Munich is the first choice in Germany for foreign direct investors, according to a recent study. However, the Bavarian capital has some catching up to do in terms of its perception abroad.
With 111 foreign direct investments in 2016, Munich overtook the previous leader, Berlin (97). Düsseldorf took second place with 98 projects. The state capital thus also attracted the lion's share of all investments made in Bavaria (194).
The Free State ranks third in a comparison of federal states, behind North Rhine-Westphalia (244) and Baden-Württemberg (232). What is interesting here is the diverse origins of the capital invested in the various federal states: While China leads the list of investors in NRW, most investors for companies in Baden-Württemberg come from neighboring Switzerland. US capital is the main source of investment in Bavaria.
However, Bavaria benefits most in terms of jobs created by the projects: 5,138 jobs were created here through the use of foreign funds. This was followed by North Rhine-Westphalia with 4,193 and Hesse with 3,904 new jobs. Berlin ranks eighth with 532 jobs created. This means that an average of 26 jobs per investment were created in Bavaria, compared to just 5 in Berlin.
German cities in ambush behind London and Paris
The study The consulting firm Ernst & Young (EY) also looks for a European comparison. London leads the European rankings by a wide margin. The British capital has recorded 444 investments. It is followed by Paris with 177 projects, followed by Munich, Düsseldorf, and Berlin. Frankfurt am Main (10th place), Hamburg (12th place), and Bremen (17th place) also make it into Europe's top 20. However, given the impending Brexit, the situation could still shift to London's disadvantage, according to the EY partner. Bernhard Lorentz:
"German cities are already positioning themselves: No other country has as many cities among the top 20 as Germany. If London fails to become an attractive investment location due to a lack of access to the European single market, they would benefit even more."
Does Munich have an image problem?
Despite all the good news, Munich still needs to work on improving its perception abroad. The study authors also surveyed 505 executives of international companies on which European cities they considered most attractive for company relocation and compared this with the actual ranking of investment projects. London leads both rankings, ahead of Paris. However, in terms of perceived best locations, Berlin, Frankfurt, and Munich occupy places three to five, while Munich takes the top spot in Germany based on actual figures. Düsseldorf, Germany's second-place city, even lands far behind in the respondents' perception.
| “Feeling” best locations | Actual ranking | |
| 1 | London | London |
| 2 | Paris | Paris |
| 3 | Berlin | Munich |
| 4 | Frankfurt | Dusseldorf |
| 5 | Munich | Berlin |
Also interesting: Investors already active in Germany—so-called insiders—view Bavaria by far as the most attractive federal state for a company's location. Among "outsiders" who are not yet active in Germany, Berlin leads the rankings, ahead of Bavaria. Perhaps, one might think, Bavaria, like Munich, has an image problem. Or perhaps the southeastern part of the country—and especially the state capital—is simply a little more conservative.
