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The upturn on the German market for holiday properties and second homes continues. This is according to the new Engel & Völkers “Market Report on Holiday Properties in Germany 2017”. In the study, the company examines 24 locations on the North and Baltic Sea coasts, as well as in the German Alpine region. Asking prices for holiday homes and apartments in the first quarter of 2017 formed the basis for the report. In addition to regular market activity, Engel & Völkers also focused on the highest prices fetched for absolutely exceptional properties in unique locations. In most cases they preside over sea views or an Alpine panorama, with prices high above local average valuations. “In many places the persistently high demand for holiday properties is met by a limited availability of listings, leading to a hike in prices. In fact, more than half of the locations we surveyed witnessed price rises in prime locations and good locations,” said Kai Enders, Member of the Board of Engel & Völkers AG.
Holiday homes: Sylt, Tegernsee and Chiemsee remain the three highest priced locations
Like last year, the highest asking prices for holiday homes in Germany were recorded on Sylt. In comparison to 2016, the North Frisian island also recorded a considerable jump in prices: In the first quarter of 2017, holiday properties in the premium segment fetched as much as 12 million euros (2016: 10 million euros). Sylt is followed by the two well-established Bavarian holiday destinations Tegernsee and Chiemsee. Asking prices here leveled out at up to 6 million euros on Lake Tegernsee and up to 3.5 million euros on Lake Chiemsee.
For a limited number of outstanding properties where prices are independent of market norms due to their particularly exclusive location and rarity, far higher prices were recorded in all three top destinations. On Sylt, the sale price for homes in this category rose to 16.5 million euros (2016: 15 million euros) in the first quarter of 2017. This places exceptional prices on the North Sea island around a third higher than in the locations Tegernsee and Chiemsee, ranked in second place. The highest price fetched in both locations – of up to 10 million euros – remained at the same level as the previous year.
Besides Sylt, Engel & Völkers observed price increases for holiday properties in very good locations in many other destinations elsewhere. This trend can be attributed to the excess in demand over supply. Among the island and coastal locations, Travemünde witnessed a high growth in prices, as did the Alpine region of Garmisch-Partenkirchen.
Holiday apartments: Tegernsee records the highest price rises
Sales prices for holiday apartments in the top locations also rose in the majority of cases. This is true of the three highest priced holiday apartment destinations Sylt, Norderney and Tegernsee, as well as for many Baltic Sea regions and southern Germany. For example, on Sylt and Norderney, asking prices rose in the first quarter of 2017 to as much as 15,000 euros per square metre (2016: both 14,000 euros), followed by Tegernsee at up to 12,000 euros (2016: 10,000 euros). This means that the Bavarian holiday destination ranks among the top locations of those surveyed for the highest price growth of holiday apartments.
In parallel to local top prices, exceptional prices for outstanding holiday apartments also rose in some locations. On Sylt, for example, the price per square metre for such exceptional properties increased to as much as 20,000 euros (2016: 17,000).
Sylt: North Rhine-Westphalia region overtakes Hamburg as largest buyer group
In addition to price trends, Engel & Völkers also investigated the origin of buyers for 2016 in the market report. It remains domestic buyers who dominate the German market for second homes. International clients, on the other hand, play a relatively insignificant role in the holiday regions surveyed. Nonetheless, the ratio of foreign buyers in the Alpine region in 2016 was significantly higher than in the coastal locations. They were active in Garmisch-Partenkirchen in particular, accounting for 13 percent of the holiday properties sold there by Engel & Völkers (2015: 4 percent). At the same time, buyers from North Rhine-Westphalia overtook buyers from Hamburg as the largest buyer group of the real estate company on Sylt last year. While clients from North Rhine-Westphalia closed 10 percent of sales of holiday properties in 2015, this ratio rose to almost a third in 2016.
Outlook: Price rises for holiday properties in all locations
For the first quarter of 2017, Engel & Völkers registered an increase in asking prices for holiday properties in the majority of the 24 locations surveyed in its report. This trend could be observed both in the premium and second-tier locations. Due to the growing level of demand, sale prices in good and average locations across Germany are also experiencing dynamic growth. In the prime locations in particular, Engel & Völkers anticipates that the availability of prestigious holiday properties will remain limited. One reason for this is the limited potential for new development, due to the island location or restrictive building regulations. “We expect the interest in German holiday properties to stay at a consistently high level in the near future. Considering the persistent imbalance between supply and demand, we are confident of further potential for appreciation in value, especially in prime locations,” said Kai Enders. Properties in these locations represent a worthwhile investment, as owners can profit both from private residency and lucrative holiday rentals.
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