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 Baden-Württemberg, Stuttgart.
Stuttgart is not only state capital, but with 663,000 inhabitants also the most populous city of the state of Baden-Wuerttemberg and the sixth largest city in Germany. Stuttgart is also the centre of the fourth largest metropolitan region with around 5.3 million inhabitants.
The city was first mentioned in a document of 1292. Since then, Stuttgart has grown into a renowned location for research and development and has even put forth innovations such as the world’s first mass-produced automobile with personalities such as Karl Benz and Gottlieb Daimler. Today, the automotive industry forms the core of one of the wealthiest regions in Germany. The city regularly ranks high on leaderboards, including 28th place in Mercer’s highest-quality cities and 24th out of 442 on the 2015 Innovation Cities Index.
Stuttgart as Economic Location
The birthplace of the modern car is not just a branch location of well-known car manufacturers such as Daimler and Porsche, but also the high-tech companies IBM and Hewlett-Packard as well as Deutsche Post, Bosch, Allianz Insurances and the consultancy Ernst & Young. More than half of all goods produced here are exported, making Stuttgart the strongest German metropolitan region in exports. There are also several universities with a total of 55,000 students. The local research institutes, such as Fraunhofer Institute, Max Planck Institute and the German Aviation Centre, account for 11 percent of the total research and development costs of Germany. Around 20 percent of employees in Stuttgart are considered highly qualified.
The broad offer of education, business and research has a positive effect on the labour market. Accounting for only 4.1 percent, unemployment is significantly below the nationwide average of 5.2 percent.
Demographics and Housing Market
Current forecasts expect Stuttgart to gain further 12,000 inhabitants by 2030. With the resulting 644,800 inhabitants, this would put the city on a new population peak. The growing population is leading to an increase in households and a sustained increase in demand for housing. The vacancy rate is already below one percent. In the period from 2008 to 2018, an enormous increase in the value of condominiums of all years of construction was recorded. On average, the increase in value here was at 129 percent. Purchase prices for new housing increased on average by 122 percent. Rents for apartments of all years of construction were on average 48 percent higher in 2018 than in 2008. Rents for new housing increased by 41 percent, while rents in general increased by as much as 48 percent. With 2,129 housing completions in 2018, Stuttgart will only meet 42 percent of the new housing requirement, which is at 5,100 residential units per year.
Summary and Outlook
Stuttgart is the centre of the fourth largest metropolitan region in Germany with a balanced economic structure. As an indicator of a very healthy economic climate, particularly worth mentioning is the low unemployment rate. The risk of future structural problems is correspondingly low. A steady increase in population ensures a constant demand for housing.
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