German residential market: Upward trend despite corona-virus

Price slumps, falling numbers of buyers and soaring vacancy rates? There has been much speculation to date about the impact of the coronavirus crisis on the real estate market. Engel & Völkers has analysed the market data for Germany’s seven largest cities in the period from March to May 2020: Berlin, Hamburg, Munich, Frankfurt, Cologne, Düsseldorf and Stuttgart. The findings: “Due to the restrictions in place, buyer and investor activity did slightly decrease between the beginning of March and the end of May. Since restrictions have begun to be eased however, activity has returned to pre-crisis levels and in some cases even exceeded them,” says Kai Enders, Member of the Board of the Engel & Völkers AG, adding: “Real estate prices have remained stable over the past weeks. For the year as a whole, we are anticipating a slight increase in prices.”

Hamburg - Real estate market in times of COVID-19: This is how the prices for residential real estate in Germany's top 7 cities develop.


The general mood of uncertainty caused by the pandemic has hardly affected the behaviour of property owners in recent months. Engel & Völkers did not record any significant drop in the number of requests for valuations or in the number of properties for sale in the German capital. “We received an extremely large number of enquiries,” reports Christian von Gottberg, Managing Director of Engel & Völkers Market Center Berlin Hohenzollerndamm. The number of actual viewing appointments only slightly decreased, while virtual viewings increased by 100 percent. Financing constraints meant that around 44 percent of deals were delayed in closing. “Nonetheless, we haven’t seen any deals fall through as a result of the coronavirus,” reveals Günter Th. Fischer, Managing Director of the Engel & Völkers Market Center Berlin-Mitte. Accordingly, forecasts for the future are optimistic. “Our revenues from sales remained stable, even at the height of the crisis. Now that lockdown is easing, sellers are also returning in greater numbers,” says Christian von Gottberg. “Prices remain at a high level. In our view, this is not set to change any time soon,” Günter Th. Fischer adds. Houses and apartments with a garden, terrace or roof terrace are currently in particularly high demand. In prime locations such as Berlin-Dahlem, such properties can sell for up to 10 million euros. Freehold apartments at prime addresses in the Berlin-Mitte district are currently commanding prices of up to 21,000 euros per square metre.


Property prices in the north German city of Hamburg were already very high in the period leading up to the pandemic, and remained stable during the period under review. “There is a strong excess demand on Hamburg’s real estate market, with an extremely limited availability of properties. This general situation has meant that sale and rental deals were still closed at very high prices in the city’s prime locations, even during the coronavirus outbreak,” says Lena Soyke, Managing Director of Engel & Völkers Market Center Hamburg Elbe. Mansions on the Alster lake and the banks of the River Elbe continue to command sale prices of 10 million euros. Freehold apartments in upmarket neighbourhoods such as Uhlenhorst, Rotherbaum, Harvestehude and HafenCity are selling for top prices per square metre of 20,000 euros. Truly exceptional homes such as freehold apartments in the Elbphilharmonie concert hall have a current market value of up to 30,000 euros per square metre. “Social distancing has seen many people relocate their day-to-day life and workplace to their own homes. As soon as our usual freedom of movement is reduced, we see property features such as a study, balcony or garden become more important for clients,” says Lena Soyke. Philip Bonhoeffer, Managing Partner of E+V Hamburg Immobilien GmbH, also reiterates the shift in search criteria and priorities that has resulted from the coronavirus crisis. As well as adding: “Over the last three months, prospective clients have been very open-minded when it comes to digital technologies. They’ve accepted virtual viewing appointments with great interest.” While the number of real-life viewings in the city dropped just slightly (-10 percent) during the period under review, the number of virtual viewings increased by a notable 360 percent.


Bavaria’s state capital is home to the most expensive real estate in Germany. Some buyers and interested clients showed restraint here over the last three months. “There was a certain amount of uncertainty and a ‘wait-and-see’ attitude in the premium segment. Some clients opted to postpone their real estate transactions, which is why we’re anticipating ongoing catch-up effects moving into the third and fourth quarters,” reveals Florian Freytag-Gross, Managing Director of EuV Residential Lizenzholding GmbH. He continues: “With the easing of restriction measures though, we’re already seeing a positive turnaround. Demand has picked up again and prices are stable.” Between March and May, property prices in Munich remained consistently high. In very good locations such as Altstadt-Lehel, Alt-Bogenhausen, Herzogpark and Schwabing, mansions changed hands for as much as 20 million euros. Freehold apartments in the same neighbourhoods reached top prices per square metre of up to 20,000 euros. Despite very strict measures in the state of Bavaria, Engel & Völkers real estate agents still managed to conduct virtual viewings and close sales deals over the last three months. “So far, the coronavirus crisis has not brought about the price collapse predicted in many places. Munich is sure to remain a desirable location for private residences and investments,” says Florian Freytag-Gross.


Prices remained stable in all districts of Frankfurt during the coronavirus pandemic. Strong demand and limited supply continue to impact on the city’s property market. “Although the number of requests for viewings in person decreased over recent months, the quality of client enquiries did in fact increase. Interested clients showed a far clearer intention to buy than before the coronavirus outbreak, and more deals were closed than in the same period last year,” says David Schmitt, Managing Partner of Engel & Völkers Frankfurt. Engel & Völkers is registering increased demand in the premium segment in particular. In prime locations, which include Diplomatenviertel, Holzhausenviertel and Westend-Nord, detached and semi-detached homes commanded prices of up to 4.8 million euros. For exclusive freehold apartments, sales prices of up to 14,000 euros per square metre were recorded. Domestic buyers dominate Frankfurt’s property market, accounting for 90 percent of transactions. “We’re noticing that our client base is increasingly looking for family homes and new luxury developments with their own gardens. These are often detached, semi-detached or terraced properties. Large apartments with a garden also remain in strong demand,” says David Schmitt.


Growing demand and limited availability continue to have a strong impact on Cologne’s real estate market. “Although viewings have only been possible to a limited extent since the coronavirus restrictions were introduced, we’ve still been able to generate deals thanks to close contact with our clients, fast-paced listings online, and virtual viewings. In recent weeks we’ve seen that digital offers are becoming increasingly important, even though they can’t replace real-life viewings in the short term,” says Florian Freytag-Gross, Managing Director of
Engel & Völkers Immobilien Deutschland GmbH. The majority of search clients are German citizens at present, accounting for around 95 percent of transactions. They are showing particular interest in real estate in the premium segment, as well as in freehold apartments as a capital investment. In the city’s most exclusive districts, which include Marienburg, Lindenthal and Rodenkirchen, exclusive mansions sold for top prices of up to 10 million euros. Meanwhile, premium freehold apartments commanded top prices per square metre of up to 10,000 euros. Florian Freytag-Gross expects prices to remain stable in the future: “Up until now, the level of demand and the desire to own a home of one’s own are still clearly exceeding the scarce availability of properties. So we’re not seeing any significant impact from the pandemic on the real estate market.”


During the course of the coronavirus crisis, real estate transactions in Düsseldorf were initially delayed with the outbreak of the coronavirus, for example due to difficulties obtaining important bank documents and conducting viewing appointments. Interested clients were keen to view properties in person, especially in the premium segment. The situation has now changed, since the easing of restrictions: “The market is livelier than before, and demand is very high,” reveals Birgit Pfeiffer, Managing Director of Engel & Völkers Düsseldorf. Demand has risen slightly overall, which is why high prices can still be realised. In the city’s best locations, houses at prime addresses are selling for up to 8 million euros. Top asking prices for freehold apartments are 15,000 euros per square metre. There is still a slight drop in the number of enquiries from international clients. They account for 15 percent of the client base, while 85 percent of buyers come from Germany. Properties in good locations with the potential to appreciate in value are particularly sought-after at the moment. Birgit Pfeiffer comments on this high level of interest in real estate as follows: “Properties are homes that represent safe havens – even in turbulent times. But at the same time, they’re an investment in the future that might even bring financial returns. The resale of real estate without any financial losses is also a key motivational factor in our consultations at the moment.”


Demand for residential property in the southern German city of Stuttgart has remained steady, even during the restrictions imposed as a result of coronavirus. The market continues to be dominated by national buyers looking for properties for their own private occupancy. “Our real estate agents were able to conduct viewing appointments while adhering to safety measures, and to bring about deals,” says Stephan-Andreas Philipp, Managing Director of Engel & Völkers Stuttgart-Mitte. Prime locations in Baden-Württemberg’s state capital include the Killesberg, Gänsheide and Bopser, as well as the neighbourhoods of Degerloch and Sillenbuch situated higher above the city. Houses here with large plots of land are particularly sought-after, as are family-friendly apartments comprising four to five rooms. “While demand dipped slightly over recent months, the quality of client enquiries went up, both in terms of rentals and sales,” reveals Thilo Preller, Managing Director of
Engel & Völkers Stuttgart Feuerbach. There is a strong excess demand for residential real estate in Stuttgart, which assured a positive development in prices despite the coronavirus crisis. In very good locations, detached properties can sell for up to 4.5 million euros. Freehold apartments in these locations command a top price per square metre of 10,000 euros.

Outlook: Pandemic reinforces desire for a safe home and stable investment 

The analysis by Engel & Völkers shows that the coronavirus has not impacted people’s basic residential needs. On the contrary: “People have grown more acutely aware of just how important it is to have somewhere pleasant to live,” says Kai Enders. With volatile stock markets and a lack of investment alternatives, coupled with favourable mortgage terms, buyers and investors will be looking to invest in crisis-proof properties in the long term. This is reason enough for Kai Enders to look ahead to the future with optimism: “In times of crisis, investors traditionally look for alternatives with potential for high returns. For private buyers, on the other hand, the desire for a sense of security and retreat in a home is manifest. Real estate in prime locations in Germany’s top 7 cities is therefore proving to be an ideal investment.”

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