Germany’s coasts and islands, as well as the Lake Constance region and Alpine region, are extremely popular locations for German holiday home buyers. “In particular, high-end holiday homes in prime locations prove to be, in view of the limited supply, stable investments with growth potential,” says Kai Enders, who is a Member of the Board of Engel & Völkers AG. Thus, there is a significant deficit in supply in almost all holiday destinations, which leads to rising prices in many areas. This concept comes from the “Holiday home market report Germany 2015″, in which Engel & Völkers investigates average purchase prices and achievable daily rent for holiday homes in a total of 26 locations.
Whilst the prices of flats, as well as detached and semi-detached houses, are settling down to their 2014 rates in some holiday home locations, the price level has risen noticeably in some locations and sectors. Due to the shortage of supply in prime locations, prices are also rising in many average and basic locations.
On Sylt, the first half of 2015 saw top prices for flats rise by 4,000 euros in comparison to the previous year to up to 17,000 euros per square metre. In the detached and semi-detached house sector, the price level has risen significantly in prime locations to up to 15 million euros (2014: 12 million euros). Thus, this North Frisian island is the most expensive holiday home location in Germany. On Norderney, the maximum price per square metre for flats in preferred locations increased from 14,000 euros in 2014 to 16,000 euros. Norderney has the second-highest property prices in this sector across Germany. On Lake Tegernsee, flats at the top end of the scale currently fetch 14,000 euros per square metre and 9,000 euros per square metre in Friedrichshafen near Lake Constance. “Due to demand, entry level prices are also rising in the best areas in some locations,” comments Kai Enders. This means that, for example, the lowest price limit for flats on the island of Rügen in very good areas, such as Binz and on the Mönchgut peninsula, have risen from 3,000 euros in 2014 to 3,600 euros in the first half of 2015.
Owner-occupancy and rental
Many buyers are fulfilling a lifelong dream by buying a second home in their favourite holiday location. “Those who use their properties a lot themselves see rental as an additional income alongside the non-material return on investment and their own usage,” says Kai Enders. Due to the unstable financial situation, holiday homes are also coming to the attention of potential buyers as crisis-proof retirement plans, which are a financial investment and bring a yield. The low interest rates and the resulting challenges for investors in terms of investing their money in a profitable way have further driven this trend. For an increasing number of buyers, the option of combining owner-occupancy and rental is becoming more important. In selecting a holiday home, buyers should look for not only an attractive location, but also convenient and high-quality facilities, as well as a location which is consistently popular as a holiday destination. “These criteria are key to ensuring successful rental, as they can generate long-term, steady rental income,” according to Kai Enders.
Buyers prefer holiday homes in their own country
German holiday homes are very popular with German buyers, as they are quick and easy to access. For this reason, buyers from Lower Saxony are especially interested in holiday homes on the East Frisian Islands. Properties on the East Frisian Islands and in the Lübeck Bay, including Fehmarn, are preferred by buyers from Hamburg and Schleswig-Holstein. In almost all locations which were investigated, Engel & Völkers also noted high demand from buyers from North Rhine-Westphalia. This was the same for Lake Constance and the Alpine region, as well as the Mecklenburg Baltic Sea coast. In some locations, such as on Sylt, there is an increasing amount of enquiries from Switzerland.
Prices continue to rise in prime locations
Due to the limited opportunities for new construction in many areas, either because of the geography of the area or restrictive planning and building laws, the number of attractive properties available, especially in prime locations, will remain low. Engel & Völkers is also expecting the demand for holiday homes and second homes to increase further. Especially in good and prime locations, this pressure on prices should thus also increase. Locations with a distinctly upwards price trend include Sylt, St. Peter-Ording, Warnemünde, Chiemsee, Tegernsee, Überlingen and Friedrichshafen. Similarly, prices for flats in good and prime locations on Juist, Norderney and Kühlungsborn are also likely to continue to rise.
The following link will provide you with a comprehensive market report (avaible only in german) including detailed information.