Increasing housing shortage for top seven German cities

The top seven German cities are showing increased signs of a housing shortage according to the Empira Group.

The manager has said that the only top seven location able to keep its ratio of apartments per 100 inhabitants stable over a 10-year comparison model is Hamburg. The other cities saw their ratio fall due to a strong population influx and inadequate levels of development. Berlin has recorded the sharpest decline in vacancies since 2006, with a ratio of 11 new apartments to 100 new inhabitants, while Munich (52 units to every 100 incoming inhabitants) and Frankfurt (46 units to every new 100 inhabitants) are the least undersupplied major urban areas.

In a study on the residential market, Empira has also ranked the top seven cities for project developments based on demand indicators, existing stock and construction activity. It believes that Frankfurt, Stuttgart and Munich offer the best environments for new construction, while Hamburg and Cologne are the least attractive.

Empira says the volume of new construction is lagging behind the estimated demand due to a shortage of space, lengthy approval procedures, high construction costs and unfinished projects hurt by market dynamics.

However, Professor Dr. Steffen Metzner, the study’s author and head of research of the Empira Group, has not unearthed any conclusive evidence of a general undersupply of housing in the rest of Germany.

“The top seven markets are particularly interesting for investors and developers for a variety of reasons; the residential segment in particular is being focused on — not only politically,” says Metzner. “But a closer look reveals clear differences between these seven locations in terms of the dynamics of supply and demand, and ultimately in the attractiveness for residential developers.”

The complete research report can be viewed and downloaded here.