Hamburg: High demand for apartment buildings may increase prices
Hamburg's apartment building market is experiencing a pronounced boom phase which will be sustained in 2007, according to Grossmann & Berger's assessment. In sections, prices are already two yearly rents over that of 2005, in “good“ and “very good“ locations the difference averages up to three years' difference. In good locations like Eppendorf, for example, up to twenty times annual rent will be paid. In 2005, only eighteen times the annual rent was achieved. Combined with a residential shortage, meager construction activity is expected to bring further price increases.
Grossmann & Berger sees big foreign interest, most notably of Danish investors, as reason for the significant price increase. In comparison to their home markets, in Germany they can count on high yields. By way of comparison, Hamburg's apartment buildings currently promise yields of 4 to just under 6%. In Copenhagen, residential properties get yields at the moment of approximately 2 to 3%.
Average locations especially sought
Rented residential properties of all types and at all locations are in demand in Hamburg. Apartment buildings from six units and, due to the high yield, in average locations, are especially sought. While British investors are for the most part interested in properties with a minimum of 50 apartments, Danish buyers are also ready to invest in smaller units from €1mn and to take over complete restoration. With an investment horizon of at least ten years, they apply a rather long-term strategy.