Positive Trend Continues: Revenue from Home Sales Rises to Over 36 Billion Euros
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Rising prices lead to higher sales revenue despite declining sales figures
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Berlin remains the top-performing market
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Major cities in eastern Germany are gaining ground: Leipzig breaks the one-billion-euro revenue mark
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Average home price stands at 225,242 euros; in the top 7 cities, it is 429,007 euros
Berlin, October 7, 2021 – Revenue from residential property sales continued to rise in 2020, while the number of condominiums sold was slightly lower than in the previous year. These are the findings of the ACCENTRO Homeownership Report 2021, published by ACCENTRO Real Estate AG in collaboration with the German Economic Institute (IW). As part of a special analysis, the team led by Prof. Dr. Michael Voigtländer also examined the estimated costs of energy-efficiency measures needed to achieve the German government’s climate targets for the existing building stock.
This is the 14th edition of the Homeownership Report, and it is the only German publication that compiles and interprets data from appraisal committees on all condominium transactions in all major German cities. The report differs from similar publications, which are usually based on expert estimates or the analysis of listing data.
Sales on the Rise Once Again
Sales rose by 3.3 percent in 2020 to a total of 36.027 billion euros. This positive trend is attributable to rising sales prices. The sharpest increases in sales were recorded in Jena (+69.3%) and Osnabrück (+65%). The mid-sized cities of Oldenburg, Heidelberg, and Remscheid round out the top five for the highest revenue growth. Overall, revenue rose in 2020 in 55 of the 81 cities surveyed.
“Medium-sized cities in particular are attracting investors. In addition to favorable economic conditions, the lower entry prices and yield multiples compared to those in the top 7 are also decisive factors,” explains Lars Schriewer, CEO of ACCENTRO Real Estate AG. “This trend has been evident since 2010.”
Indeed, among the top 10 cities with the strongest sales growth since 2010, there is not a single major metropolis, but rather many medium-sized cities in eastern Germany, such as Halle (Saale), Chemnitz, Gera, and Rostock.
A slight increase in transactions was observed in 30 cities. This increase was concentrated primarily in eastern German cities. In absolute terms, the largest increase was in Leipzig (+702 sales) to 5,217 transactions, followed by Chemnitz (+228).
At the same time, the shortage of building land and available condominiums is becoming apparent. In 2020, 123,299 apartments were sold in the 81 cities surveyed. That is 5,627 fewer apartments than in 2019, representing a moderate year-over-year decline of about 4.4 percent. In 2020, the most apartments were again sold in Berlin (16,473), Munich (9,845), and Hamburg (6,195). These three cities alone account for 26.4 percent of all sales. Cologne, Frankfurt am Main, and Stuttgart rank fourth through sixth. The largest decline was observed in Frankfurt am Main (-17.7%), followed by Cologne (-17.5%) and Berlin (-11.0%).
“This year’s ACCENTRO Homeownership Report underscores the stability of the German housing market. There was no ‘coronavirus shock’—it is striking, in fact, that the number of cities where more than 1,000 apartments were sold—33 in total—remained virtually unchanged despite the general decline in sales. This is certainly linked to the increased importance of housing. Especially during the lockdown, many people realized how important a beautiful and spacious home is,” explains Prof. Dr. Michael Voigtländer, head of the Financial and Real Estate Markets division at the IW, who was once again responsible for data collection this year.
“The continued rise in home prices more than offset the slight decline in home sales. For homeowners, 2020 was marked by rising rents and sales prices,” adds Lars Schriewer.
From 2019 to 2020, the average price of a condominium rose to 225,242 euros, representing an increase of 10.2 percent. In the top 7 cities, growth was even higher at 10.8 percent, with an average sales price of 429,007 euros.
Berlin Continues to Show Strong Overall Volume
In contrast to other rankings in the report, the top 7 cities are all tied for the number of sales. Despite a sharp percentage decline (-11.0%), Berlin continues to record the most sales. With sales of 6.03 billion euros, the German capital not only generated the highest sales volume but also accounted for just under one-sixth of the nationwide total. Munich had already narrowed the gap to first place the previous year. While the growth rate was still 16.6 percent in 2019, Munich’s sales growth was significantly lower last year at 2.9 percent. Total sales rose to 5.71 billion euros, further narrowing the gap with Berlin. Overall, sales in all 81 cities continued to rise. The total value of condominiums sold amounts to more than 36 billion euros. This corresponds to growth of over 3.3 percent.
Nearly 25,000 New-Construction Sales and Continued Revenue Growth
In 2020, a total of 24,669 new-construction units were sold, most of them in Berlin (3,378), Munich (2,720), and Hamburg (1,479). Compared to the previous year, this represents a 9 percent decline. In Berlin, the decline was particularly sharp at -26.7 percent. This is in line with the long-term downward trend in the top seven cities. “Especially in the major cities, there is a shortage of building land, and bureaucratic hurdles are slowing down the construction process. However, demand remains high thanks to the influx of new residents,” explains Lars Schriewer.
In 2020, a total of 9,600 apartments were sold in major cities—in 2015, the figure for these locations was still more than 15,000. But the number of new-construction sales did not decline everywhere. An increase was observed in 35 of the 81 cities surveyed. Oldenburg posted the largest increase, with 236 more sales, followed by Münster (+224), Heidelberg (+144), and Ludwigshafen (+128). Major cities in eastern Germany, in particular, are popular with buyers of new-construction homes, as highlighted by a look at sales per 1,000 residents. While Chemnitz still ranked third in 2019, the city now tops the list this year with 8.64 transactions per 1,000 residents, followed by Leipzig (8.62). Munich was the only major city to make it into the top 10, with 6.62 sales per 1,000 residents.
“Despite the decline in the total number of sales, sales revenue continued to rise in 2020. This was particularly evident in medium-sized cities and the outskirts of major metropolitan areas. However, the top 7 cities still stand out because each generated more than one billion euros in revenue from condominium sales. This year, Leipzig also made it into this exclusive club for the first time, further establishing the city as an investment destination,” explains Lars Schriewer.
1.3 Trillion Euros in Investment Needed by 2050 – Skilled Labor Shortage Slows Energy-Efficiency Renovations
As part of its climate protection plans, the federal government is also placing greater responsibility on the building sector. On the path to a climate-neutral building stock by 2050, a target of 70 million metric tons of CO2 equivalent has been set for the year 2030. In 2020, emissions still stood at 118 million metric tons. The IW estimates the cost of investments in the necessary energy-efficiency measures at over 500 billion euros by 2050. Additional investments in the maintenance and quality of the building stock will require a total investment volume of 1.3 trillion euros by 2050, which corresponds to approximately 43 billion euros annually. So far, only about 40 percent of the necessary amount has been invested.
“The industry is already moving toward greater energy efficiency. Given the increased demands for climate protection in the building sector, the pressure to take action here will grow,” explains Prof. Dr. Michael Voigtländer.
“To achieve the climate goals in the building sector, enormous sums must be invested by the real estate industry and society. The shortage of skilled workers is also hindering the necessary energy-efficiency measures in many places,” adds Lars Schriewer.
According to calculations by the Competence Center for Skilled Workers (KOFA) at the German Economic Institute, only 25 percent of positions in the field of plumbing, heating, and air conditioning can currently be filled. As of June 30, 2021, over 15,000 positions were unfilled. In building electrical systems, more than 17,000 positions were unfilled, while in refrigeration technology, 82 percent of positions were unfilled. These figures refer to employees at the skilled-worker level. When it comes to hiring experts—that is, skilled workers with a master craftsman’s certificate or at least many years of experience—the statistics look even worse. In this case, only 13 percent of positions in the plumbing, heating, and air conditioning sector can be filled.
About the ACCENTRO Homeownership Report
ACCENTRO Real Estate AG has published its Homeownership Report for the 14th time. This year, the report was once again produced in cooperation with the German Economic Institute. The analysis is based on homeownership transactions from the 2020 reporting year in all 81 major German cities. By drawing on data from appraisal committees, the report differs significantly from similar publications, which are usually based on expert assessments or the analysis of listing data. The report consists of two distinct sections. While the first section compares housing markets using various criteria, the second section provides detailed market data for all 81 cities. The findings of the ACCENTRO Homeownership Report on Germany’s seven most populous cities and developments over the past twelve years are also available online and can be filtered individually: www.accentro.de
About ACCENTRO Real Estate AG
ACCENTRO Real Estate AG is a residential real estate investor and the market leader in residential 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 sale of apartments to owner-occupiers and private investors at market-rate rents, 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 portfolio owners, investors, and project developers. The shares of ACCENTRO Real Estate AG are listed on the Prime Standard segment of the Frankfurt Stock Exchange (WKN: A0KFKB, ISIN: DE000A0KFKB3). www.accentro.ag
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