Research by Grossmann & Berger reveals that the average asking price* for a new-build apartment in Hamburg was considerably higher at the end of the 1st half year. However, this creates a false impression of how prices are changing as it is due to the low number of new construction starts and a large share of residential units in expensive locations. The price thus calculated is a snapshot of the market rather than an indication of a basic trend.
“In this evolving market situation, the price of new-build apartments has remained constant, partly because they offer the benefits of energy efficiency,” says Frank Stolz, managing director of Grossmann & Berger with responsibility for the new-build sector. “We expect to see demand revive slightly in the second half of the year, since buyers’ hopes of plummeting prices and lower interest rates have not materialized. Moreover, we are assuming that the supply of new-build apartments available to buy or rent will shrink and that this will further aggravate the situation on the housing market. In the long term, the shortage of available properties will probably lead to demand outstripping supply. The energy efficiency benefits of new-build apartments will, in our view, lead to an increase in demand.”
Price of construction starts leaps up
By examining all the new-build developments for which the marketing process began in the 1st half of 2023, we see that the average asking price* for apartments has climbed by over 20 %, both in the city as a whole and in the top 23 residential districts. Grossmann & Berger’s analysts report that overall in the city the square metre prices soared to €10,850 and in the top 23 residential districts** to €13,580. “More than 45 per cent of all residential units coming onto the market in the first half year were in developments located in very sought-after areas such as HafenCity or Harvestehude. The surge in prices against the full year 2022 was correspondingly high,” adds Stolz.
In the 1st half year the average apartment in Hamburg measured 90 m² and was thus some 6 m² larger than units in 2022 – especially because properties on sale are currently concentrated in the expensive locations. As a result, the average total purchase price in developments started in Hamburg during the period rose to €976,500. The average apartment in the top 23 was 91 m² and thus 11 m² bigger. In this market the total purchase price was in excess of a million euros at €1,235,780.
Appreciably fewer construction starts
Fewer new apartments are being built in Germany. The results of the half year review of construction starts for new apartment developments confirms Hamburg is also following the trend towards less building activity. In the 1st half of 2023 a mere 34 developments were put on the market. A year before the figure was 49. The number of residential units fell from 691 to 660 during this period. “At present developers face a Herculean task when calculating a profitable apartment-building project. The increased costs of construction and borrowing do not square with the stagnating selling prices. In many places new-build plans are being shelved,” explains Stolz. “We do not, however, expect to see prices alter significantly. There is little room to manoeuvre on prices thanks to the high costs of construction and borrowing.”
Forecast: Stable square-metre prices
In view of the current interest rates, the price increases for residential properties seen in recent years are now a thing of the past. The G&B Property Price Trend forecasts settled prices in 2024 at the level seen in 2022. In this case, the average value for property within Hamburg city limits will be €8,500/m². In the top 23 residential districts** an average purchase price of €11,000/m² is expected. “There is likely to be an even stronger move towards smaller, more compact homes – together with a realization on the part of buyers that cash in hand is the key to their dream property,” says Stolz.
* Average asking price: Figure calculated in reference to all new-build apartment developments included in the survey whose construction start falls within a defined period
** Grossmann & Berger counts the following 23 parts of the city with the greatest new-build demand as the top 23 residential districts: Alsterdorf, Altona-Altstadt, Altona North, Bahrenfeld, Barmbek North, Barmbek South, Eilbek, Eimsbüttel, Eppendorf, HafenCity, Harvestehude, Hoheluft East, Hoheluft West, Hohenfelde, Lokstedt, Othmarschen, Ottensen, Rotherbaum, St. Georg, St. Pauli, Sternschanze, Uhlenhorst, Winterhude
*** G&B Property Price Trend: Estimate of the prices buyers are prepared to pay for a standard new-build apartment, without reference to location or special features of the project: first occupancy in a new-build, 3 rooms, around 80 m² living space, 1st floor, modern fit-out, elevator, without built-in kitchen or parking space