Market overview

Market Watch German Residential Real Estate

A market overview

A market overview

Germany continues to establish its position as Europe’s safe haven for capital. The country boasts four of the 2018 top six leading European cities for overall investment and development prospects: Berlin, Frankfurt, Munich and Hamburg. In recent years, Germany’s residential real estate prices have been on the rise.

Industry leaders confirm that the country’s strong economic situation has and continues to sustain growth. In 2017, Germany’s GDP growth reached a six-year high of 2.2%. The unemployment rate also dropped to 3.6% – the lowest level in 20 years.

“Significant residential real estate growth in German prime locations. Industry experts expect this trend to continue for years to come.” The German Institute of Urban Affairs.

Price Development [2014-2017]

Berlin 33%
Frankfurt 29%
Munich 18%
Hamburg 24%

Price per square meteter [H1 2018]

40-80 sq 80-120 sq
Berlin 4.012,00 4.941,00
Frankfurt 5.263,00 5.505,00
Munich 7.302,00 7.441,00
Hamburg 4.321,00 4.816,00

Berlin is Germany’s most populous urban area with more than 3.5 million inhabitants. The city’s growing reputation as Europe’s technology, media and startup-hub continues to boost the residential property sector.

Yet, compared to other European capitals, property prices are less expensive. Berlin’s property is 2-3 times less expensive than in Paris, and up to 5 times less expensive than London in comparable central locations.

Berlin benefits from a rapidly growing population of young, well-educated residents and vigorous business expansion. This growth continues to drive a property development boom in prime locations. Experts widely see the boom as sustainable, since there is no slowdown in sight for the city’s steady stream of young residents and businesses. 

In 2016, Berlin’s population growth hit over 60,000, up from the city’s annual average of 45,000 (from 2011 to 2015). The growth in 2016 was the strongest since Reunification. Even the almost 11,000 housing units built in 2016 were still not enough to meet demand. Berlin currently has an annual requirement of more than 20,000 residential units. Taking into account the excess demand over the past few years, the city has a housing shortage of 80,000 units.

All figures from Immowelt trend indicator of property prices.

For more information about real estate market development in Berlin, you may check out our website:

Apartment price development

2017 11%
2016 9%
2015 10%

3.5m Population

19k IPC**

100 House Shortage*

Apartment price development

2017 15%
2016 12%
2015 0%

0.7m Population

21k IPC**

64 House Shortage*

“The biggest winner of Brexit will be Germany and Frankfurt.”

Home to the European Central Bank, Frankfurt is the financial and commercial heart of Germany. The city is a sought-after destination for businesses and investors alike.

Besides banking, the region around Frankfurt is home to large insurance, pharma and law companies. The city also has many well-known, major trade fairs. The Frankfurt Motor Show is the largest motor show in the world. Likewise, the Frankfurt Book Fair is also the largest in the world.

Frankfurt already sees tangible benefits from the United Kingdom’s decision to leave the European Union (EU). Some international banks, like Standard Chartered, Morgan Stanley, and Nomura, will base their EU headquarters in the city. Others, like Citi and Deutsche Bank, plan to beef up their operations there. The Association of Foreign Banks expects that Brexit will create 3,000 to 5,000 jobs in Frankfurt over the next two years.

Frankfurt’s population is also rapidly on the rise. The city’s population was 700,000 in 2017 and will likely reach over 800,000 by 2027.

The momentum will intensify Germany’s housing shortage and drive demand for high-end family homes in particular. In 2016, the city had 3,500 new homes. This number is well below the current demand of 6,000 units per year.Housing prices and rent continue to rise.

Even before Brexit, investors had pegged Frankfurt as Europe’s next buy-to-let hotspot. The city is the place for a residential real estate buy-to-let purchase in 2018. Many believe that Frankfurt is in the early stages of a “Londonesque” property boom and that the growth has only just begun.


For more information about real estate market development in Frankfurt, you may check out our website:

“High work-related immigration, low interest rates, and weak construction supply are driving demand and house prices in Germany. This applies especially to the German prime locations Berlin, Frankfurt, Munich and Hamburg.”

– FAZ Real Estate Investment Research

Germany’s third largest city is the capital of Bavaria. Munich is home to many major universities, museums and architectural attractions. The city is also well-known to offer a high quality of life. In 2018, the city ranked as one of the highest in the world (3/230) and highest among major German cities in Mercer’s 2018 Quality of Living Index.

Like Frankfurt and Berlin, Munich’s residential real estate market continues to grow. Between 2011 and 2016, there were 6,700 new housing units built per year. The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) estimated demand at 10,500 units in 2016. To absorb excess demand from previous years, Munich needs to build 20,000 units per year.

To accommodate growth, construction activity continues to shift from the city center towards the outskirts.

PWC’s report on Emerging Trends in Real Estate: Europe 2018 notes that, “prime land in Munich is already built on, so we are building in the areas in the next tier down. We see rents rising there as well. Our land bank there contains a lot of residential, and we have changed our strategy to build that too.”


For more information about real estate market development in Munich, you may check out our website:

Apartment price development

2017 4%
2016 10%
2015 3%

1.5m Population

26k IPC**

72 House Shortage*

Apartment price development

2017 4%
2016 12%
2015 6%

1.8m Population

24k IPC**

75 House Shortage*

Hamburg is Germany’s second largest city. Known as the  “gateway to the world,” the city is also home to Europe’s third largest port.

Hamburg is also a major tourist destination. In 2015, UNESCO declared Speicherstadt a World Heritage Site. The city also has a vibrant economy independent from tourism. Small and medium-sized enterprises flourish, and the city also has strong international trade and business services sectors.

As for the city’s residential real estate, prices are already sky-high. Even so, construction activity is well below demand. In 2016, Hamburg saw 7,050 housing units completed. That’s less than half of the 15,000 homes per year that JLL estimates that the city needs. In an effort to meet demand, the city recently set a new-build target of 10,000 homes per year.


For more information about real estate market development in Hamburg, you may check out our website:

Financial figures come from: Euro Journal 2017, Immowelt rent and price figures
* The higher the value, the higher the shortage based on Empirica Research Institute calculation
** Income Per Capita
***Residential real estate overview

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