Real Estate Market Report - Rentals and Sales

The market development of the past months - we give you an insight with facts and figures.
The housing and real estate market in Munich has developed better than expected in recent months. However, the corona crisis remains a very big challenge for landlords and property owners.

Since March, companies and even institutions such as universities have been adjusting to the new conditions. Projects have been put on hold or started with delays. Home offices have become standard for a large number of employees. Students are in "distance learning" and follow lectures and seminars online from home. In September and October, despite the new circumstances, demand for furnished apartments and houses has stabilized and is at about the same level as the previous year.

Significantly more furnished apartments on the market

At the beginning of July, we recorded a peak in supply at Mr. Lodge with 390 properties. Currently we are still offering 260 properties (-30%). However, we are still far above the (low) previous year's figures. The strong supply of apartment buildings and increasing competition from hotel apartments are noticeable in the one-bedroom segment. Hotels are trying to attract tenants by offering long-stay apartments at very attractive prices. In contrast, the supply of 4- to 6-room apartments and houses continues to decline and is too scarce.

Here's how supply has evolved year-over-year at Mr. Lodge (as of 10/19/2020)

• 1-bedroom apartments: +240%
• 2-bedroom apartments: +35%
• 3-bedroom apartments: +90%
• 4-bedroom apartments: -60%
• Houses: -40%

Supply development Immoscout24 (IS24):

There is currently a larger supply not only in the furnished apartments on time, but also in the normal housing market. A look at the Immoscout24 portal shows this. It shows a further increase in the supply of rental apartments. It would typically be at the end of September/October that supply bottoms out, as many students and job changers traditionally need living space at the beginning of fall.
There is no sign of that this year.

Rental housing category:

• Offers in mid-March: approx. 1,450 properties
• Offers in the middle of June: approx. 2,250 objects
• Offers mid-October: approx. 2,350 objects

Rental housing market outlook: Some optimism - but lower prices

We are currently seeing a second wave of the pandemic in almost all European countries, which national governments are trying to combat with local restrictions. Travel is becoming more difficult again. Nevertheless, we are cautiously optimistic for the coming months due to the current good demand. Given the continuing large supply of apartments, landlords will have to prepare for lower rents and yields, especially for smaller properties.

The Corona crisis will remain a major challenge in the coming months and year. But as a landlord, there are things you can do to make your own offering more attractive:

• Does your apartment offer enough space to work and live?
  In recent months, the use of our own four walls has changed significantly. During the day, people work at home, and we also spend more time in our own homes in the evenings and on weekends. A proper workspace and overall homely furnishings are becoming more important.
• Can any vacancy be used to improve the furnishings? Our furnishing advice and technical service will be happy to assist you here. Apartments get on in years and from time to time need a thorough refreshing up to renovation and new furnishing.

Contact our interior design team: Tel: 089 340 823 563 | einrichtungsservice@mrlodge.de

• Is the Internet speed in the property fast enough? We recommend at least 50 Mbit/s. Whether it is for streaming or video conferencing: Now more than ever, a high-performance Internet connection is very important.
   
• Is the rent in line with the market? Excessively high rents lead to unnecessary vacancies. We are happy to advise you here!

Our landlord advisory is here to help: Lisa Hessner, Veronika Schimon, Kevin Radde: Tel: 089 340 823 44 | vermieterberatung@mrlodge.de | www.mrlodge.de

• Is the apartment no longer equipped in line with the times and is there a lack of demand as a result? 
  If an investment is no longer an option, we recommend selling.

The influx into Munich has been a strong, price-driving factor in rents and purchase prices. On balance, the residential population increased month by month in previous years. As a result of the corona crisis, the residential population has fallen in recent months. This trend could continue in the coming year. Quite a few people are already talking about a trend toward suburban areas. This will not remain without influence on the real estate market.

On the one hand, property owners are motivated to sell by traditional reasons such as family, career and regional changes, while on the other hand, the corona crisis has prompted new motivations such as liquidity protection or asset restructuring. On the other hand, a high level of investment interest is still evident on the buyer side. Many prospective buyers lack investment alternatives. For many, real estate continues to be the investment with no alternative. This has led to further price increases in many places in 2020, although the level is already very high.

Are you currently considering selling your property? Our sales team is happy to support you throughout the entire sales process with many years of expert knowledge and experience.
Your advantages at a glance:

• Free property valuation
• Optimal presentation of your property through home staging. We put your property in the right light by our interior designers
• Professional photography, video and 360° shots by our own photographers
• Our technical service, which assists you with repairs and maintenance
• Mr. Lodge marketing department

Property owners who are currently thinking of selling their property should not hesitate and take advantage of the good conditions for selling now.

The new regulation of commissions for the brokerage of apartments and houses decided by the government will come into effect from 23.12.2020. As of this date, we will charge the real estate seller and buyer 1.5% plus VAT each for the successful brokerage of a purchase contract. In the case of houses, the new regulation only applies to terraced houses, semi-detached houses and single-family houses, i.e. not to multi-family houses. The regulation still does not apply to land.

Property owners who wish to benefit from the previous regulation (commission paid by the buyer) should initiate the sale in the coming weeks.

Our sales team is happy to advise you: Anja Kemmelmeyer, Bernd Wedemeyer, Dr. Cornelia Koronakis,  Thomas Engel, Edda Pucher and Jacqueline Sauren: Tel: 089 340 823 540 | verkauf@mrlodge.de

Encouragingly, more building permits were issued in the city and district of Munich in the first 8 months. In the region, however, the permit figures are proving to be very mixed. In Dachau, for example, significantly fewer permits were issued.

Period 01.01. to 31.08.2020 in detail (change in % compared with prior-year period):

Source: Bavarian State Office for Statistics

The population in Munich declined to 1,558,345 by Aug. 31, 2020. Thus, the population decreased by -1,697 persons in the period 01.01. to 31.08.2020 (previous year period +7,119). 

Source: Munich Statistical Office

In a nationwide comparison of all metropolitan areas, Munich recorded one of the smallest declines in office leases at minus 26% to 406,000 square meters, according to BNP Parisbas Realestate.

Unemployment decreased by 1,232 people in September compared to the previous month and amounted to 54,505 (rate 5.0%). Compared with a year earlier, 20,069 more people are unemployed.  Job announcements fell by 34.6% to 2,330 in September.

Source: Federal Employment Agency Munich

Prospective real estate buyers with financing needs continue to benefit from the low interest rate policy of the central banks. The current best values from June 2020 (interest rate effective). The values relate to a 50% loan-to-value with a purchase price of 400,000 euros and 2% repayment and represent an orientation. (Source: Interhyp - www.interhyp.de).