Our editor Daniel Kieckhefer comments on the study presented by UBS: Whether one can actually speak of an impending real estate bubble in Frankfurt remains to be seen.
Many factors influence the market in every single city, and not all real estate markets develop in a way which make them comparable. For example, comparatively expensive high-rise apartments in residential towers have only been sold increasingly in Frankfurt for a few years. This completely new market is expensive and is aimed in particular at real estate investors who often do not even live in Germany. Such expensively sold apartments have a huge impact on the official property sales statistics, but probably less on the regular real estate market: many of these expensive high-rise apartments are often vacant, intentionally or unintentionally. Because of their prices they do not compete for the classic real estate seeker looking for an affordable home.
In addition, the 30 percent rule in Frankfurt has only recently started to take effect, which in turn ensures that privately financed apartments cross-finance the costs of subsidized apartments. This also results in politically desired increases in real estate sales prices on the privately financed housing market.
Without this special market for residential towers and the 30 percent rule, the statistics would certainly not look so gloomy. In addition, the Frankfurt real estate market was undervalued for a long time by international comparison and is still so for many investors today. In this respect, the real estate data used for Frankfurt needs to be reassessed. If there is no reassessment, Frankfurt will continue to appear wrongly at the top of the statistics. Because the trend towards extremely high-priced apartments in residential towers is picking up speed here, with purchase prices on the upper floors in some cases exceeding 25,000 euros per square meter.