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The real estate market of Leipzig

The real estate market of Leipzig is going through a critical phase in its development and become busier. Currently, the city built more residential buildings.
13.05.2013
Homesoverseas.ru editorial office
44
New buildings are being built in almost all sought–after areas of Leipzig: single-family and multi-family houses, multi-storey buildings with apartments - the city is at the stage of a construction boom.

Just five years ago, this state of affairs seemed impossible. At that time, a significant part of Leipzig real estate was empty waiting for tenants. Now there is a shortage of housing in some areas of the city. More and more people are moving from the suburbs to the city (the city's population has grown by 5,000 people again and now stands at about 535,000 people), banks offer profitable loans with government support, and local brokers record increased demand for real estate and an increase in sales turnover. Real estate prices increased significantly in 2012, and this trend continues in 2013.

Apartments with three or more rooms are in great demand. In 2012, they rose in price by almost 10% and the average prices per square meter currently range from 2500 to 3500 euros and even reach 3800 euros. This applies to both new buildings and sanitized (completely renovated and modernized) old buildings. Even apartments in unsanitized old buildings cost up to 2,200 euros per sq. m. For the most part they are purchased for personal living.

For the purpose of renting, cheaper real estate is purchased in medium or low-level areas (apartments with one and two rooms), which pays off on average in 11-12 years. At the same time, the risks are higher here, since quick rental is not always guaranteed. In such prestigious areas as Musikviertel or Bachviertel, apartments instantly find their tenants – but they are more expensive and the payback period reaches up to 18 years.

The unsanctioned old buildings of Leipzig, which are architectural monuments, belong to a special category of real estate. Due to special tax benefits, they are of high interest to investors, especially from western lands. In good central areas of the city, such facilities have become very rare, so now everything that is on the market is being bought. Even the location of the object is no longer of great importance, whether it is a noisy roadway or a quiet alley.

In Leipzig, on the contrary, there is a slight lull in the market of private single-family homes - sales turnover has even fallen slightly here. But the reason for this is not low demand, but rather an insufficient supply of real estate. Private houses are mostly sold only in cases of relocation, divorce or financial difficulties of their owners.

There is also a shortage of building sites. In such classic private sectors as Markkleeberg, near the southern lake landscape, land plots already cost from 250 to 350 euros per sq. m. Sometimes this even leads to absurd situations when not only undeveloped plots are acquired, but also plots with old houses, which are subsequently demolished and new private houses are built in their place.

Rental rates are also rising, although not as fast as market prices. Many tenants who paid from 6 to 7 euros per sq.m. m cold lease (rent excluding utilities), had to put up with an increase in rent payments. When new tenants move in, rates increase, as a rule, by 1-2 euros per sq. m. In the best areas of the city, such as, for example, Musikviertel, cold rentals reach 11 euros per sq. m. Although for this price tenants usually receive additional amenities such as a sauna, a designer bathroom or automatic control of electrical appliances.

This situation suggests one thing: the Leipzig real estate market is getting crowded, and this leads to the fact that some tenants even agree to pay the broker's commission for finding rental housing. Previously, paying for the services of a broker to find a tenant was the business of the owner.

Experts of the local real estate market predicted this scenario of price development in the Leipzig real estate market five years ago, which is the third largest and most important city in East Germany after Berlin and Dresden. But unlike Berlin and Dresden, the increase in real estate prices in Leipzig began relatively recently. Therefore, large and small investors still have the opportunity to purchase interesting inexpensive apartment buildings or apartments with high growth potential in the future.

The article was prepared by L&B Immobiliya EuRus GmbH specifically for the portal HomesOverseas.ru .

L&B Immobiliya EuRus GmbH is a company specializing in the sale of real estate in Germany to foreign buyers from Russia and CIS countries, as well as from Italy, Spain, France and other countries. The company's services include full transaction support, including the preparation of all necessary documents, assistance in opening an account with a German bank, renting out purchased real estate, and much more.

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