Frankfurt home prices keep on rising
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.