Berlin, September 15, 2017 – “Berlin’s prominent success story over the past ten years can easily obscure the similarly impressive—and in some cases even more impressive—development in certain East German markets. Leipzig, Dresden, and Erfurt, in particular, are popular university cities and represent interesting growth markets,” says Jacopo Mingazzini, CEO of Accentro Real Estate AG. Over the past ten years, sales in the residential real estate market have grown by 153 percent in Leipzig, 134 percent in Dresden, and as much as 429 percent in Erfurt. These are the findings of the tenth Accentro Homeownership Report.
Strong Sales Momentum in Existing and New Construction
This strong growth in total sales since 2006 has affected both the new-construction and existing-property segments in Leipzig and Dresden. Sales from transactions involving completed properties in Leipzig in 2016 were more than 18 times higher than in 2006; in Dresden, they doubled; and in Erfurt, they increased eightfold over the past decade. For existing properties, Leipzig saw revenue more than double. In Dresden and Erfurt, growth rates since 2006 stood at 193 percent and 326 percent, respectively. In addition, purchase prices in both cities have nearly doubled over the past decade. In 2016, Erfurt—along with Magdeburg and Halle—was one of only three East German cities to rank among the top 10 in terms of sales growth per 1,000 residents.
Leipzig’s market recorded a 32 percent increase in the average price of residential real estate, Dresden a 95 percent increase, and Erfurt an 85 percent increase. By comparison, prices in Berlin rose by 160 percent—the highest increase in Germany—while the most expensive housing market, Munich, saw a 102 percent increase. Overall, 72 of the 82 major cities surveyed recorded price increases of at least double digits.
Leipzig Stands Out in the Ten-Year Comparison
Leipzig deserves special mention in the ten-year comparison. Sales in the Saxon metropolis have developed extremely dynamically. In 2006, 2,542 apartments were sold in Saxony’s largest city; by 2016, that number had risen to 4,877. That is nearly a doubling, with sales currently up by 152.9 percent. “Leipzig plays a prominent role in the market for condominiums. The city is popular among young people due to its attractive cost of living and a very vibrant cultural and university scene. As a result, Leipzig has recorded a population growth of 14.4 percent since 2006, ranking second only to Munich, which has seen growth of just over 19 percent,” explains Mingazzini. Leipzig has another locational advantage in the form of its airport, Germany’s second-largest cargo airport.
Growth in Transaction Volumes Is Slowing
The strong upward trend in the residential property markets of Leipzig, Dresden, and Erfurt was also reflected in rising transaction volumes over the past decade. However, in 2016, Leipzig—the region’s largest market—recorded a decline in transaction volumes for the first time since 2010. In Leipzig, there was a 2.5 percent decline in 2016 compared to the record year of 2015, while growth in transaction volumes in Dresden slowed to 4.1 percent. In the new-construction segment, the number of transactions in Dresden also declined by 1.4 percent in 2016. The trend was similar in Berlin, where the number of transactions in the residential property market fell by 7.4 percent in 2016 compared to the previous year. “This is due to increasing political overregulation, which artificially makes it more difficult for the population to become homeowners, particularly in high-demand markets. Nevertheless, we expect transaction volumes in the growth cities of eastern Germany to stabilize at a high level in the medium term. Accentro continues to anticipate an above-average outlook for locations such as Leipzig, Dresden, and Erfurt,” adds Mingazzini.
Leipzig and Dresden in Comparison:
The two most important markets in Saxony, Leipzig and Dresden, showed divergent trends in total sales in 2016. While Leipzig’s sales figure declined by 2 percent year-over-year to 877 million euros, Dresden’s sales in the residential property market grew by 1.4 percent year-over-year to 638 million euros. In Leipzig, this sales volume was spread across 4,877 transactions—2.5 percent fewer than in 2015—while in Dresden, it was spread across 4,116 transactions, representing an increase of 4.1 percent. The average price in Leipzig in 2016 was 179,844 euros, and in Dresden, it was 154,956 euros.
About ACCENTRO Real Estate AG
ACCENTRO Real Estate AG is a residential real estate investor and the market leader in housing privatization in Germany. As of December 31, 2020, its real estate portfolio comprised approximately 5,200 units. In addition to Berlin, its regional focus includes major East German cities and metropolitan areas, as well as the Rhine-Ruhr metropolitan region and Bavaria. ACCENTRO’s business activities encompass four core areas. These include the tenant-oriented sale of apartments to owner-occupiers and private investors, the sale of real estate portfolios to institutional investors, the development and management of its own real estate portfolio, and the marketing of apartments for property owners, investors, and project developers. The shares of ACCENTRO Real Estate AG are listed on the Prime Standard of the Frankfurt Stock Exchange (WKN: A0KFKB, ISIN: DE000A0KFKB3). investors.accentro.de
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