The property market in Frankfurt is struggling to keep up with demand. In the last five years, the number of inhabitants in the metropolis on the River Main rose by 9.4 percent – an increase in demand that cannot be met by new and existing properties. The region’s increasing economic attractiveness and sustained high migration mean a further population increase of 800,000 inhabitants is expected by 2025 (for comparison, almost 730,000 people were living in Frankfurt at the end of 2016).
As a result, rents have been rising steadily for years – by 3.1 percent in 2017 alone, and by almost 10 percent since 2016. While the current average net basic rent for existing properties is €14.80/m², those who were living in a new build in March 2018 were paying €17.31/m² – 15 percent more than that month the previous year. Rents for furnished micro apartments are now even higher. For these, landlords can expect an average monthly income of at least €25/m²*
Sources: Statistical Yearbook for Frankfurt am Main, PROJECT Research (based upon ImmobilienScout24 listings)
*Net basic rent, all information subject to change. Lower monthly rent can lead to lower returns. Figures rounded off. Ancillary and administrative costs not included.
**Gross rental return: ratio of the net basic rent to the purchase price, excluding ancillary, administrative and maintenance costs. The return forecast is based upon the current, regional average rents being asked for new buildings (property portal values). A reliable forecast of achievable rents cannot be made.
Achievable rents and the rental market could possibly be subject to adverse development. For example, the loss of local public transport or other facilities can reduce the attractiveness of properties. In addition, an increase in competitors or changes to social structures can also lead to the downgrading of a location. Your financing conditions and general market risks can influence the return forecast due to economic fluctuations. This can then have an adverse affect upon rental demand and rent levels: this can result in the letting being delayed and/or a reduction or even total loss of expected rental returns. The example forecast can change or even fail completely if one of the aforementioned risks comes into being.
PROJECT Immobilien Wohnen und Gewerbe GmbH aims to give the most complete and most realistic information possible. Despite increased diligence, the aforementioned impacts cannot be ruled out.
