Hello and welcome to Engel & Völkers Channel 24. What is it in your eyes that constitutes a luxury property? Quite possibly an exceptional location, a high quality of fittings and facilities, and of course the price tag. Properties at the very top of the market very rarely come up for sale, and they often sell for double a study to examine this special market. Kai Enders, Member of the Management Board of Engel & Völkers AG, is here today to tell us about the findings. Welcome, Mr. Enders! What is the thinking behind the latest market study regarding luxury property? The brokerage of luxury real estate is the core business of Engel & Völkers. We are involved with many transactions of this kind and we want to offer homeowners and interested buyers our expertise. The study now published provides a good overview for the first time of this special segment of highly exclusive properties in Germany. What exactly do people associate with a luxury home? This is a question that gave us something of a headache as we set about this study.
Luxury is very subjective after all. All of us have a different idea of what it is and there are various value thresholds floating around in the industry that are said to denote where luxury begins. We don’t think that is very meaningful, partly because this wouldn’t allow us to take sufficient account of regional differences either. In the end we arrived at a very pragmatic solution. We have focused simply on the most expensive 5% of transactions in the various markets, and that is then without doubt luxury. You just mentioned the different regions there – which places were taken into consideration in the study? In this first study we took a closer look at the seven largest cities in Germany. That is Munich, Stuttgart, Frankfurt, Düsseldorf, Cologne, Hamburg and, of course, Berlin. Having said that, we can imagine looking at other locations as well the next time we carry out the study. For example, the holiday regions in the north and the south are very interesting. If we take a direct look at the prices – where in fact does the price bracket for luxury property start? In Frankfurt we found the lowest entry prices for properties. Staying with our definition, luxury there begins at just 700,000 euros. At the other end of the spectrum is, unsurprisingly – Germany’s most expensive city – Munich. Buyers had to pay 2.1 million euros here to enter into the top 5%. Three times as much in other words. This tendency didn’t surprise us, but the extent of the difference certainly did. If these are the entry prices, the next question this poses is, of course, just how high are the absolute top prices? As you can imagine we are frequently asked about this – many journalists are interested to know. In Hamburg last year we witnessed a sale for 13 million euros. In Munich it was just under this at 12.5 million euros. But it should be noted that such sales in the double-digit millions are still absolute exceptions on the German property market. Much more interesting in fact is the frequency we observed in the cities. Luxury can be found in specific areas. In Munich, for example, a third of transactions in this segment were in Bogenhausen. In Hamburg, such sales usually take place in the Elbe suburbs and on the Alster lake. And which cities have the highest prices per square metre if we look at freehold apartments? That was an interesting finding. This time, Berlin ranked highest here with a top price of just over 19,000 euros. In Hamburg we also saw a transaction for 19,000 euros. But Berlin is surprising as the city has always been the lowest priced of the major cities in the past and now we are seeing, at least with top properties, that it is joining the ranks of Hamburg and Munich. If we stay for a moment with the freehold apartments: where on the other hand are the lowest ranking top prices per square metre? We registered five-figure prices per square metre in every city with the exception
of Cologne that was just under at 9,800 euros. These are big regional differences. What new findings would you say this study brought to light? The one major insight is in fact the large regional differences that we see. Luxury in Munich means something completely different to luxury in Cologne, luxury in Frankfurt is different to luxury in Hamburg. Or to put it another way: for a comparable level of luxury you have to pay dramatically different prices from city to city in Germany. If we take a look now into the future, how will the luxury residential property market in Germany develop in the future in your opinion? Trends on the property market always have a long-time impact. In the recent past we have seen increasing new building development in the luxury segment. There is a whole number of new luxury residential complexes, so the availability of such homes has increased. But the level of demand remains very strong, both due to a lack of investment alternatives and due to low interest rates. And we are expecting this to remain the case for the foreseeable future. We anticipate that prices will continue to rise. In other words, the premium market is set to see strong momentum in the future. That we can be sure about. Thank you for these interesting findings and the insight into this small but very exclusive market. And many thanks to you for watching. I look forward to welcoming you back again next time to Engel & Völkers Channel 24.