Stuttgart: Excess demand sends prices high for residential property

Stuttgart, the capital of the German state of Baden-Württemberg, is one of the world’s leading centres of production and innovation. Various globally renowned companies are based in the city and its greater metropolitan region, as are esteemed universities and technical colleges. For investors, cities like Stuttgart offer a high degree of security, as the sustained level of demand for residential property in such a location means that prices are highly probable to rise in the long term. “During the Covid-19 pandemic we saw a steady level of demand and an increase in transaction volume. Buyers especially appreciate the natural beauty of Stuttgart’s surrounding region, as well as its excellent infrastructure and transport links,” says Stephan-Andreas Philipp, Managing Director of Engel & Völkers Stuttgart-Mitte.

Hamburg - (Image source: Engel & Völkers Stuttgart)

Particularly desirable: Detached and semi-detached properties in green environs

Prices for residential property in Stuttgart have been at a steady high for many years now. The average asking price for detached and semi-detached houses was 1.1 million euros in the first half of 2021. The transaction volume in this property category increased to 432 million euros in 2020. This marks a 9 percent increase over the previous year. The most sought-after neighbourhoods for detached and semi-detached houses include Killesberg, Gänsheide, Bopser, as well as the greener neighbourhoods of Degerloch and Sillenbuch. In Stuttgart’s absolute prime locations, buyers pay between 1.6 and 5 million euros for a detached or semi-detached house – while homes in good locations sell for 1.2 to 3.5 million euros. “Many of our clients are tending to gravitate towards properties with a garden or terrace at the moment. Good accessibility is also very important to them,” says Stephan-Andreas Philipp.

On the rise: Prices for freehold apartments

The average asking price for existing apartments on the market was around 5,200 euros per square metre in the first half of 2021. In the same period, buyers paid an average of 8,200 euros per square metre for newly built apartments. Freehold apartments in very good locations command top prices per square metre of up to 16,000 euros. The transaction volume for freehold apartments rose to 1.26 billion euros in 2020, representing a 6.4 percent increase over the previous year. Sought-after locations for freehold apartments include districts such as Mitte, Stuttgart West, the Lehen and Heusteig neighbourhoods in the south of the city, in addition to the Degerloch district and the area around the Kurpark in the historic district of Bad Cannstatt. In prime locations such as Killesberg, Gänsheide, Bopser, Frauenkopf, Sonnenberg and Birkenäcker, top prices per square metre can reach as much as 13,000 euros. “The excess demand for living space in popular neighbourhoods can only be counterbalanced with increased new construction. The Rosenstein quarter near the city centre, for example, is a newly planned district that is currently taking shape as part of major reconstruction work for the new Stuttgart 21 train station,” Stephan-Andreas Philipp remarks.

Outlook: Wider Stuttgart region enjoys increasing level of demand

The area surrounding Stuttgart is also benefiting from the high buyer demand. It is predominantly young families looking for a moderately priced home. “Demand for family-friendly properties is increasing, particularly in the mid-priced segment. Peripheral locations and suburbs are reaping the advantages of this development,” says Thilo Preller, Managing Director of Engel & Völkers Stuttgart Feuerbach. Münster, Wangen and Zuffenhausen are examples of municipalities in the greater Stuttgart area that fall into this category and currently offer potential for appreciation in value.  

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