Top 10 Red Rock Investment Locations in Market Report: Leipzig

A strong economy with ongoing growth: In the Residential Property Market Report, the economic development of real estate markets in Germany between 2018 and 2019 has been analysed.

The Gohlis Palace in Leipzig. (Image: Andreas Schmidt)

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 largest city of the Free State of Saxony, Leipzig.

In General

With its 583,221 inhabitants, Leipzig is not only the largest city of Saxony, but also the tenth biggest city in Germany. Along with the city Halle an der Saale, which is 32 kilometres away, it forms the conurbation Leipzig-Halle: Around 1.1 million people are living here. Both town charter and right to hold a market were issued around 1165. At this time, an important trade centre has already been developed, which led to the worldwide first trade fair in the year 1190. Until today, Leipzig enjoys an excellent reputation as the oldest fair city and is considered an important trade location in Central Europe.

In the recent hundred years, Leipzig also established itself as a book printing city. Of vital importance was the founding of the German publisher’s and bookseller’s association in the year 1825 and the bookseller’s market in 1836, which promoted the settlement of numerous publishers. The country’s oldest universities and colleges are situated in the fair city as well. The fact that their focus also includes music aside from trade is no coincidence: Leipzig is considered an important location for music history, which largely goes back to the work of Johann Sebastian Bach and Felix Mendelssohn Bartholdy. Even today, the city is not only an historical centre for economy, trade, administration, culture and education, but also home to a creative scene.

For companies from logistics, healthcare, bio technology, media, science and automobile production, Leipzig is an important industrial location. It wasn’t only the trade fair and its good reputation as a university city that contributed to this, but also the fact that Leipzig is one of the fastest growing cities in Germany. These factors affect the job market noticeably. Thus, the socioeconomic development in regards to population, purchasing power and employment market is clearly above the national average. The employment rate increased in the last five years by 14.1 percent. The rate of unemployment lied at 13 percent in 2011 and has decreased since then constantly to 6.7 percent by January 2019. Also, more workers commute from the surrounding communities to Leipzig, which leads to a positive commuting balance of around 37,180.

Demographics and Housing Market

The extraordinary strong population development in Leipzig surpasses previous forecasts. Thus, an average of 10,100 people per year moved into the city since 2011. Until 2030, the population will probably grow by another 34,500 inhabitants and sum up to approximately 617,700 – this corresponds to a growth of 5.9 percent. At the same time, the number of households rises, which will keep demand for living space high in the long term.

With the city’s strong growth, prices rise on the real estate market as well. Since 2008, prices for newly built condominiums rose by 66 percent while purchase prices for apartments from all years even increased by 70 percent. Depending on the location in Leipzig, prices for new constructions range between 3,310 Euro / sq m and 5,980 Euro / sq m and in the case of existing buildings between 1,225 Euro / sq m and 4,500 Euro / sq m. In the same period, rental prices increased by 44 percent for existing buildings and by 74 percent for new constructions. With that, rents for new constructions lie between 9.10 Euro / sq m and 15 Euro / sq m, while rents for existing properties range between 5.30 Euro / sq m and 11.70 Euro / sq m. This price trend will most likely continue in the upcoming years. Cause is hereby not only the population growth, but also the rising demand for single apartments, whose average size lie at 39.9 sq m currently. Around 38,000 students form a moderate weight on Leipzig’s real estate market.

Housing stock has increased strongly in previous years and currently comprises of around 329,488 apartments. In 2018, around 1,144 apartments have been completed, while the vacancy rate decreased further: It currently lies at 4.7 percent. Annual demand rises to around 2,400 apartments by 2030: A target for the volume of new construction that is met by only 48 percent in the current time period.

Summary and Outlook

Leipzig belongs to the most prosperous cities in Eastern Germany. Its strong demographic development at low prices and a currently higher vacancy rate pave the way to attractive opportunities for investors. Since population growth turns out stronger than previously assumed, living space in Leipzig is going to face a strong demand in the future as well. Beyond that, its prestigious university and strong local economy will further increase Leipzig’s appeal.

 

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Red Rock Releases Residential Property Market Report 2018/2019

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