40
GERMANY
ISSUE
I
RESIDENTIAL PROPERTIES
Risk
Return (% pa)
10
9
8
7
6
5
4
3
2
2,5
3
3,5
4
4,5
5
“smaller” big cities – because in addition
to the top seven, there are 73 other cit-
ies in the country with a population of at
least 100,000. These medium-sized cities
offer specific advantages of their own. The
market is subject to less price fluctuation,
and properties in excellent locations that
offer a quality comparable to that of large
cities can usually be acquired for an ap-
preciably better price. Although the rents
are frequently well below the levels seen
in the seven major cities, the smaller cities
generally offer higher returns at compara-
I
nvestors are still interested in German
(residential) real estate as Germany
continues to be regarded as a safe hav-
en regarding real estate investments. For-
eign and German investors tend to put
at least half of their total registered real
estate investments in the seven big prop-
erty hubs of Berlin, Cologne, Düsseldorf,
Frankfurt am Main, Hamburg, Munich
and Stuttgart. Thanks to its transparency
and volatility levels which remain low, the
real estate market in these cities ensures a
high degree of reliability when it comes to
Will Medium-sized Cities Soon
Overtake Major Cities?
Demand for residential real estate is particularly high in Germany. Major cities barely
offer any profitable investment opportunities nowadays. However there are still alternatives:
In German B cities attractive returns can still be generated with reasonable risk levels.
planning. In view of the extremely short
supply, however, investors will find that
the market will remain persistent and
strained in 2017 – despite higher levels
of construction activity. This means that
prices on the market will remain above
average at low entry-level returns. While
returns of more than 5% are still feasible
in Cologne, potential returns in Munich
are only 3.2% on average.
This makes the search for real estate
investments tougher this year, and forces
investors to broaden their scope to include
The chart compares the average returns that
can be generated in the respective markets to
the specific investment risk.
A simple trend line was calculated on the basis
of the analysed medium-sized cities with a
population of at least 100,000. For each city
featured, the difference between the return
and the average return for the respective risk
can be calculated. In general, the cities above
the trend line offer above-average returns in
relation to their specific risk, while returns are
below-average for cities below the line.
RISK-RETURN PROFILE
FOR RESIDENTIAL REAL ESTATE AT WÜEST PARTNER
Note: Returns correspond to the average gross returns in
the respective cities. Figures include both good properties
in average to prime locations as well as inferior properties.
The actual returns may deviate from the stated returns by
up to 200 basis points in the respective cities.
Source: Wüest Partner Deutschland
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Berlin
Saarbrücken
■
■
Frankfurt/Main
■
Wuppertal
■
Coblenz
Brunswik
■
■
Kiel
Lübeck
■
■
Paderborn
■
Würzburg
■
Erlangen
■
Regensburg
■
Karlsruhe
■
Bonn
■
Ulm
■
Dresden
Potsdam
■
■■
■
Hamburg
■
Stuttgart
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Düsseldorf
1
2
1 2
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Munich
■
Cologne