Demand for vacation homes in Germany remains high

Demand for holiday properties and vacation homes in Germany’s holiday destinations remains high. The level of interest exceeds the availability of properties, especially in prime locations. This is documented in the “Market Report for Holiday Properties in Germany 2019”, published by Engel & Völkers. The report examines price trends in 26 locations on the North Sea and Baltic Sea, in the Alpine region, on Lake Constance, in the Allgäu region and the so-called “Five Lakes” region around Starnberg. Compared to the previous year, Engel & Völkers registered a price rise for holiday apartments in very good locations in 18 of the 26 locations surveyed. A look at the market for holiday homes reveals that prices in the best locations have stabilised at a high level.

Top prices on island of Sylt and in “Five Lakes” region

Three locations commanded top prices for freehold apartments in premium locations at the beginning of 2019, with a peak value of 20,000 euros per square metre: Sylt, Norderney and Tegernsee. These high prices are often driven by the very scarce supply of available properties. Due to the limited scope for new building developments in waterfront locations, especially on the islands in the North and Baltic Sea, a significant excess demand has emerged in recent years. Properties in Juist, Langeoog and Borkum also registered sharp price rises. “Holiday homes remain an attractive investment for buyers and rentability is key here,” said Kai Enders, Member of the Board of Engel & Völkers AG.

The popular North Sea island of Sylt retains its top position in the ranking of top prices in the holiday home segment. At 25 million euros, the previous year’s peak sale price has been exceeded by no less than 8 million euros. New to the ranking, the so-called “Five Lakes” region is also very high up with a sale price of 20 million euros for a particularly exceptional holiday property. Vacation  homes with water frontages on the largest lakes in southern Germany generally commanded high prices. The majority of buyers are from Munich and are fulfilling their dream of owning a second home on one of the Bavarian lakes. A particularly high proportion of buyers from the German state of North Rhine-Westphalia are active on the East Frisian Islands, accounting for 45 percent of activity.

Outlook: Vacation homes in Germany set to remain a sound investment

The excess demand on Germany’s holiday property market will continue into the future due to the limited availability of properties. According to Engel & Völkers, further price increases can be expected in some regions. After the sharp jumps in prices in recent years, prices are now levelling out at a high level in top holiday destinations. “Sale prices may be rising all the time but investments in holiday homes still remain an interesting prospect. Germany continues to be a popular holiday destination for both domestic and foreign tourists and the number of annual overnight stays is on the rise. This trend will continue to have a positive effect on the occupancy rate of high-quality rental properties in prime locations,” said Kai Enders.