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News Release

Frankfurt

Reduced momentum in the rental apartment markets; some significant price rises for condominium apartments


Press release including charts [PDF]

 

FRANKFURT, 3rd February 2016 – The upward trend in asking rents in Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Leipzig, Munich and Stuttgart, the eight cities under review by JLL, lost momentum again in 2015 for the second year in succession. Purchase prices had shown an overall rise in the first half of the year, but there was a more significant variation in prices over the full year and the Swabian capital Stuttgart was top performer.
 
The greatest rise in asking rents** in the second half of 2015, compared to the same period last year, was in Leipzig with +8%, followed by Stuttgart with +7%. There were rises of between 4% and 5% in Cologne, Düsseldorf and Frankfurt. However, significantly lower growth rates of around 2% and 1% were observed in Munich and Berlin respectively. Rents in Hamburg fell slightly over the course of the year at 1%.  ‘With the exception of Leipzig, there is now a rental price cap in all residential markets under review. However, first observations show that there has been little recognisable effect to date. A more important factor in the overall rental price development appears to be the shift of rental price growth to previously more reasonably prices locations and cities. To say at the moment that there will be no effect eventually caused by the rental price cap would be premature.’ says Roman Heidrich, JLL Team Leader Residential Valuation Advisory Berlin.
 
There was a significantly greater rise in asking prices for condominium apartments**. In the second half of 2015, there were double digit price rises of 10% to 15% compared to the previous year in Stuttgart, Leipzig, Düsseldorf and Berlin, whilst the price rises in Munich and Cologne were 9% and 7% respectively. There were only marginal price rises in Hamburg and Frankfurt with 2% and 1% respectively.  ‘Despite the comparatively moderate price development, the purchase price rise in the eight cities under review is twice as high on average as the rise in rental prices. At a time of high demand and a reasonable financing environment, the price rises have continued unabated in most cities. Only in Hamburg have purchase prices remained at the same level, which is the first time since 2008. It remains to be seen whether this already points to a stagnation of purchase prices in the hanseatic city, as has happened in the rental market.’ says Sebastian Grimm, JLL Team Leader Residential Valuation Advisory Frankfurt.

 
Overview of research results for the individual cities:
 
Rental prices in Leipzig, Düsseldorf and Stuttgart continue to increase moderately; stagnation in Berlin, Hamburg and Munich in the second half of 2015
 
Munich is still Germany’s most expensive city in terms of both rental and purchase prices. There was a marginal rise in asking rents of 2.2% in the second half of 2015 to €16.00/sqm/month (previous year: +4.4%), but the rise in the second half year was just 0.3%. There was significant growth of 5.2% registered in Frankfurt to €12.95 /sqm/month (previous year: +2.8%). The performance by the cities on the Rivers Isar and Main was significantly exceeded by Stuttgart. With 7.2% (previous year: +5.2%), the Swabian capital showed the second highest year-on-year growth amongst the cities under review and rents rose to €12.35/sqm/month. The weaker development continued in Hamburg, where rents fell year-on-year by 0.5% to €10.80/sqm/month. In Cologne, the significant upward trend of the past few half years is continuing. Rents rose year-on-year by 3.7% to €10.00/sqm/month (previous year: +2.2%). Likewise, there was a considerable rise in rents further along the Rhine in Düsseldorf with 4.2% to €10.00/sqm/month. By contrast, there was a more subdued performance in Berlin. Asking rents stagnated compared to the first half year at €9.05/sqm/month. The annual growth due to the rise in the first half year was still 1.1% (previous year: +9.1%). The most significant rental price rise of all cities under review in the second half of 2015 was again in Leipzig. Rents rose year-on-year by 8.1% to €6.00/sqm/month (previous year: +4.3%).  ‘There could be further significant rental price rises in a number of cities in 2016 because of the continued shortfall in new-build activity and the simultaneous considerable rise in population. In almost all cities in 2015, the effect of the price cap which was intended to affect highly sought-after city centre submarkets was found by tenants to be negligible. In most cases, tenants are prepared to pay the prevailing market rent as there is a lack of well-located apartments with contemporary fit-out.’ says Heidrich.
 
 
Highest year-on-year purchase price rises in Leipzig, Berlin and Munich
 
Over the past half year, the most significant rises in purchase prices were registered in Leipzig, Berlin and Munich. The upward trend is continuing, but has slowed down in the other condominium apartment markets. Purchase prices have stagnated in Hamburg and Frankfurt over the second half of 2015.  ‘With the reasonable financing conditions and high demand, you would expect that new-build activity would greatly accelerate in the major cities under review. The fact is that there has been increased new-build activity observed in most cities, but not to the degree required by the market. In a number of cities such as Berlin, Hamburg and Munich, construction activity has remained at the previous level. The scarcity of available space is exacerbated by the lack of capacity in the construction sector, which is something of an obstacle.’ says Sebastian Grimm.
 
The upward trend in asking prices for condominium apartments continued in Munich in the second half of 2015. With a year-on-year rise of 8.9% (after the year-on-year rise of 9.1% in the first half year), the average asking price is €6,080/sqm. In Frankfurt, looking at the second half year alone, prices fell slightly over a half year period for the first time since 2008 (down 1.0% compared to the first half year), which is the result of lower price rises in the new-build segment. There was still a year-on-year price rise of 1.3% to €3,950/sqm (compared to a rise of 16.0% in the previous year). In Hamburg purchase prices remained at the same level as the first half year at €3,790/sqm, which equates to a year-on-year rise of 2.0% (compared to +8.8% in the previous year). The highest year-on-year price rise in all eight cities under review by JLL was again in Stuttgart with a rise of 15.5% to €3,340/sqm (compared to +8.7% in the previous year). There was also a significant rise in Düsseldorf in the second half year with 10.9% year-on-year to €3,160/sqm (compared to +4.0% in the previous year). The momentum of the previous half years continued in Berlin with a rise of 9.1% to €3,470/sqm. The condominium apartment market in Cologne cooled down slightly in the second half year, up 2.5% compared to the considerable growth in the first six months of 4.4%, which means that prices have risen by 7.0% year-on-year to €2,910/sqm (compared to +10.0% in 2014). Leipzig registered the most significant price rise in the second half of the year of 11.1% to €1,500/sqm; the year-on-year price rise in by far the most reasonably priced of the eight cities was 12.3% (compared to -3.5% in the previous year).
 

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* In their Residential City Profiles, JLL has investigated trends in Berlin, Cologne, Düsseldorf, Frankfurt am Main, Hamburg, Leipzig, Munich, Stuttgart since 2008. A total of 130,000 rental offers and 80,000 purchase offers for condominium apartments 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.
Residential City Profiles can be downloaded beginning Mid February on http://www.jll.de/germany/en-gb/research/residential

** Note: rental and/or purchase prices describe the median, i.e. 50% of the values in a city lie above this value and 50% below.