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; continuing with the state capital of the Free State of Saxony, Dresden.
As a state capital and biggest city of the Free State of Saxony after Leipzig, Dresden not only forms the local political centre, but also the seat of numerous institutions from culture and education, as well as important industries.
Dresden is internationally known for its restored old town in particular, which has been imprinted by a number of architectural periods. In general, many baroque and Mediterranean influences are noticeable in the architecture of the city. Along with its location at the Elbe Valley, Dresden is therefore also called “Elbflorenz”. Since 1434, the Striezelmarkt also takes place here, which ranks among the oldest and most known Christmas markets in Germany.
A diverse range of various industries has their seat in Dresden; among them the pharmaceutical and cosmetics industry, mechanical and vehicle engineering, the food and optics industry, as well as services, trade and tourism. There is a strong focus on innovative IT- and nanotechnologies. Alluding to California’s Silicon Valley, this earned the city the title “Silicon Saxony”.
Since the German reunification, Dresden could evolve itself into a dynamic growth region in Germany. A number of international companies is represented here by now, which positively affects the job market: Thus, the employment rate rose by 9.4 percent in the last five years, while the level of unemployment lowered constantly. After it lied at 10 percent in 2011, it decreased down to 6 percent by January 2019.
Demographics and Housing Market
Today, around 557,000 people live in Dresden. Thus, previous growth predictions have already been surpassed: Since 2011, an average of 5,500 people per year move into the city. By 2030, the city is expected to receive another 34,600 inhabitants and will thereby probably hit a total of 591,700 inhabitants. This corresponds to a percentage increase by around 6.2 percent. By doing so, the increasing number of households will ensure a long-term demand for living space.
Already since 2008, the increase of rental and purchase prices continues. Prices for condominiums in particular rose by 83 percent since then, in the case of newly built condominiums it is still 80 percent. Depending on their locations, this brings existing properties to purchase prices between 1,465 Euro / sq m and 4,970 Euro / sq m, while apartments in new buildings cost between 2,790 Euro / sq m and 6,161 Euro / sq m. Prices for apartment rents from all construction years increased in this time period by 37 percent and in the case of new constructed apartments even by 41 percent. With that, rents range between 6.00 Euro / sq m and 12.08 Euro / sq m and for new buildings between 9.10 Euro / sq m and 17.26 Euro / sq m. Space demand per inhabitant increased to 37.4 sq m in recent years, around 40,500 students have an additional influence on the housing market.
Housing stock was able to record growth in recent years, too. In 2018, 2,265 apartments have been finished here, which leads to a total stock of 304,380 apartments and a decreased vacancy rate of 1.9 percent. Until 2030, the average annual demand is going to increase to 3,700 apartments. A target that is currently met by only 61.2 percent, which constitutes a significant growth potential for the construction industry.
Summary and Outlook
Dresden is not only the political centre of Saxony, but also plays an important role in the economy – especially in the IT division. But other sectors as well exhibit an extraordinary positive development, where growth chances promise long term prosperity. The high living standard at comparable low costs moreover promotes the already strong population development. With these prospects, Dresden will also in the future remain one of the most beautiful, attractive and dynamic cities in Eastern Germany.
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