One price record is chasing the next in the real estate market. Housing prices, for instance, are said to have risen by an average of three percent across Germany during the second quarter of this year compared with the first three months, resulting in a year-on-year increase of 6.3 percent. The Central Bank’s low-interest policy and local authorities who are allocating too little land for construction are seen as the price drivers here. But there is another aspect that has long been ignored: “Lots are being bought and/or sold by private owners in many cases without any clear intention of developing them,” says Gordon Gorski, Managing Director of HOCHTIEF Projektentwicklung GmbH.
With the continuing run on German real estate, local hotels have also become the focus of investors from all over the world. Where this type of real estate was once seen by most as too risky, in the first half of 2016 alone investors have acquired hotels in the German market with a value in excess of two billion euros. This is 35 per cent more than in the same period last year. “Hotels have meanwhile become an asset class in their own right in the German investment market,” confirms Gordon Gorski, Managing Director of HOCHTIEF Projektentwicklung GmbH, adding, “They are particularly popular with institutional and private investors.”
Building lots are scarce—particularly in attractive downtown locations in the Top 7 cities. This is pushing up lot prices and making it more difficult for project developers to acquire suitable spaces. In the meantime, some sellers’ asking prices are forcing up entry prices so much that the limits of all other parameters are being reached, rendering it difficult to make reliable calculations. Competition between different types of usage is constantly on the rise. In the view of Gordon Gorski, Managing Director of HOCHTIEF Projektentwicklung GmbH, the main victims here are the residential and office segments, and he says that diverting to urban outskirts may help in building residential projects but would achieve very little in the area of office real estate.