Housing Market Report Frankfurt 2020 Housing Market Report Frankfurt 2020

Frankfurt housing market’s horizontal and vertical growth insufficient

Verena Bauer • 03/11/2020

There will continue to be a shortage of residential space in Frankfurt in future. Although new urban neighbourhoods are being planned and created. This is the conclusion of the Frankfurt Housing Market Report by international real estate consultancy firm Cushman & Wakefield (C & W). The real estate experts also provide insight into the rent and price levels as well as a future outlook for the Frankfurt residential market.

According to the authors of the report, Helge Zahrnt, Head of Research & Insight C & W Germany, and Richard Tucker, Head of Capital Markets Frankfurt C & W Germany, the Main metropolis has by far the strongest population growth forecast among the top-4 cities in Germany. "In addition, the Rhine-Main region as a whole is also growing at an above-average rate. By 2035, Frankfurt’s population is expected to have grown by 13.3 percent to 860,000," Zahrnt continues.

According to Tucker, Frankfurt's popularity is based on the high quality of life it offers, its  industrial sector mix and its large number of educational institutions. The real estate expert also mentions its excellent infrastructure ("The city of short distances") and its strong key economic indicators as further plus points.

Continuing shortage of housing
Frankfurt’s popularity has its price. There is a persistent shortage of housing: while 7,329 building permits were issued in 2018, the figure was only 5,829 in 2019. Zahrnt and Tucker expect the number to have risen again in 2020. At the end of 2019, total housing stock of about 395,000 dwelling units was recorded. This is well below the level of current demand. There is currently a shortage of about 50,000 apartments and this could double by 2030, leading to further increases in rents.

Capital value growing due to rising rent and price levels
A scarce supply makes for high prices. Apartment owners achieve prime rents in the Westend, Nordend and Bornheim/Ostend submarkets. These districts have the largest supply of rented flats – along with Frankfurt West and Sachsenhausen. When analysing the prices for owner-occupied flats, many of the same districts come up. The highest prices are in Westend, Nordend, in the Old Town and, at the very peak, also in Riedberg. The largest supply of condominiums is found in Frankfurt's West, South and Gallusviertel. Richard Tucker's summary: "The key figures of the residential investment market have been trending steeply upwards for 20 years. Further growth is also forecast for the coming years. Frankfurt’s residential market has in recent years developed into one of the most expensive in Germany".

Frankfurt's horizontal and vertical growth is insufficient
New urban neighbourhoods are being planned and built from scratch. This includes the FOUR project under construction in the city centre and will include 380 rented flats as well as office and retail space - a mixed-use building. A further urban neighbourhood development, Römerhof, is to be built south of Rebstockpark. The development plan is to be published in 2021. The developers are planning more than 2,000 flats. All just a drop in the ocean? Zahrnt and Tucker give an answer: "The population has been growing significantly faster than the rate of apartment construction in recent years. The number of households in Frankfurt will have grown by some 32 percent between 2005 and 2035; significantly faster than the national average of 10 percent. No reduction in the demand growth rate is expected". So there is only one thing to do: build more, and build more still.


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