13 09 2017

10th ACCENTRO Homeownership Report: New Revenue Record, but Stagnant Condo Sales

Berlin, 13 September 2017 – Germany’s major cities experienced another banner year in condominium sales in 2016: Total revenues climbed from 28.5 billion euros to 30.87 billion euros year on year. However, the number of sales transactions stagnated. Specifically, a total of 135,551 existing and new-build condominiums changed hands in the 82 major cities examined. This implies a modest one-year decline by 851 transactions. Three of Germany’s Class A cities or “Big Seven” actually registered a negative trend, these being Berlin, Cologne and Stuttgart.

Over-Regulation and Supply Contraction to Blame for Dip in Transactions

“The negative trend in Berlin, Stuttgart and Cologne is a clear sign for increasing supply contraction. Berlin, however, is also particularly affected by over-regulation,” said Jacopo Mingazzini, CEO of Accentro Real Estate AG It is true that the German capital still saw by far the greatest number of sales among the country’s metropolises with 22,549 condominiums sold. Yet as a result of political over-regulation and supply contraction, the number of sales declined by 7.42 percent year on year.

Fewer Planning Permissions for Further Densification: Supply Could Keep Drying Up
The number of planning permissions increased by 21.6 percent across Germany in 2016. But during the early months of 2017, it already began to go back down. Especially the number of permits for new flats created by conversions or attic developments declined by 25.5 percent over prior-year period. “This trend could exacerbate the supply shortage in the major cities, which was already keenly felt in 2016. On the whole, selling prices are likely to keep pushing up, albeit not at the brisk pace we saw over the past years,” Mingazzini confirmed.

Keen Demand for New-Build Condominiums

Roughly 34,731 new flats were sold in 2016, a year-on-year increase by 14.49 percent. This means that the anyway fast momentum in newly-built condominium sales accelerated further, growing at a rate of 12.31 percent between 2014 and 2015. In fact, Berlin was Germany’s most important market for new-build condominiums in 2016. During the year under review, 5,608 newly-build condominiums changed hands in the German capital, an increase by 7.72 percent. Having outperformed Munich in terms of apartment sales in 2015 for the first time, Berlin is thus consolidating its lead in new-build condo sales.

Berlin Shows Fastest Price Growth over Ten-Year Period

The survey recorded by far the steepest price hikes over the past ten years in Berlin. The average price per condominium sold surged by 160.26 percent between 2006 and 2016 – outperforming all other German cities. But despite the brisk price growth during the past decade, Berlin’s average price per flat only ranks twelfth in the country, on a level with cities like Ulm, Heidelberg or Mainz. With a year-end figure of 5.64 billion euros in 2016, revenues from condominium sales almost tripled in Berlin since 2006.

Ten-Year Comparison: Leipzig Takes Exception

Leipzig stands out among the cities subjected to the ten-year comparison. Nowhere else did condominium sales experience as brisk a dynamic as here. The number of flats sold in Saxony’s largest city went from 2,542 in 2006 up to 4,877 in 2016. While this figure nearly doubled, revenues more than tripled. “Leipzig plays and exceptional role on the condominium market. It is popular among young people because of its attractive costs of living and a very vibrant cultural and campus scene as well as an outstanding economic development. Since 2006, the city’s population has increased by more than 14 percent, which puts it in second place after Munich with its growth rate of slightly over 19 percent,” Mingazzini elaborated.

East German Cities on Growth Trajectory

As far as the sales trend over the past ten years is concerned, the east German cities of Leipzig, Erfurt and Rostock top the list. The fact demonstrates the long-term dynamic on East Germany’s homeownership market. In Rostock and Potsdam, selling prices more than doubled during the ten-year period, while nearly doubling in Dresden and Erfurt. No less than three cities in East Germany – the state capitals Magdeburg and Erfurt, plus Halle – made the top ten in terms of sales trend per 1,000 residents. In fact, Magdeburg placed second nationwide with a 58.33-percent increase in sales per 1,000 residents.

About the ACCENTRO Homeownership Report

The Homeownership Report was published by Accentro GmbH in its tenth edition this year. The analysis is based on residential property sales transacted in Germany’s 82 major cities during the reporting year of 2016. Its ability to mine the data of the surveyor committees sets this report radically apart from similar publications that tend to be based on expert assessments or the evaluation of quotes.

About ACCENTRO Real Estate AG

ACCENTRO Real Estate AG is a listed residential property company. Its core business consists of tenant-sensitive housing privatisations. The company's subsidiary ACCENTRO GmbH is the market leader for housing privatisation services in Germany.

ACCENTRO Real Estate AG has its registered office in Berlin and is listed on the Prime Standard of the Frankfurt Stock Exchange (German securities code number [WKN]: A0KFKB).

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