New DZ HYP report “The German Real Estate Market 2021/2022”

Maximum transparency on the real estate market is of great importance. DZ HYP contributes to this by regularly examining the locations where it is active. This year, the fourteenth edition of the present study focuses on real estate market developments concerning retail, office and commercial housing properties in Germany's top locations – namely, Hamburg, Berlin, Dusseldorf, Cologne, Frankfurt, Stuttgart and Munich.

In 2021, Germany's metropolitan areas are being impacted to different extents by the effects of the coronavirus pandemic and growing demographic change. In the residential asset class, rents are continuing their upwards trend, albeit at a slower pace than in the past years, as a result of increased new construction activity and a slowdown in population growth in the major cities studied. The imbalance between supply and demand is gradually waning – but failing to curb the price increase for residential real estate. The office market seems to be stable despite moderately higher vacancy rates and the uncertainty surrounding future demand for space; modern offices remain in demand even though many people are working from home. However, investors will have to brace themselves for stagnating rents compared to the previous years. Turning to the retail market, the pandemic has accelerated structural changes: the downward trend for rents caused by online shopping has intensified, and the amount of retail space has continued to decrease. Nevertheless, Germany's top seven city centres remain attractive shopping locations thanks to the economic recovery and alternative uses.

This study includes an excursus examining the topic of demographics. Germany's ageing population is changing the demand for real estate. When the baby boomers retire, demand for office space will fall away, whilst the retail and housing markets will need to increasingly prepare for the demands of senior citizens and a higher number of people in need of care.