Invest in the haze of big cities

Because the supply of housing in the top seven cities lags behind demand, the commuter flows from the surrounding areas into the centers are getting longer and longer. Developer and investor Quantum also sees bacon belts as "becoming more and more interesting" for institutional investors. In fact, according to Savills, the transaction volume is increasing.

In the first six months of this year, investors bought apartments in the vicinity of the seven most populous cities (Berlin, Hamburg, Munich, Frankfurt, Cologne, Stuttgart and Düsseldorf) for about 465 million euros. This corresponds to an increase of about one third compared to the same period of the previous year, according to evaluations by Savills. And that too: During the same period, the transaction volume in the A cities fell by 13% to 3 billion euros. "The contrary development could be an indication that more and more investors are expanding their focus on the surrounding area," concludes Savills market researcher Matti Schenk.

In recent years, the brokerage firm registered an increase in investment in the outskirts of the top cities: from 327 million euros in 2015 to 477 million euros in 2016 and further to 812 million euros last year. The evaluation includes transactions with 50 units and more. When asked which municipalities each form the surrounding area, Savills adhered to the boundaries of the Federal Institute for Building, Urban and Spatial Research (BBSR).

Project developments accounted for 29% in the first half of the year and nearly half of the transaction volume in the surrounding area in the past twelve months. This suggests that institutional investors expect a long-term high demand for modern rental apartments in the surrounding area, says Schenk. It is also quite possible that projects will be better available than existing ones due to stronger new construction activity.

Arguments for investing in bacon belts Quantum real estate recently brought together from several sources. The figures are impressive: in 2015, the Federal Employment Agency commuted around 383,000 working people from outside to Munich every day. 362,000 workers came to Frankfurt, 346,000 to Hamburg and 309,000 to Berlin. And the commuter flow is increasing, in the past, the strongest in Berlin: There five years earlier, ie in the year 2000, 130,000 commuters were counted less. In addition, according to BBSR ever greater distances covered: average 14.6 km in 2000, five years later then 16.8 km.

The surrounding markets are developing differently according to Quantum paper. Because the pressure on the Munich market is enormous and not so much is being built in the surrounding area as necessary, rents in the bacon belt of the state capital have risen sharply in recent years - in some cities like Freising and Ebersberg even more than in Munich itself For Berlin, its surroundings and distant cities, there are clear rent differentials and also different increases in rents. Interesting for commuters are therefore located on the S-Bahn middle-sized cities with their own historically grown city center, opposite Berlin lower rents and prices and an acceptable commute to the federal capital. Figures make this clear: While Berlin's rent rose by 16.7% between 2014 and 2018, Königs Wusterhausen recorded an increase of 32.4%, Oranienburg and Schönefeld also more than 30%.

Quantums conclusion is that the "market tension of the metropolises increasingly swallows on their respective surrounding area" and bacon belts for institutional investors thus become "more and more interesting", so the sites are well connected by road and public transport to the core cities. And so because flats are being built. However, this is increasingly the case, according to the paper in which the seven municipalities directly adjacent to Munich are cited as examples: in the last five years, around eight out of ten residential units have been built in multi-family houses.

Source: Immobilienzeitung