Leipzig Residential Rental Market - Facts Sheet on Rent Level and Location
by Uwe Falkenberg
Economic developments
Leipzig has been the target of many international property
investors over the last 24 months. Here are some of the hard facts why
Leipzig has attracted over 1.6 billion Euros in investment capital 2006
alone.
The economic
situation in Germany and especially in Leipzig is positive with the prospect
of at least mid-term prosperity. The property market has three main drivers
for income improvement:
-
Positive
population development accompanied by new jobs.
-
Reduction of vacant apartments by demolishing ca. 20,000 "outdated"
apartments by 2010.
-
Active
owners interested and acting on improvement of their rental income
situation.
But as you
know just being in the right region or city does not guarantee that the
property offered is actually in a good location. This article will show the
current rent structure in Leipzig and some of the sought after locations are
and which ones are on the rise. For background information on the economic
development of the region and the current situation please refer to the
details at the end of this article*).
The City of
Leipzig has an official
rent table which is dated 2005. A new one is being established in 2008.
The current rent levels are from market research carried out by HVB and
Eurohypo, two big German property finance banks.
The rent
level for renovated medium standard and medium size
apartments (70 sqm) is on average at 3.85 Euro per sqm
in pre fabricated blocks and 4.40 -- 4.70 Euro per sqm in blocks being built
before 1945. For inner city prime locations the rent per sqm for the same
standard and size is at 6 -- 7.50 Euro per sqm. Small apartments up to 45
sqm generate the highest rent in all categories and are on average at 5 Euro
per sqm.
The rent
table distinguishes locations between "Very
Good", "Good", "Medium"
and "Basic". The spread in the
rent level for new rentals in these categories are:
Very Good:
6 -- 7.50 Euro per sqm
Good: 5
-- 7.50 Euro per sqm
Medium: 4
-- 5 Euro per sqm
Basic: 3
-- 4 Euro per sqm
Locations
being categorized as "very good" can be found in City South, Gohlis,
Schleussig, Leutzsch to name a few. Rents in good standard modernized period
buildings are rising. Especially in preferred areas like Waldstrassenviertel,
Musikerviertel, Bachviertel, Schleußig and Gohlis-Süd) an increase in rent
of 10 to 15% over the next 2 years is expected.
The good and
very good locations mentioned above are only specific regions within the
districts named and they can be right next to an area that is considered
basic. So it is very important to have reliable information about the actual
micro location of a property. I have yet to see an agent's exposé declaring
the location of his offer as being basic. There are maps and street
registers available that are based on statistics developed for the official
rent table (Mietspiegel).
This rent table plays an important role German residential rent legislation.
It is the main legal basis for raising the rent in existing contracts.
Next to the
factor location there is a growing trend towards smaller apartments for
single households, especially near the university and other teaching
institutions. Even though they achieve the highest rent an investor has to
keep in mind that from experience these smaller apartments have a higher
turnover with the risk of temporary vacancy and renovation cost.
*)
What makes the Leipzig
Residential Property Market so interesting? By Uwe Falkenberg
The author
is a Berliner and active in the German property market for more than 25
years. Experienced as project manager, developer and head of the German
Business for a UK based property consultancy he now owns and operates
Berlin Portfolio Ltd
His international background and local expertise is an ideal combination for
an international investor. For Property Search we recommend
Properties in Germany
This work is licenced under a
Creative Commons Licence.
