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Zinshaus © Grossmann & Berger

Rental Apartment Market Shows First Signs of a Changing Tide

2014 was the first year without across-the-board price rises in Hamburg, G & B says. Average to modest locations report highest growth

In the less expensive parts of the city, appreciably more apartment houses were bought and sold on the Hamburg rental market in 2014 in comparison to 2013. In 2013, an especially large number of let apartment buildings in preferred locations had been sold. The result of this shift was that the average price per property sank to 2.18 million euro in 2014 (2013: €2.89m) and the average price paid per square metre of living space fell to 2,101 euro (2013: €2,256/m² of living space.)

Differentiated Price Patterns

“For the first time in many years, no across-the-board increase in average square-metre prices was noted in 2014. Instead, prices in the less popular areas rose by around 15 per cent, whereas they tended to slip in the more desirable locations”, notes Andreas Rehberg, managing director of Grossmann & Berger. “In 2015, the achievable price to earnings multiples rose slightly in almost all locations, but the maximum attainable selling prices increased the most in average and modest locations.” This conclusion is set out in the property services provider’s latest market survey of buy-to-let apartment buildings in Hamburg, which is based on the firm’s own data and information from the Municipal Real Estate Evaluation Committee of Hamburg.

2014: More Transactions in Hamburg’s South and North

In 2014, sales of multifamily homes and apartment buildings saw their biggest increases in the sub-markets “South” and “North” (+23 per cent and +10 ten per cent respectively) while “West and Elbe Suburbs” and “Central and Alster” showed the largest declines (-38 per cent and -25 per cent respectively.) Despite this, “Central and Alster” remained the biggest-selling district in 2014 with 123 sales.

First Signs of a Changing Tide

“The differentiated changes in price are, however, an indication that the prices paid for apartment buildings in Hamburg are reaching their limits. A shift in selling activity to properties on the periphery provides further evidence,” remarks Rehberg. “Altered market conditions are increasingly clouding the investment climate. Opportunities to make a profit have been squeezed by the introduction of the cap limiting rent increases, and the new principle of “he who orders the broker, pays the fee” has raised costs.” The freedoms of buyers and owners of apartments for rent in Hamburg could be restricted further if the areas currently under inspection are declared subject to social preservation orders.

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