Hamburg’s property market continues to gain momentum

Hamburg is one of the most popular residential locations in Germany, thanks to its good infrastructure, as well as the attractive opportunities the city has to offer in terms of employment, education and recreation. In 2019, the average asking price for detached properties rose to 747,240 euros (+10.9 percent). The market for freehold apartments also continues to witness positive growth. Apartments in the Hanseatic city are offered for sale for an average of 5,281 euros per square metre. “Strong buyer demand is leading to price rises across all market segments. In addition to premium locations along the River Elbe and on the Alster Lake, good and average locations will also profit from this trend in the long term,” says Kerstin Heyng, Team Leader for the Elbe suburbs at the Engel & Völkers Market Center Elbe. 

Hamburg - This modern apartment with views of the River Elbe is located in the HafenCity quarter and boasts premium amenities. It is currently on sale for 1.78 million euros. (Image source: Engel & Völkers Hamburg)

Market for detached homes: Excess demand ensuring peak sales 

In terms of the overall sum of sale prices paid for all real estate transactions in 2018, it is evident that Hamburg, at 1.8 billion euros, is the clear frontrunner for transaction volume ahead of other cities such as Berlin (1.3 billion euros) and Munich (1.3 billion euros). “Grand old mansions and brand-new contemporary homes with waterfront views are equally sought after in Hamburg. Prices for this calibre of property in the Elbe suburbs or next to the Alster Lake can reach up to 8 million euros,” Kerstin Heyng adds. Blankenese, Nienstedten, Harvestehude and Uhlenhorst are still among the most expensive and upmarket neighbourhoods. Good locations such as Eppendorf, Eimsbüttel and Winterhude are registering top prices of 4 million euros. 

Market for apartments: Potential for new construction not yet exhausted 

Freehold apartments in very good locations, such as in the HafenCity quarter, are commanding prices of up to 15,000 euros per square metre. Good locations such as Ottensen are registering prices per square metre of up to 7,500 euros. By contrast, apartments in average locations like St. Pauli and Sternschanze cost up to 6,500 euros per square metre. “A high excess in demand persists, due to the shrinking size of individual households and the increased need for housing in central areas of the city. Bearing in mind the limited availability of real estate and the strong upward trend in property prices, we anticipate that prices will continue rising moderately in the future,” says Jan Witte, Team Leader for Hamburg City at the Engel & Völkers Market Center Elbe. Compared with all other locations in Germany, Hamburg is best able to meet the high level of demand with new construction activity. However, new residential developments realised to date still cannot meet the sheer number of new homes required. Experts at Engel & Völkers are currently reporting a deficit around 10,900 apartments. This is based on a scenario whereby construction activity continues at the current rate – resulting in just 52,000 new apartments being built by 2025, as opposed to the 62,900 completed new homes that would be necessary. 

Outlook: Basic and average locations offer favourably priced entry options 

Demand for residential property for personal use and as a capital investment will continue to rise throughout Hamburg in 2020. The high price bracket in prime locations means that districts such as Lokstedt, Eilbek and Barmbek Süd, which until just a few years ago were considered to be rather unremarkable locations, will increasingly come into the focus of prospective buyers. Real estate in the greater Hamburg area also offers attractive investment opportunities, as the potential for appreciation in property prices here has not yet been exhausted. 

Other trends relating to purchase power and property prices in German cities can be found (in German) in the “Engel & Völkers Market Report for Residential Property in Germany 2019/2020”. 

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