The structure of the German real estate market, in addition to being closely linked to economic indicators, is also linked to the unique history of Germany. Residential property prices have risen in all parts of the country over the past 15 years, but growth has not been equally pronounced everywhere. In addition to the characteristic south-north divide in Germany, east-west scissors can still be observed. In this review, the real estate agents at Engel & Völkers Germany explains why these sometimes very clear regional differences arise and how you can find the ideal home for purchase in the current market situation.
A look at the distribution of the square meter prices when buying a house in Germany quickly shows that the south of Germany is certainly one of the more expensive real estate locations, but can by no means claim this property for itself. Weighted by inhabitants, the most expensive federal state to buy a single-family home with Hamburg is even located in northern Germany - here, an average square meter costs € 3,823. In second place is Bavaria with 3,609 euros, followed by Berlin with 3,222 euros, Baden-Württemberg with 3,052 euros and Hesse with 2,599 euros. These countries are thus above the national average of 2,456 euros - above all the strong economic development of these locations, the high wage level and the innovative and future viability of the regions make them popular with many home buyers. The cheapest offers for single-family houses, on the other hand, can be found in the eastern German states of Saxony, Saxony-Anhalt and Thuringia, where the average price per square meter is between 1,156 and 1,399 euros. With 1,396 euros, the Saarland is also one of the less expensive locations for single-family houses. But even in these locations, the prices for real estate have risen! Since 2005, single-family houses in the aforementioned eastern German states have recorded an average increase in value of around 30 percent, in Saarland it has been 12 percent. The strongest growth was also achieved in Berlin, a country in the east of the republic, where the purchase prices for single-family houses have more than doubled since 2005 at 116 percent. For comparison: North Rhine-Westphalia, also the economic engine of the republic and with average prices of 2,215 euros per square meter close to the national average, recorded a growth of “only” 41.8 percent in the same period.
Even though the described trends of the south-north gradient and the east-west gap still exist in principle, the influencing factor of proximity to a metropolis is also largely responsible for the actual purchase price. Nationwide, home ownership in cities costs around 53 percent more than outside! When deciding which location you prefer for the purchase of your house, the various location factors can therefore be compared. Ultimately, your individual preferences should always be in the foreground, as the real estate agent Engel & Völkers Germany describes in the following section.
On average, 264,000 euros are spent in Germany on the purchase of residential property. However, the amount of living space that can be bought for this sum varies from location to location. An example: For this average sum, either a 35-square-meter apartment in the Munich district or a single-family house in the Thuringian Kyffhäuserkreis could be bought in 2018. With a living area of 309 square meters.
Even within one federal state there can be considerable differences: While in the Rhineland-Palatinate Westerwaldkreis, an average of just 2.9 net annual incomes are spent on the purchase of a 111 square meter property, the average in Koblenz, just a few kilometers away, is 7.1 net annual income. Wherever you specifically decide to buy a house, you should always evaluate based on the individual situation and your own wishes. How long is your commute? Where do friends and family live? How can you keep such distances short and at the same time buy a comfortable house with the desired location properties?
Real estate investing in Germany, whether it's for private or commercial use, can be a highly rewarding venture. We've been operating in the this real estate market for over 30 years, and have offered commercial brokerage services since 1988. Our specialist shops are staffed by advisors that are always on hand to help you find the perfect space, be it for business or personal investment. If you’re seeking real estate in Germany, then read on for valuable insight.
The residential real estate market in Germany, particularly the premium side, is currently performing very well. We only deal with high-end properties, and are perfectly placed to help you find your dream house for sale in Germany. The commercial sector is well suited for rental investments in particular, with office properties in high demand. If you're looking for a strong return on investment when you sell property in Germany, our teams can ensure you locate the right retail, office or industrial space for your portfolio.
The cities dominate the German residential markets. Berlin remains one of the highest-value areas, as does Munich. However, you'll find plenty of premium houses for sale in Germany out in the countryside too. If you're considering real estate investing, then high-end properties will offer you the greatest returns, especially in the current climate. We ensure that our portfolio contains only the very best property for sale in Germany, so you don't have to spend time sorting through lengthy lists of low-value prospects.
1) Buying and selling apartments
Choosing to buy an apartment in Germany, especially in a city, can be a solid investment. Whether you're planning on selling an apartment, living there yourself or renting, now is a great time for the German property market in general. Large exclusive residential complexes are of particularly high value at the moment,and lowering interest rates make this a good time to purchase a residential property too. Berlin is currently a great location for apartment sellers and renters; particularly Berlin-Mitte and Charlottenburg-Wilmersdorf where apartments are garnering high prices.
2) Buying and selling houses
Looking to buya house in Germany? Luxury homes are always in demand, especially in urban areas. Earlier this year, we reported that Munich saw the largest increase in value for detached and semi-detached properties inthe Oberföhring district. Stuttgart is also a prime location for upscale property. Our studies found that the sale value of mansions in this area rose dramatically last year. High-end houses are an excellent way to get an impressive return on investment given the current market trends.
3) Urban and rural properties
One thing to consider if you're looking at investing in real estate in Germany is whether to opt for a rural or urban location. While markets certainly make the most movement in cities and the surrounding areas, there are superb investments to be found in rural locales as well. The current rise in housing prices in urban centres makes it a much better climate for sellers. This is causing an investor trend of moving to second tier cities and more rural areas. Slightly more remote properties are likely to only increase in value as the urban markets stabilise.
We apply the same approach to our commercial portfolios in Germany as well. Current trends indicate that it's a great time to invest in a commercial German property, and demand for smaller retail and office spaces is set to increase. This means long-term rental demand is also on the rise. Commercial property investment requires different skills and approaches to residential lettings, which is why our agents know their local markets, be they in Germany or abroad. Ongoing training and analysis ensures our teams can help you with consultation and brokerage as well as buying and selling.
1) Industrial and logistics
As online retail and startups continue to take more of a share of the retail market overall, the demand for storage and logistic space also continues to grow. This means that warehouse space,especially if it's well connected to transport networks, is in demand. If you have an existing facility you wish to sell, then now is a good time. Our experienced team can take you through all the necessary steps. Conversely, if you're looking to buy commercial space as an online retailer or small company, we can help you find the right option for your business.
Also related to the startup boom and increase in online retail is the accompanying demand for office space. Location, however, is growing in importance. Smaller businesses and their employees are more focused than ever on the whereabouts of their workplace, as well as what amenities and cultural locations are within reach. Affluent regions are increasingly becoming the focus of investors for this reason, as well as the fact such areas tend to have lower competition intensity.
3) Retail properties
Traditional retail properties like shops and outlets are less of a secure investment in the current climate. While online retailers are driving demand for smaller, better-placed offices and logistical space, this is having a backlash on the demand for conventional retail properties in Germany. That said, an increase in sales of retail space is expected according to some sources, which means it's a potentially good climate if you're considering selling yours in order to diversify your investments or alter your existing portfolio.
At Engel &Völkers we pride ourselves on being able to offer transparent, concise and expert advice on real estate in Germany. Have a look at our property insights for inspiration and tips, or contactus today.