The latest investor survey conducted by DIP partner Aengevelt Immobilien has revealed that 96 per cent of market participants expect demand for rental flats to remain high or even rise further in the near future. The strongest growth in demand is expected in the high-quality housing segment. By contrast, a third of investors anticipate a decline in the housing supply, meaning that the housing shortage will become even more acute in many regions. 69 per cent of market participants expect rents to rise, with a disproportionately high increase in prime locations and a more moderate rise in less desirable locations.
Twice a year, the property firm Aengevelt conducts a nationwide survey of institutional and private flat owners, investors, service providers, financial institutions, valuers and property managers in order to compile the ‘Aengevelt Residential Investment Index (AWI)’. As part of this survey, views on the future development of the housing markets are also gathered.
The survey round that has just been completed revealed that, nationwide, only 4 per cent of market players expect a decline in demand for rental flats – if at all, then only in structurally weak rural regions. The overwhelming majority, on the other hand, anticipate that demand will remain high or even increase further. There is a clear trend here: the higher the quality of living, the higher the demand is estimated to be. 64 per cent foresee rising demand for rental flats in good locations, 57 per cent in average locations and 50 per cent in basic locations. Basic locations are also the only market segment in which as many as 12 per cent of respondents expect demand to fall.
Supply is failing to keep pace with the growth in demand. Across all quality categories, only 12 per cent of market participants expect the supply of rental flats to increase, whilst 33 per cent expect it to decline. Taking into account both demand and supply trends, the housing shortage is expected to persist or worsen in most housing market regions. Consequently, Aengevelt sees no signs whatsoever that the market situation is easing.
The imbalance between supply and demand trends is reflected in expectations regarding rent trends, although here too there is a distinction based on property quality. In prime locations, 75 per cent expect net basic rents to rise, whilst only 7 per cent expect them to fall. In average locations, 70 per cent expect rents to rise, whilst in basic locations, at 54 per cent, this is still a clear majority. Aengevelt attributes the upward trend in net basic rents, on the one hand, to increased land, construction and financing costs, and, on the other hand, to the continuing imbalance between insufficient supply and high demand. In addition, over 90 per cent of market players expect an increase in ancillary housing costs.
The ‘flight to quality’, which is evident across the board, is also evident in the trend in purchase prices for residential property: in prime locations, significantly more market participants expect prices to rise than to fall (30 per cent compared with 21 per cent); in mid-range and, in particular, lower-end locations, the opposite is true. In less desirable locations, 39 per cent expect prices to fall, whilst only 16 per cent anticipate a rise in prices.
Dr Wulff Aengevelt, managing partner of DIP partner Aengevelt Immobilien: “The political debate is currently focused mainly on the lower-priced housing segment, and not just in Berlin. However, the actual trend in demand is moving in a different direction: the vast majority of tenants want a higher standard of living. Despite the high level of pent-up demand, however, new-build activity remains subdued because political over-regulation and restrictions at federal, state and local levels are significantly further undermining the necessary profitability of investment in residential property, on top of the already dampening interest rate environment.”
