A 47th-floor three-bedroom apartment with three bedrooms is for sale at 9 million euros ($10,000,000). This price is a warning sign, as some view it as a warning.
Locals call it “Mainhattan”, a reference to the skyscrapers and location along the Main river. Although Germany’s financial hub is far from New York in terms nightlife, culture, banking and banking, it still beat New York to be at the top of a 2021 real-estate bubble index.
A majority of Germans have bought a house or apartment after they have long avoided property ownership.
The resultant property rush has seen 18 high-rise buildings springing up in Frankfurt. This building frenzy is being replicated across Germany where prices have reached record highs. House prices have risen roughly 50% since mid 2016.
In the UBS bubble ranking 2021, Frankfurt beat Hong Kong and Toronto, while New York was beaten by New York. Nearby Munich was also at the top.
Since the middle of 2019, German real property prices have outpaced most of Europe, including France, Britain, and house prices increased more than 10% during the second quarter 2021 compared to one year ago.
This demand was highlighted by German insurer Allianz, and a local pension fund paying 1.4 billion euros ($1.6billion) for one of the four skyscrapers being built for the financial capital.
FOUR is a project that includes offices and two-bedroom apartments at a cost of approximately 3 million euros.
The developers behind the project stated that they are targeting the Frankfurt region. The city is one the most wealthy in Germany. “The demand has confirmed that this was the right approach. We don’t see any bubble.”
There has been a steady increase in interest. However, coronavirus has turbocharged property investment. Traditional savers in Germany have had more money to invest and deposits have been subject to negative interest rates.
In 2006, less than 42% of Germans owned their home. However, that number jumped to nearly 47% during the financial crisis.
According to the latest data from Germany’s Bundesbank, borrowing to purchase property has increased in speed during the pandemic. The value of home loans reached 1.45 trillion euros by 2020, which is roughly 6% more than the year before. Data for this year also show that this borrowing has continued its growth.
“SKY NOT THE LIMIT”
While the ongoing pandemic reduces immigration and strengthens tenant protection, while Germany’s population shrinks faster, some observers believe that the seeds have been planted for property prices to unwind.
In November, the Bundesbank warned of the dangers of an overheated market for property and warned that it could be overvalued up to 30%.
“We need roughly 220,000 immigrants to keep the population stable and the property demand stable,” Jochen Moebert, an economist with Deutsche Bank Research, said. Jochen Moebert, an economist at Deutsche Bank Research, stated that Corona has taken a hit on immigration. He added that net immigration dropped from 400,000 to 220,000 before the pandemic.
Moebert predicts that this, along with stricter rules for making homes more energy efficient and rent control, will lead to a boom in the property market by 2024.
He said, “We’re reaching for the top.”
Barbara Steenbergen, International Union of Tenants, stated that the pandemic had tightened control on European property investors by preventing foreign buyers from buying ordinary homes in Amsterdam or elsewhere.
She stated that “the markets for investors are becoming more controlled across Europe.”
Frankfurt is showing signs of a turning point, with plans to build a Porsche-branded apartment tower.
Local officials believe that the top may have been reached.
“The sky is not the only limit for property prices,” says a spok