May 30th, 2017
Munich Real-estate prices rising quickly– Berlin by comparison stable
There was a time, not that long ago that the German property market was considered by many as ‘boring’ and unimaginative. This was due to its slow but ‘measured’ growth.
However that has changed because of European and international political and economic uncertainty. The ‘boring’ stability and transparency, which were before perhaps considered a sort of liability, are now attracting investors. In fact, Germany is the new safe haven of choice for real-estate investors in Europe, Asia and the Middle East.
However within this framework of solid political and economic stability, German real-estate is not a monolithic or uniform entity and there are clear regional differences, as for example between the large southern citiy of Munich and the nation’s capital Berlin.
Munich prices have risen sharply both in housing, construction land and in the commercial sector and the city’s expert committee recently presented an annual report on the Munich real estate market. This was the subject of an article this week by Anna Hoben in Germany’s leading newspaper, the Munich based Süddeutsche Zeitung.
According to this report, € 12.9 billion changed hands for Munich real-estate last year.
The ‘expert committee’ of the city consists of 30 specialists, besides the profession of self-employed experts for real estate evaluation, the representative of the municipal finance office and the planning authority, project developers, property developers and brokers.
The article highlights the following pricing examples: a villa in Oberföhring, 900 square meters of living space, for 19 million Euro. A semi-detached house in Bogenhausen for 6.4 million Euro. A terraced house, 400 square meters of living space, for 5 million Euro or 335 sq.m condominium, for 8.4 million Euro.
Locals are calling this ‘insanity’ and the one sentence which is heard again and again in the presentation of new real-estate market study is – “The madness goes on!”
Along with a steady increase in the price for apartments and building land, the article points out that prices for Munich commercial real-estate have also risen sharply. As an example, flooring values, which are only determined every two years, Microsoft’s headquarters in Germany, would have increased by up to 110 percent. A commercial building can therefore be twice as expensive as it was in 2014. [!]
These may be ‘extreme examples’, but they show where price development is going and it worries some Munich city officials, while no-one yet is speaking of any ‘bubble”.
By comparison Berlin’s recent property development has been more subdued with prices increasing in a slower and more controlled way. We have written often on this blog about the relative affordability of Berlin property.