Business location with top jobs, growth region, place with high quality of life – the Bavarian capital Munich has a lot to offer and attracts more and more people. What does this mean for the housing market? Is the purchase of a property for capital investment in Munich worth it in the long term? In the following, we have compiled some interesting information for you on all aspects of investing in residential property.
Munich is, next to Berlin, Germany’s most important economic, transport and cultural center and offers a broad mix of industries. The major branches of the economy are: information and communication technology, automotive and mechanical engineering, electrical engineering, medical technology as well as cultural and creative industries.
Many internationally operating companies are represented in the Isar metropolis –including BMW, Siemens and Allianz. With Google, Microsoft, Amazon, IBM and Oracle, almost all of the big players among the US corporations have locations in Munich. Evidence of the strong job market is the low unemployment rate of 3.3%, which is lower in no other major German city.
Munich has been growing steadily for years – on the one hand due to sustained high birth rates, on the other hand as a result of high immigration. The Bavarian capital currently has a population of more than 1.5 million people. The signs are pointing to growth for the future as well. According to current forecasts, some 1.85 million people will be living in Munich by 2040. This represents a growth rate of 18.8 percent.
The excellent economic situation and the continuously increasing number of inhabitants ensure a high demand on the housing market. The market in Munich is one of the most expensive property markets in Germany. The boom phase, which has been going on for years, is continuing and the supply of housing is far from covering demand. The shortage of building land reinforces this situation.
At the moment, the rents offered in Munich average € 21.67 per square meter for newly built apartments, and € 20.53 per square meter for existing apartments. It should be noted that there are great differences between the individual districts.
Districts with the highest offered rents (new build):
Districts with the lowest offered rents (new build):
Due to the shortage of living space in the city and constantly rising rents, a trend has intensified in recent years: working in Munich, living in the surrounding area. According to the city of Munich, in 2017 alone, almost 26,000 people moved from the city to the neighboring countryside. This offers several advantages – especially communities with good transport connections, such as Freising, are an excellent alternative to the big city.
Situated north of Munich, Freising is a place worth living, with short distances to the countryside – the Isar meadows and numerous local recreation areas offer relaxation from everyday life. Furthermore, Freising impresses with excellent local supply. Thanks to the large selection of childcare and educational facilities, Freising is the ideal place to live for families. Last but not least, there are convenient connections to Munich both by public transport and by car.
The increasing attractiveness of the Munich surrounding area is also leading to rising rents in Freising: for a newly built apartment, an average of € 16.15 per square meter can currently be expected.more about Freising
As many other large cities, Munich is subject to the Tenancy Law Amendment Act, or the so-called “rental brake”. It states that rents for new leases in sought-after areas may only be a maximum of ten percent above the local comparative rent.
Exceptions to this rule include new buildings used and rented for the first time after 2014. So, buying a new property gives you more freedom of choice.
By the way: the restrictions of the rental brake also apply in the district of Freising.
In Munich, the signs are pointing to growth. More and more people are being attracted to the Bavarian capital, which is why current forecasts assume a further shortage of living space and rising rents. In the long term, the metropolis therefore offers very good rentability and stable yields. Thus, the purchase of a property in Munich – or alternatively in Freising – as a financial investment represents a very attractive option.
Quality of life
Booming economy, low crime rate, good urban infrastructure, a wide range of leisure activities – Munich once again came third in Mercer’s “Quality of Living” ranking of the world’s most livable cities. As in previous years, Munich is thus the city with the highest quality of life in Germany.
1st place: Vienna 3rd place: Munich 10th place: Stockholm 45th place: New York 57th place: Rome 74th place: Dubai 103rd place: Shanghai 167th place: Moskow 231st place: Baghdad
Supply and demand
Rental price development