cities - it is certainly true of the Birmingham market," she says.
"The flow of capital into and between Europe's property markets continues and investor demand is exceptionally strong, with opportunity funds, institutional and German investors seeking increasingly scarce prime properties.
"The principal Western European markets all claim prime office yields of below six per cent, even in cities where the occupational markets have been slow to show signs of recovery.
"Further yield compression is anticipated and product is being targeted away from the prime markets of Paris, Madrid and Barcelona as investors seek to maximise returns which is expected to lead to a tightening of yields in secondary cities."
The 12-month outlook for Birmingham is described as steady - as is the three-year outlook - with no significant rise or fall in the global office asking rents, accord-ing to Mark Swallow, head of the Knight Frank's Birmingham office.
"Overall, the global report paints a positive outlook across the markets, while for Birmingham specifically, we have a steady position on which to build on in the coming 12 months to cement our place in the international rank-ing," he says.
"Birmingham has benefited from a positive 12 months with low vacancy rates and there is strong evidence of rental growth which we predict will continue to grow over the coming six - 12 months, bolstered in particular by the continued expansion of the service sector industries as well as by strong output forecasts.
"The UK warehouse invest-ment market remains the most active in Europe. Total returns were at their highest in over five years at 18.4 per cent.
"The market outlook also remains positive as occupier demand strengthens and rents are anticipated to pick up as the year progresses as the weight of domestic and foreign capital chasing limited stock continues, placing downward pressure on yields."
Occupational markets across Europe have continued to show signs of improvement, albeit in varying degrees with higher aggregate levels of letting activity reported in 2005 following three years of relatively weak occupier demand.
Turning to the office sector, Mr Swallow says: "Each of the principal western European markets claim prime office yields of below six per cent.
"In Birmingham, demand for prime product has pushed yields to five per cent and given the scarcity of available product, coupled with the continuing allocation of money targeting property, further yield compression is anticipated in the short term.
"The supply of good quality space across the market has been limited to date, aiding rental growth - although in Birmingham we are yet to hit the £30 per sq ft mark.
"The delivery of new office space through the development pipeline, including Abstract Land's Colmore Plaza, will provide occupiers with greater choice and therefore greater negotiating power."