Knight Frank reports that prime property in Munich, Germany, is on the rise as more international buyers look to the city for real estate opportunities. Germany’s tight lending structure and the fact that only 45% of Germans own their own homes insulated the country’s property market from the worst of the global financial crisis, which contributed to Munich’s 9.3% boost in premium property prices in 2012. Experts are projecting prices to continue increasing despite the country’s weakening future GDP appraisal, thanks in part to the city’s robust tourism and world-class education and hospital facilities. For more on this continue reading the following article from Property Wire.
The residential property market in Munich, a long standing location of choice for wealthy Germans, is starting to attract more international buyers, according to a new analysis report from Knight Frank.
Prime property prices in Munich increased by 9.3% in 2012, outperforming most other key European cities and now affluent buyers from Russia, the Middle East and the UK are targeting the areas of Altstadt-Lehel, Glockenbach, Schwabing and Maxvorstadt in the city center.
According to Kate Everett-Allen, of Knight Frank’s International Residential Research team, Munich’s excellent medical facilities are particularly drawing interest from Middle Eastern buyers.
Mainstream residential prices in Munich stand at around €4,200 per square meter while luxury prices are closer to €15,000 per square meter. And the report says that although economic indicators may be weakening in Germany with GDP forecast to rise by only 0.5% in 2013, the outlook for property prices is more upbeat.
The report says that since its housing market downturn in the late 1990s, Germany’s residential sector has outperformed most of its European neighbours. The conservative lending policy of German banks, combined with the fact that only 45% of German households own their home, helped lessen the impact of the global credit crunch when it hit in 2008.
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As a result, post-Lehman mainstream property prices have risen by 7.4% in Germany, but fallen by 8% across the wider Eurozone. At €4,200 per square meter, mainstream prices in Munich are among the most expensive in Germany compared to €3,100 per square meter in Frankfurt and €2,200 per square meter in Berlin. However, property prices still compare favourably with other European cities.
The city has a population of 1.4 million but attracts 5.7 million tourists each year. ‘Munich remains popular with many wealthy Germans and an increasing number of international buyers. Latest estimates suggest around 5% of buyers purchasing homes in Munich above €2 million are from abroad with Russian and Middle Eastern buyers most prominent,’ said Everett-Allen.
‘Munich’s excellent hospital and medical facilities, on a par with London’s Harley Street, are helping to attract interest from Kuwaiti, Saudi Arabian and Qatari buyers amongst others. Estimates suggest 700 Arab patients were traveling to the city each year for treatment some 10 years ago, and this figure has risen substantially since,’ she explained.
Most of Munich’s prime buyers want a home within a 30 minute walk of the city center and here prices can reach €15,000 per square meters, according to the report. An apartment in the heart of the city in prime areas such as Altstadt-Lehel, Glockenbach, Schwabing and Maxvorstadt rank highly on most luxury buyer wish lists.
Munich’s up and coming areas such as Nymphenburg have undergone significant regeneration in recent years and values in neighbouring Neuhausen are moving upwards, but older houses and villas in Pasing remain popular too.
The luxury residential market in Munich recorded price growth of 9.3% in 2012 outperforming many other European cities including London and Paris. Unlike much of Europe, residential sales activity has increased in Munich with total sales volumes rising from €9.3 billion in 2011 to €9.9 billion in 2012.
‘Quality properties are often being sold within two weeks of coming to the market. We expect prime prices in the city to rise by a further 5 to 10% in 2013 as supply tightens and demand increases due to Munich’s growing international appeal,’ concluded Everett-Allen.
The report also points out that when buying in Germany different levels of property tax apply depending on location. In Germany, real estate transfer tax (RETT) or Grunderwerbsteuer is levied on the transfer of real estate. Prior to 2007 all German federal states applied a rate of 3.5% but since this date states can set their rates independently.
In Munich, and its wider state of Bavaria, transfer tax currently stands at 3.5%, but in Berlin and Hamburg it is now 4.5% and in Stuttgart and Dusseldorf it is 5%.
This article was republished with permission from Property Wire.