Frank­furt home prices keep on ris­ing

Financial Mirror (Cyprus) - - FRONT PAGE -

Prices for res­i­den­tial real es­tate in Frank­furt rose sig­nif­i­cantly dur­ing the first half of 2016, high­light­ing fig­ures pub­lished in the new half-year re­port by the city’s Land Valu­a­tion Com­mit­tee.

Acord­ing to the big­gest price rises were for apart­ments built since 2000, but ex­clud­ing new­builds. In this cat­e­gory, the Com­mit­tee reg­is­tered in­creases of 13%, with prices reach­ing EUR 4,740/sqm. Prices for older apart­ments con­structed be­fore 1950 were also sub­stan­tially higher, with the peak square me­tre price climb­ing to EUR 8,190.

Nor­dend and Os­tend, where the me­dian pur­chase price is EUR 4,940/sqm and the max­i­mum stands at EUR 7,640/sqm, saw the great­est sales vol­umes in this cat­e­gory, with 41 ob­jects chang­ing hands. Buy­ers were most in­ter­ested in units built between 1975 and 1990.

In­ter­est in new­builds, which trans­lated into 351 sales, has nar­rowed, whereby a ma­jor­ity of deals in­volved newly built con­do­mini­ums in Bock­en­heim, Hausen, Hed­dern­heim, Niederursel and Rodel­heim. Over­all, con­do­minium sales were down, as was the num­ber of trans­ac­tions in­volv­ing multi-fam­ily houses, which de­clined by 23% in com­par­i­son with the cor­re­spond­ing prior-year pe­riod. These falls are pri­mar­ily due to the un­will­ing­ness of own­ers to put their prop­er­ties up for sale.

The most ex­pen­sive dis­tricts were Os­tend, with prices of up to EUR 7,590/sqm, and the Europavier­tel, with prices of up to EUR 6,610/sqm. The most af­ford­able prices were reg­is­tered in Fechen­heim, were apart­ments cost at most EUR 3.340/sqm. The av­er­age price for a stan­dard new­build apart­ment across all dis­tricts amounted to EUR 4,460/sqm, a rise of 4% over H1 2015. In roughly a quar­ter of trans­ac­tions, buy­ers paid more than EUR 5,000/sqm.

Mean­while, re­ported that Sav­ills’ lat­est Live/Work In­dex shows that there have been some ma­jor changes in the com­bined cost of res­i­den­tial and of­fice rental per per­son per year across lead­ing world class cities. For ex­am­ple, the cost of liv­ing and work­ing in Lon­don have fallen by 11% since De­cem­ber 2015.

The In­dex bases its rank­ing on the to­tal ac­com­mo­da­tion costs for a start-up team of seven em­ploy­ees. A com­pany in Lon­don faces to­tal ac­com­mo­da­tion costs of $100,114 per per­son per year, whereas the fig­ure is $114,000 in New York. As a re­sult, New York top­pled Lon­don from its po­si­tion as the most ex­pen­sive city. Berlin, along with the In­dian city of Mum­bai, of­fers par­tic­u­larly af­ford­able ac­com­mo­da­tion costs. Newly founded com­pa­nies need to bud­get just $30,000 per per­son per year for res­i­den­tial and of­fice rentals in the Ger­many cap­i­tal.

Although Ger­many’s real es­tate agents have yet to re­port any no­tice­able in­crease in de­mand for res­i­den­tial prop­erty, many within the in­dus­try are cer­tain that de­mand from over­seas buy­ers in Berlin and Frank­furt, which is al­ready strong, will be given a fur­ther boost once the Brexit process gets un­der­way.

Ac­cord­ing to an­other re­port in Ei­nar Sk­jer­ven of the Sk­jer­ven Group views Brexit as, “one of the most sig­nif­i­cant pos­i­tive fac­tors for the Berlin mar­ket.” He ex­pects Lon­don’s start-up scene to turn to Berlin, and that this will fur­ther add to de­mand for res­i­den­tial real es­tate in the Ger­man cap­i­tal.

Ac­cord­ing to Ru­bina Real Es­tate, mem­bers of China’s mid­dle-classes are al­ready show­ing high lev­els of in­ter­est in Berlin apart­ments in the EUR 300,000 to EUR 500,000 cat­e­gory, a de­vel­op­ment that is likely to fuel fur­ther price surges. Real es­tate agents in the greater Frank­furt re­gion also be­lieve that it is highly likely that prices in the mid-mar­ket seg­ment will con­tinue to rise.

En­gel & Volk­ers re­vealed that a num­ber of Lon­don-based banks and com­pa­nies are plan­ning to move their head­quar­ters from Lon­don to Frank­furt. Due to the scarce sup­ply of of­fice space in Frank­furt’s top lo­ca­tions, prospec­tive tenants are al­ready ex­tend­ing their in­ter­est to fringe and pe­riph­eral dis­tricts.

New fig­ures pub­lished by Ham­burg’s Land Valu­a­tion Com­mit­tee show that sales of apart­ment build­ings and con­do­mini­ums in the port city to­talled more than EUR 3.6 bln eu­ros in 2015, an in­crease of more than 50% from 2014. The num­ber of trans­ac­tions reg­is­tered by the Com­mit­tee was also up, by 16% to 427, and rep­re­sented the high­est fig­ure since 2010. Ac­cord­ing

the in­crease in de­mand and mar­ket ac­tiv­ity have re­sulted in price rises, push­ing the square me­tre price up by 18% to a new high of EUR 2,485. The big­gest in­creases, in some cases of more than 30%, were reg­is­tered in fair to good lo­ca­tions. At EUR 2,479/sqm, prices in these lo­ca­tions have dou­bled since 2008. Ham­burg’s most ex­pen­sive neigh­bour­hoods are all in wa­ter­side lo­ca­tions: Har­veste­hude (EUR 7,207/sqm), Hafencity (EUR 6,784/sqm), Uh­len­horst (EUR 5,550/sqm) and Rotherbaum (EUR 5,321/sqm).

Mean­while, a re­cent TLG Im­mo­bilien study into prop­erty mar­kets in Eastern Ger­many saw at­trac­tive yields from com­mer­cial real es­tate in­vest­ments in the re­gion’s B cities, Leipzig, Dres­den, Er­furt, Ro­s­tock and Pots­dam.

Fi­nally, of­fice rents in Berlin have risen as the amount of avail­able space has con­tracted. A new bul­wiengesa study, com­mis­sioned by CA Immo, TLG Im­mo­bilien and Union In­vest­ment, has re­vealed that the num­ber of of­fice work­ers in the city is set to in­crease by 62,000, or 8.7%, over the next four years. This will lead to de­mand for an ad­di­tional 1.6 mil­lion square me­tres of of­fice space. Only 4% of Berlin’s of­fice space is cur­rently va­cant.

The av­er­age rent rose by 7% to EUR 15.60/sqm. The high prices are a dis­ad­van­tage for com­pa­nies cur­rently on the look­out for space as they have less money avail­able for per­son­nel and busi­ness de­vel­op­ment. This is es­pe­cially true for com­pa­nies in the TMT (tech­nol­ogy, me­dia and telecom­mu­ni­ca­tions) sec­tor, who were re­spon­si­ble for around a third of of­fice space take up in Berlin dur­ing H1 2016, ac­cord­ing to CBRE.

The short­age of of­fice space is the re­sult of sub­dued de­vel­op­ment ac­tiv­ity. New de­vel­op­ments are planned, in­clud­ing the con­struc­tion of the 140-me­tre East Side Tower of­fice scheme at Ost­bahn­hof by a joint ven­ture between OVG Real Es­tate and Freo, and a cubi­form of­fice de­vel­op­ment to the south of Berlin’s main rail­way sta­tion from CA Immo.

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