The latest annual residential map from Catella, covering analysis of 80 German residential markets, continues to show a largely positive picture. Demand will exceed supply going forward, and price effects are a result of shortages, land price increases and rising rent expectations.

The sharpest increase in rents during the past twelve months was in the “very good residential areas in the seven A locations” category, at 12%. This was followed by the “very good residential areas throughout Germany” category, at 7%. Average prices in the very good residential areas of the top 7 locations exceeded the EUR 15/m² mark for the first time, and at a nationwide level average prices in very good residential areas of the 80 towns and cities analysed are now higher than EUR 10/m².

“This change is clear evidence that demand combined with rising rents is a development which is concentrated primarily to the very good residential areas in Germany. Rents have also gone up in mid-range residential areas, but the increase has been nowhere near as sharp,” explains Dr. Thomas Beyerle, Head of Group Research at Catella.

With an average of EUR 21/m², Munich currently leads the field for rents in very good residential areas, while the lowest recorded figure in this category is in Remscheid at EUR 7/m². Recklinghausen is bottom of the table in the “mid-range residential areas” category, at EUR 6/m², while Munich recorded the highest value in this category as well, at EUR 17/m².

With an average top yield of 5.1%, compared with 5.5% in 2016, this figure is approaching the 5% mark for the first time since 1990, which is evident in the very strong investor interest in A locations and very good residential areas. Leading the way in the A locations is Munich, with a top yield of 3.2%. The highest recorded figure is in Herne (8.0%), followed by Cottbus (7.9%) and Hamm (6.9%).

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