Real estate trends in Germany 2023

Trends in the real estate market in Germany by the end of 2022
Trends in the real estate market in Germany
Real estate in Berlin: current opportunities for investors
Sounds and Associations: Secrets of Effective Foreign Language Learning

Decline of the real estate market in Germany at the end of 2022

At the end of 2022, the residential real estate market in Germany experienced its first significant downturn after a long period of stable growth. Big investors slowed down their actions, and potential buyers became more cautious in their transactions.

Reasons for the decline in the real estate market

The main reasons for this downturn are reduced demand due to high finance costs caused by the increased interest rates and inflation. The shortage of supply has led to rising rents, which has also reduced interest in buying a home.

Opportunities to buy real estate objects at a profit

Although housing prices are falling, the situation is not uniform across the country, creating opportunities for purchasing real estate in Germany at a profit. Buying property at reduced prices, especially in conjunction with rising rental rates, can significantly increase investment returns. An important aspect of investing is understanding the current market conditions.

Examples of real estate prices in Germany

For example, new apartments in the Friedrichshain area are offered starting at €411,000, while rentals in the Weissensee area start at €363,000. Apartments for rent in the Friedrichshain area start at €316,000. It's important to note the sales of apartments in a new complex with a garden and parking in Schöneberg.

Opportunities for real estate investment in Germany

Acquiring real estate in Germany in the current situation can be an attractive investment option. In 2023, the Federal Statistical Office of Germany noted an overall decline in housing prices in the country by 6.8% compared to the previous year. In the first half of 2023, there was a decrease in prices in both the secondary and primary real estate markets. Buying property at reduced prices, combined with rising rental rates, could lead to an increase in investment returns.

Real estate market in Germany: price decline and development trends

German cities such as Berlin, Hamburg, Munich, Cologne, Frankfurt am Main, Stuttgart and Düsseldorf, recorded a significant drop in house prices compared to the previous year. Thus, the value of of apartment buildings fell by 10.4% and single-family homes by 6.4%. However, real estate values depend on many factors, such as location, quality, and property segment. In affluent neighborhoods, prices remain stable, especially in the premium segment, but in less popular neighborhoods, prices have declined significantly.

There is also a significant decrease in prices for real estate that requires energy renovation - prices for such properties have dropped by 40%. At the same time, the housing supply shortage in Germany, against the backdrop of a growing population, is expected to persist in the coming years. As a result, the transaction market has shrunk by 55-75%, returning to levels seen in 2012. The average yield on real estate in Germany ranges from 2% to 3.5%.

Real estate investments and prospects

The second quarter of 2023 also showed a decline in real estate investments. In conditions of uncertainty, large investors are being cautious. The volume of investments in high-quality residential complexes decreased by 73% compared to the previous year, and the volume of transactions in the second quarter fell by 9% compared to the first.

Nevertheless, Berlin continues to attract investors with various real estate offers. New residential complexes in different districts of the capital promise favorable conditions and completion dates in 2024-2025. For example, there are apartments starting from €330,000 in Friedrichshain, from €316,000 in Schöneberg, or apartments starting from €363,000 in a residential complex with a garden and parking. This indicates the potential for growth in the real estate market in Germany and its changes in the future.

Berlin is currently experiencing an active construction and supply of a wide range of residential apartments and apartments and apartments that are ideal for both personal residence and investment purposes. The city is brimming with new residential complexes, as well as restored historic buildings, which open up to the Buyers have many opportunities to purchase real estate in Germany.

For example, in the neighborhood of A residential complex with 60 apartments is being built in the Wilmersdorf area, priced from 990,000 euros. This project also includes a garden and a parking lot. It is expected to be completed by 2023. 2023. In another Berlin neighborhood, Steglitz-Zelendorf, a residential complex is under construction that will include 12 apartments, with prices starting at €675,000. This project is also scheduled for completion in 2023 year.

In the suburbs of Berlin, in Hohen Neuendorf, a residential complex with 71 apartments is under construction, with prices starting at 292,000 euros. This project is expected to be completed in 2024. Additionally, in a historic building in the Wilmersdorf district, 81 apartments will be available, with prices starting at 856,000 euros.

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Recommended real estate

The completion date for this property is also scheduled for 2024.

According to a study by CBRE, about a third of investors in Germany favor a value-add strategy. value-add strategy. This involves buying real estate, increasing its value and and then resell it. This approach explains the interest in financing developers at the early stages of project realization. of project realization.

Another promising strategy for investment is the acquisition of a ready-made object with the aim of renovation and subsequent resale at a profit. Taking into account the above-mentioned factors, Russian investors are actively interested in real estate investment opportunities not only in Germany but also in other countries. are actively interested in real estate investment opportunities not only in Germany, but also in other European Union countries. countries of the European Union.

Analysis shows that, on average, prices for single-family homes have dropped by 12%. A particularly noticeable decline is observed in the segment of homes with low energy efficiency, where the decrease has ranged from 25 to 30%. At the same time, prices for new constructions have decreased to a lesser extent – by 2-7%.

It should be noted that the demand for single-family homes remains at a stable level, which contributes to the gradual adjustment of their prices. This is also due to the growth of rental rates, which creates a favorable atmosphere for investing in residential real estate in Germany.

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Conclusions

As a result of the decline in the German housing market in 2022 and its mixed performance in the first In the first half of 2023, there are excellent opportunities for discounted real estate investments. Prices for various properties are falling significantly, especially in apartment buildings and properties requiring renovation. However, it is worth remembering that stable prices remain in affluent neighborhoods and the premium segment. The housing shortage and population growth are expected to support demand in the coming years. Although real estate investment has also declined, it can be a good time to finding great deals and making successful investments. There are a variety of properties that can be a great investment with long-term returns.