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Hardly any negative corona effects on the Munich residential property market: purchase prices stagnate at a high level - demand remains high

• Online press conference by Becken and bulwiengesa on the current situation
  on the Munich residential property market
• An additional 10,800 new apartments per year will be required by 2025
• Home purchase processes for end consumers extended by four to six weeks during the
  coronavirus pandemic
• HOCH DER ISAR new-build project by Becken with current sales rate of 28 percent

Munich, November 11, 2020 : Munich's residential property market will remain tight in the coming years. A corona effect on the price development of residential property is therefore not discernible. By 2025, the population of the Bavarian capital will grow to 1.59 million people. Over the same period, Munich will need around 10,800 new residential units per year to meet the additional demand for living space. Meanwhile, the coronavirus crisis is causing end consumers' purchasing processes to take four to six weeks longer. At the same time, prospective buyers of condominiums are becoming more aware that residential real estate is a safe investment even during the coronavirus pandemic, according to project developer Becken's experience.

These are the key findings of today's online press conference on the Munich residential property market by project developer Becken and research company bulwiengesa.

Munich housing market defies the coronavirus pandemic

Dr. Heike Piasecki, branch manager and authorized signatory at bulwiengesa, comments: "Many factors point to a persistently high price level on the Munich residential market. Although the number of unemployed people in Munich had risen by around 116,000 year-on-year by October 2020 as a result of the coronavirus crisis, the rising population, high purchasing power and the forecast increase in employees subject to social security contributions until 2025, among other things, are driving high demand for housing. At the same time, the completion rate is lagging well behind both demand and the targets that the city of Munich has set itself." Dr. Piasecki adds: "By 2025, 10,800 apartments should be completed per year, compared to an average of just over 7,000 units between 2015 and 2019. If construction activity does not pick up significantly, the undersupply will continue in the future."

Purchase prices are rising slightly and will therefore remain at a high level in the coming years, according to bulwiengesa's forecast. On average, prices for residential property in Munich currently stand at EUR 9,000 per square meter. The peak is around 17,000 euros per square meter. The Haidhausen sub-area is one of the reasons for this high level. A look at the price categories of the listings reveals that condominiums in the lower price categories up to €500,000 have been virtually non-existent since 2016. Dr. Piasecki explains: "One of the main reasons for the big price jumps in the condominium market in recent years is the high price of building land. Since 2010, these have risen more than 3.5-fold. In 2019 alone, the rate of price increases for residential building plots was 8 percent."

Changing conditions in the sale of condominiums

In the midst of the coronavirus crisis, project developer Becken began preparations for the construction of its HOCH DER ISAR residential property project in the Au-Haidhausen district. The residential ensemble with 185 condominiums is now under construction as planned. While the crisis has only had a limited impact on the construction process so far, Stefan Spilker, Managing Director of Becken Holding GmbH, has noticed a change in the framework conditions for sales processes: "With the shutdown, we initially registered greater interest in our listings. Due to the unpredictable course of the pandemic, potential buyers took more time to make a decision. At the same time, we have noticed that banks are taking significantly longer to process financing requests from private customers. This has extended our sales processes by four to six weeks, which in turn has led to longer reservation times and postponements of notary appointments."

HOCH DER ISAR project development achieves sales rate of 28 percent

Following the start of sales at the end of 2019, Germany-wide project developer Becken has now sold more than a quarter of the apartments, a good two years before completion: "As of today, we have sold or reserved 28 percent of the 185 condominiums, which are spread across 13 different buildings. This includes all types of apartments, which confirms that we are addressing the right target groups. The majority of buyers come from Munich and the surrounding area and have purchased the residential property primarily for their own use," reports Spilker. The sizes of the future condominiums vary from 30 square meters to 330 square meters. The 185 apartments are divided into eleven penthouse apartments, 88 city studios and culture apartments, 72 spacious city apartments, eleven garden apartments and three townhouses. "In sales, we are also noticing that interest from end consumers, who postponed their decision to buy a condominium at the beginning of the pandemic, is on the rise again. We conclude from this that prospective buyers have realized during the pandemic that residential property is a crisis-proof investment," says Spilker. Completion of the ensemble is planned for the turn of the year 2022/2023.