In the latest Red Rock Investment Residential Property Market Report 2018|19, past year’s trends are being documented. In the process, the ten most important locations in Germany were examined on their market situation, their demographic development, infrastructure, as well as their investment perspective on the housing market. In our overview you’ll see the results for these cities; starting with the state capital of Lower Saxony, Hanover.
Hanover was first mentioned in the year 1150, the place received its town charter in the year 1241. Today, the city has around 535,000 residents and is thereby the biggest city, as well as the most important economic site in Lower Saxony. In addition, decades of history as a fair city led to an extraordinary infrastructure. Hanover in general is considered an important transport hub due to its central location – be it from a German or even a European point of view.
Nine universities, several libraries and a pulsating cultural scene with annual theatre-, music- and dance festivals are part of a rich supply of education and entertainment. As a trade and industrial city, Hanover is an important location for banks, insurances, financial service providers, the automotive industry and plenty of research institutes. Hanover’s expansion to an industrial location has a positive influence on the job market. Thus, the unemployment rate declined from 10.7 percent in the year 2011 to 6.6 percent in January 2019. The employment rate therefore rose by eleven percent in the last five years alone. Also within the metropolitan region between Braunschweig, Göttingen and Wolfsburg, Hanover is of particular importance for employees: Around 115.100 more workers commute to the city, than out of the city.
Demographics and Housing Market
Since 2011, the number of inhabitants rose by an average of 4,500 annually. According to recent predictions, another 17,000 residents will move into the city by 2030. The ongoing population growth in combination with the low construction activity leads to rising prices and shortages, especially in regards to multi-floor residential buildings. For this reason, both state capital and local housing industry initiated the Hanoverian housing construction campaign in 2016. It is planned to swiftly build at least 5,000 new housings by 2020 – 25 percent of which should be promoted publically.
However, since no significant reductions of the demand surplus can be assumed, further price increases are to be expected. Purchase prices for condominiums for instance rose by 114 percent since 2008 and by 73 percent in the case of newly constructed condominiums. Depending on the location, purchase prices of newly constructed apartments vary between 3,205 Euro / sq m and 6,802 Euro / sq m, while existing properties cost between 1,540 Euro / sq m and 4,600 Euro / sq m. Apartment rents, whose prices rose depending on the construction year by either 37 percent or 39 percent, vary in the case of newly constructed buildings between 9.25 Euro / sq m and 17.00 Euro / sq m and in the case of existing properties between 6.70 Euro / sq m and 13.24 Euro / sq m. The demand for living space per inhabitant lies at 41.9 sq m currently, around 47,000 students take an active share on the demand on Hanover’s housing market.
Housing stock grew strongly in recent years. After 911 units were completed in the previous year, it now comprises of 295,237 housings, which decreased the vacancy rate to 2.6 percent. Until 2030, an annual average demand of around 1,450 housing will arise – a welcome challenge for the residential economy.
Summary and Outlook
Hanover is the political and economic centre of Lower Saxony. The world’s largest exhibition grounds, the well diversified economy and a healthy job market are the figureheads of this prosperous, strong location. Due to a very positive population development and an ongoing high demand for housing, Hanover will continue to be one of the most interesting investment locations in the future as well.
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