London is by far the most expensive European city in which to live and work, but costs are on the rise in 'upstart' rivals as tech clusters create strong demand for property. These are the findings in a report by property firm Savills’ Live/Work Index, which measures the combined cost of residential and office space per person, per year in a combination of established world cities and their up-and-coming rivals.

The cost of accommodating an employee in London is more than four times the cost of accommodating the same worker in Berlin, according to the report.

The average total cost of accommodating a worker in the 20 cities measured is $56,855. However, London rates skew the average cost across the four European cities up to US $63,800. Costs were tallied as $112,800 in London, followed by Paris at $78,200, Dublin at $36,500 and Berlin at $27,700.

While still comparatively cost effective, Dublin and Berlin have seen significant increases in costs since 2010: accommodation overheads in Dublin have increased by 28% and Berlin by 20%, while in London they are up by 18%. Paris, by contrast, has seen an increase of only 1%.

Since the aftermath of the global financial crisis, recovery in Europe’s real estate markets has been concentrated in the cities favoured by occupants and investors in the growing digital and creative economies, according to Savills. This means some relatively small cities, such as Berlin and Dublin, are able to compete with larger more established locations.

“Young talent is not tied to location. What young, talented workers need is interactivity and human interaction. Living, working and playing are all mixed up for Generation Y,” said Yolande Barnes, head of world research for Savills. “Cities that offer this mix can compete with the big, capital-intensive cities. Cities with low populations can really pull their weight as tech cities because of the quality of life they offer.”

Ms Barnes cited Berlin and Dublin, and also Austin, Bristol and Manchester, among the emerging tech cities.