Exceptional luxury property in Germany sees significant price growth
The most expensive residential locations in Germany have risen significantly in value once again between 2010 and 2011, according to the latest survey of he country’s luxury property market from Engel & Völkers.
There have been substantial price increases in price in Berlin, Hamburg, Munich, and on Lake Starnberg. Record price highs have also been recorded in holiday regions on the North and Baltic Sea coasts and in the Alpine region.
On Lake Starnberg, at prime addresses in the lakeside town of Berg, rare lakeside plots are already reaching prices per square metre of up to €25,000 in exceptional cases.
The dynamic of the price trend in these locations has become reminiscent of the development witnessed on the island of Sylt, the survey also shows. In Kampen, the most sought after part of Sylt, unaltered prices of as much as €35,000 per square metre mark the highest end of the market.
The survey focuses on exceptional locations and properties. ‘The top prices quoted are not representative of the market in general, nor do they reflect price trends for residential property in other locations,’ said Kai Enders, member of the board responsible for the residential property division at Engel & Völkers.
He added that merely a fraction of transactions closed in these specific locations reach the top prices listed in this survey. Alongside a unique location, the highest standards of appointment, comfort and quality are other preconditions for these price brackets.
He also pointed out that it is minor details that decide whether or not absolutely top notch prices are fetched. Also striking is the fact that there has been a 60% rise in prices for properties in top locations in individual cases during the period surveyed. This figure represents a significantly sharper rise than is the case for residential property on the market as a whole.
‘Securing of capital is the most important motive to buy. The market volume in itself in Germany’s top locations is indicative of their degree of exclusivity. Less than 1% percent of purchases and around 3 to 4% of the purchase price volume can be attributed to these exclusive locations,’ the report says.
‘Interested buyers are driven by various different motivations. One major factor is people’s wish to make as stable and secure an investment as possible. In light of the debt problems faced by various countries and the uncertain future of the Euro, many people are fearful of the possibility of rising inflation and are safeguarding their capital by purchasing residential real estate thought to be particularly likely to retain its value,’ it adds.
Enders explained that the thinking is very much that capital investments become more secure, the more exclusive the location. ‘Considerations regarding returns on investment play a less important role wherever properties are bought for private usage. Many wealthy buyers are tending to opt for investments in residential property with high value retention in other investment forms that promise higher returns but involve a greater level of risk,’ he added.
Particularly exceptional developments have been launched in Berlin, for instance, where top properties hardly fetched more than €5,000 per square metre of living space just three to four years ago. Since then, prices for exclusive residential property here have risen to new record highs. New development projects in the heart of old Berlin are especially desirable. In isolated cases, prices of up to €15,000 per square metre have already been paid.
Price hikes of this magnitude have also been seen in outstanding locations in Munich, for example left and right of the Englischer Garten park, in Hamburg on the banks of the Außenalster lake, and in sought after holiday regions.
In addition to major urban areas and well known second home markets, some medium sized regions are also commanding the highest prices for top residential properties. This is the case, for instance, in the Hochtaunuskreis and in the spa towns of Wiesbaden and Baden-Baden. The town of Constance, in locations with views overlooking Lake Constance, has also been the site of top prices for top residential properties.
‘We are anticipating that prices in the best locations detailed in our survey will continue to rise. There is still a great deal of upward scope if one considers top locations abroad be it in New York, London or Paris, around the Mediterranean such as on the Côte d’Azur, on in the upmarket ski resorts of the Alps,’ said Enders.