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News Release


Sale prices continue to show high growth rates – slowdown in rental price rises in the rental markets - Jones Lang LaSalle updates its Residential City Profiles

​Press release including charts [PDF]

Frankfurt, 20 February 2014 – The rises in rents and sale prices continued to drift apart in the second half of 2013 in the eight cities investigated by Jones Lang LaSalle*. Whilst rental growth slowed down, prices for condominiums continued their rise after the first six months.
The biggest annual rise in rents** of 7% to 9% were recorded in Stuttgart, Berlin and Munich. In Cologne and Leipzig, prices increased by 5% and in Frankfurt and Düsseldorf, growth of 3% and 4% respectively was registered. Rents in Hamburg levelled off.
Year-on-year, sale prices for condominiums** in some cities increased almost three times more than rents. In Leipzig, Düsseldorf, Stuttgart and Cologne, prices rose by between 16% and 19% and by 12% in Frankfurt and Munich. The growth rate only remained in single digits in Berlin and Hamburg, at 9% and 6% respectively.
“In the rental segment, there was a slight cool-down in the price rise in the second half of the year, to reach a level last seen in 2010. Following some very high rental price rises in, for example, Hamburg, the potential for further rental price rises in some cities and submarkets would now appear to have been exhausted”, according to Andrew M. Groom, Jones Lang LaSalle’s Head of Valuation & Transaction Advisory Germany. And further: “In the condominium market, low interest rates continue to drive demand and, at the same time, there are also signs of slowdown in some submarkets – first and foremost due to the very high price rises (in some cases by 50% plus) seen over the past three years. The sharp rise in rents and sale prices in the most important economic centres now appears to be fuelling significant price shifts in smaller cities such as Kiel and Nuremberg. These locations will continue to see strong rental and sale price rises in 2014.”

An overview of the results of the investigations for the individual cities:

Munich enjoys the highest rental and sale price rises
The upward trend in rents continued in the second half of the year in Munich, undisputedly the most expensive of the housing markets investigated. Asking rents reached a new high of €15.00 per sqm p.m. which, at +8.5%, is the highest rental price rise year-on-year. The gap to other housing markets also widened. Rental growth in Berlin slowed down between the first and second halves of the year; however, year-on-year the 7.9% increase is the second highest of the eight cities investigated, and asking rents increased to €8.20 per sqm p.m. “In view of the sustained strong demand, we expect to see a further rise in rents in the German capital in 2014. It is not only the central locations which have seen prices rise, an increasing number of the lower priced districts such as Marzahn and Spandau are following suit. Growth rates in the case of new lettings will fall slightly over the medium-term, as the rise in household incomes fails to keep pace with rental trends”, explains Roman Heidrich, Jones Lang LaSalle’s Team Leader in Residential Valuation Advisory Berlin. In addition to Berlin and Munich, Stuttgart also registered one of the strongest rental price rises in 2013. Year-on-year, rents in the state capital of Baden-Württemberg have increased by 6.6% to €10.95 per sqm p.m. This means that Stuttgart has overtaken Hamburg to become the third most expensive rental apartment market. Hamburg was the first major city to record sharply rising rents, with 40% of the rise recorded between early 2007 and 2013. The Hanseatic City is now the first to experience a levelling off of rents. Asking rents have remained stable at €10.70 per sqm p.m. for the third half year in a row.
In Frankfurt and Düsseldorf, there was a noticeable slowdown in the upward trend in the rental apartment market. Year-on-year, Frankfurt recorded rental growth of 2.5% to €12.00 per sqm p.m. In Düsseldorf, the rental market recorded slightly higher growth of 3.8%, with the rental level reaching €9.35 per sqm p.m. in the second half of the year. Sharp rises in rents of around 4.8% and 4.9% year-on-year were observed in Cologne and Leipzig respectively; however at €9.45 per sqm p.m., prices in Cologne were far higher than the level of €5.30 per sqm p.m. achieved in Leipzig. In the second half of the year, only the Cathedral City registered moderate growth; rents levelled off in the economic centre of Saxony.
“In 2014, rental growth is expected to weaken slightly in most cities compared to 2013, as potential tenants have less financial scope after such a long upward trend in rents. Nevertheless, market conditions remain positive in general, as demand is expected to continue to outstrip supply in the medium-term”, according to Heidrich. And further: “The introduction of a rental price cap should freeze rents at their current level, but will not remedy the underlying cause of rental growth. This will only be achieved by increasing the volume of supply through new construction.”

Highest price rises for condominiums in Cologne

In Munich, condominiums were offered in the second half of the year at prices of €5,130 per sqm, which is 11.7% more expensive than in the same period the previous year. Price rises weakened slightly at this high level in 2013 compared to the 17.2% increase registered in 2012. Prices in Hamburg were considerably below the asking prices in the Bavarian state capital. At €3,420 per sqm, prices increased by 6.0% year-on-year, the lowest growth rate of the eight cities investigated; although slightly higher prices were again recorded in the second half of the year.
The highest price rise of all cities investigated, +19.3% year-on-year, was observed in Cologne, although predominantly in city centre locations. The average price level achieved in the Cathedral City was €2,470 per sqm, which was the second lowest sale price of the cities investigated. The second highest price rise of +16.7% was observed in Stuttgart. This increase was seen across the whole of the city and led to a rise in the average price to €2,760 per sqm. Düsseldorf also recorded one of the highest rises in sale prices: prices increased by 16.1% year-on-year, reaching €2,810 per sqm, with the price uplift affecting all city districts. In Leipzig, asking prices fell slightly in the second half of the year, although the state capital of Saxony still enjoyed a considerable price uplift of 16.3% to €1,380 per sqm in 2013. This means that prices have risen by almost a third since 2011.
By the end of 2013, prices for Frankfurt’s condominiums reached €3,360 per sqm, which is an almost comparable rise to Munich (+11.7%). “In the second half of the year, the rise in sale prices for condominiums contradicted the general trend of stagnation. Whilst prices of new-builds are below the average, the (still inexpensive) prices for post-war buildings are currently fuelling a price rise”, explains Sebastian Grimm, Jones Lang LaSalle’s Team Leader of Residential Valuation Advisory in Frankfurt. And further: “As in the other cities, the appetite for investment properties is greater than the supply. Additionally, low interest rates continue to drive up prices in the condominium market.” In Berlin, prices for condominiums again increased strongly in the second half of the year. Year-on-year, the city has seen a moderate uplift of 8.7% (to €2,570 per sqm) compared to the other cities; however, apartments in the City on the Spree have already increased in value by over half since 2010. The Berlin market for condominiums has therefore experienced the highest upward trend in prices of all cities investigated over the past four years, with the exception of Munich.
“Sale prices for condominiums will lose some of their current very strong dynamic in 2014. There was a clear slowdown in an increasing number of cities by the end of the year”, explains Sebastian Grimm. And further: “The number of purchasers willing and able to pay high prices is reducing and many are now questioning the short-term sustainability of the current price level; this could mark the start of a consolidation at a high level.”

“Despite the natural scepticism of market participants in view of the current price level, the current interest rates, which will remain at an historically low level over the next 12 – 18 months, will be decisive for price trends. Until there is a change in ECB interest rate policy and therefore a change in the direction of interest rates, a steady marginal rise in prices will continue to be observed from an overall perspective and also increasingly in the case of secondary cities. Furthermore, the upward trend, especially in the top locations (which are less dependent on interest rates), will continue”, concludes Andrew Groom.  


* For the twelfth time, Jones Lang LaSalle has investigated trends in Berlin, Hamburg, Munich, Frankfurt am Main, Düsseldorf, Cologne, Stuttgart and Leipzig. A total of 180,000 rental offers and 90,000 purchase offers for condominiums were analysed. The data factors analysed are presented at city district level and are broken down into building age categories and apartment sizes. Further detailed analyses dating from 2004 are available on request.
** Note: rental and/or sale prices describe the median, i.e. 50% of the values in a city lie above this value and 50% below.