Spotlight Wohnungsmarkt Deutschland März 2019

Publication

Spotlight German Residential Market

Text: Matti Schenk

Who owns Germany's rental apartments?
Germany has by far the largest rental apartment market in Europe. German residential property has been highly popular with institutional investors for a long time. However, not all regions of Germany have highly significant rental apartment markets. The ownership structure is fragmented and differs strongly from region to region. Here, we take a look at these differences and shine a light on the largest owners of apartments in Germany. The Berlin market is examined as a separate case study.

Significant regional differences in the size of rental apartment markets
The German apartment market is a rental apartment market. However, this is by no means the case in all districts of Germany. An average of 65% of all apartments in independent cities are rental apartments. In the rural districts, the average proportion of rental apartments throughout Germany is only around 40%. The twenty districts with the relatively smallest rental apartment markets are exclusively rural districts in western Germany. Conversely, of the twenty districts with the relatively largest rental apartment markets, thirteen are in the federal states created from the former East Germany (excluding Berlin).

Two in three rental apartments belong to private individuals
Of the 21.2 million rental apartments in Germany, around two thirds belong to private individuals or a community of owners. A further fifth of the apartment stock is owned by the public sector and housing associations. Hence, private companies account for just 2.7 million rental apartments, representing a relatively insignificant proportion of the overall market.

Private companies: often in the spotlight, almost never dominant
One group of owners is a particular subject of debate surrounding the apartment market, namely private companies. However, only in 31 districts do private companies own more than a fifth of rental apartments combined. Moreover, such companies only have single-digit market shares in 71% of all districts. Private companies primarily focus on independent cities in which their holdings account for an average of approximately 14.5% of all rental apartments. In the rural districts, however, their average market share is just 6.6%.

The largest apartment owners in Germany
Among the fragmented and regionally diverse ownership structure of the rental apartment market, a small number of major owners stand out. According to our research, at the end of the third quarter of 2018, 25 owners in Germany had holdings of approximately 30,000 apartments or more. Combined, these players own more than 1.9 million rental apartments, or around 8% to 9% of the current rental apartment stock.

Berlin case study: owners in the hot spot of the German residential investment market
Berlin's rental apartment market has witnessed particularly strong rental growth in recent years. Not only has this thrust the city into the spotlight of public debate, it has also made the German capital an extremely important location in the institutional residential investment market. According to census data, around 1.5 million of the approximately 1.9 million apartments in Berlin were let for residential use. The German capital has an above-average number of rental apartments in the hands of professional owners. Berlin accounts for around one in six German rental apartments owned by private companies, giving private companies a correspondingly high market share in the city. However, housing associations and particularly the public sector also have an above-average presence in Berlin. We were able to assign a total of around 828,500 apartments to 180 professional owners known by name.
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