Hamburg property market growing despite Covid-19

Hamburg remains one of the most sought-after real estate locations in Germany, even during the Covid-19 pandemic. Known as the “Gateway to the World”, the city draws private buyers and capital investors alike, attracted by the potential for appreciation in value and the high quality of life it has to offer. “The market for houses and apartments has proven resilient to the pandemic: The excess demand for residential property remains constant, and prices continue to rise as a result – including in premium locations along the River Elbe and on the Alster Lake”, says Philip Bonhoeffer, Managing Partner of E+V Hamburg Immobilien GmbH. The average asking price for detached and semi-detached houses records a 6.3 percent increase from July 1st to September 30th 2020, compared with the same period last year in 2019. On the market for freehold apartments, average prices reached 5,747 euros per square metre, marking a 13.9 percent rise over the third quarter of 2019. “Residential property in Hamburg remains in limited supply, and there is a steady rise in prices as a result. The pandemic will not have any effect on this moving forward. The lack of alternative investment opportunities and the current low rate of interest mean that real estate will continue to be a sound and secure investment”, says Carolina Geber, Team Leader of Elbvororte (“Elbe Suburbs“) at the Engel & Völkers Market Center Hamburg Elbe.

House market: Waterfront addresses remain a high-price evergreen

The average asking price for detached and semi-detached houses in Hamburg was 853,052 euros in the third quarter of 2020. In traditional premium locations on the waterfront, like the River Elbe such as Blankenese, Othmarschen and Nienstedten, or next to the Alster Lake in neigbourhoods like Harvestehude, Uhlenhorst and Eppendorf, houses are sold for prices up to 15 million euros. “A home directly on the water remains the most desirable type of residential location in the city – be it a traditional Hanseatic-style mansion, an old residence with stucco decoration and alcoves, or a contemporary new build. This is reflected in the consistently high prices”, says Philip Bonhoeffer. “But the pandemic has meant that attention is increasingly shifting to locations on the periphery of the city and in the surrounding countryside that offer direct and convenient transport links into Hamburg”, he continues. Average locations such as Eidelstedt, Niendorf and Bramfeld now reach up to 1.13 million euros.

Apartment market: Prices per square metre have risen sharply for new builds

Asking prices for freehold apartments also continue to rise despite the current situation. In the third quarter of 2020, the price per square metre for existing properties was 5,747 euros. Very good locations such as Harvestehude, Rotherbaum, Uhlenhorst and Hafencity commanded top prices of up to 25,000 euros per square metre. Good locations such as Eimsbüttel and Neustadt fetched top prices per square metre of 11,000 euros. “Although Covid is fuelling a trend towards more rural residential areas, the high excess demand for apartments for smaller households in central locations remains nonetheless, and is even slightly on the rise. Due to the limited availability and current price trends, we anticipate that the price level for freehold apartments will remain steady, even during this pandemic”, says Carolina Geber. Locations such as Niendorf, Rissen and Tonndorf are witnessing particularly high price rises. They are set to hold attractive investment opportunities for some time to come, since the potential for value appreciation has not yet been exhausted in these areas. The sustained demand for housing is also noticeably reflected in the development of asking prices for new developments. Although Hamburg is reacting to this acute need with a high level of new construction activity, the ongoing excess demand remains and is leading to a sharp increase in prices for such new builds as a result: The asking price per square metre rose to 7,497 euros in the third quarter of 2020, marking an increase of 22.7 percent over the same period last year.

Outlook: High level of demand in locations on the city outskirts

In 2020, the demand for housing in the region surrounding Hamburg will be higher than ever before. The pandemic is leading to a change in the search criteria and demands on living space. There is a high level of interest in homes with large grounds and living interiors, with additional space for a home office: “Covid has meant that more and more people are looking for land and a greater amount of space. Detached properties and large interiors are witnessing strong interest. Listings that meet these criteria are rare in Hamburg’s city centre, with attention shifting towards peripheral areas of the city instead. Prices are set to rise in the medium to long term in the immediate suburbs”, says Jan Witte, Team Leader City at Engel & Völkers Market Center Hamburg Elbe, adding: “Areas on Hamburg’s outskirts are well connected to the city centre and economically prosperous, making them all the more attractive“. Locations that were considered basic a few years ago are now very much in demand among prospective clients. Consequently, districts such as Rahlstedt, Billstedt are now seeing asking prices of 800,000 euros for detached and semi-detached properties.