Grasping opportunities in one of Europe's most promising real estate markets
Despite the construction boom there is a strong demand in larger cities.
Vacancy rates for office properties in German major cities are at record low figure.
An increase in the number of households despite falling population numbers.
"With decreasing acquisition yields, it is even more important to professionally manage the acquired assets."
As a result of the increasing demand for office space, at the five top locations, the vacancy level has decreased significantly during the years since 2010. In 2019 the highest vacancy rate, at 6.2 percent, was seen in Düsseldorf and Frankfurt while the lowest, at 1.7 percent, in Berlin. However, with the ongoing Brexit developments, Frankfurt am Main, as one of the main financial hubs in Europe, is expected to receive further attention from financial institutions looking for an alternative to London.
The fundamentals of the German real estate market provide for positive future prospects. Despite declining population due to demographic change, an overall increase in the number of households is expected: the reason for this is the continuing trend towards fewer residents per household. For example, the Federal Statistical Office estimates that the number of households will rise from the current 41.6 million by 2035 to 43.2 million. The 2000s, where little new housing was created, are also having an effect on the German real estate market. Because despite the ongoing construction boom, there is still a surplus demand, especially in larger cities.
Despite the persistently high volume of transactions in the German real estate market, a lack of lucrative objects in the market ensures that many investors no longer switch to B-but also to C-locations. Niche segments such as hotel buildings, medical facilities and data centers, which were reserved for specialists only a few years ago, are increasingly being developed by investors. However, according to PwC expert Susanne Eickermann-Riepe, it is not only increasingly important to find the right objects, but also their optimal management.
Head of Real Estate, PwC Germany
Tel: +49 69 9585-5909
Partner, PwC Germany
Tel: +49 30 2636-1166