© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
November 30, 2012 7:05 pm
The spa town of Baden-Baden in the foothills of the Black Forest lacks the heavy industry and service sectors associated with much of urban Germany, but it thrives thanks to its growing popularity with international property buyers and its role as a cultural and lifestyle centre.
As well as Germany’s largest opera house, Baden-Baden hosts one of only five German restaurants with two Michelin stars and is renowned for health treatment centres, including the ruins of 2,000-year-old public baths.
The town’s well-preserved pink and grey baroque architecture makes it appear more ornate than nearby Stuttgart or other urban areas of Baden-Württemberg, the southwest German federal state in which they are located. And of Baden-Baden’s 55,000 residents, half live in the centre of the town. These qualities are now proving useful for the local housing market, which is bucking national trends.
German house prices are volatile and start from a relatively low base, with different indices in different regions. The German Institute for Economic Research predicts increases of more than 10 per cent in Berlin, Augsburg, Hamburg, Munich and Nuremberg in the next year – Berlin values have risen a similar amount over the past two years, partly thanks to investors seeing it as a “safe haven” in the current financial crisis. Yet the wider market still struggles. Average residential prices across Germany in the second quarter of 2012 dropped 2.65 per cent to €193,000 according to www.globalpropertyguide.com, whereas in Baden-Baden for the first half of this year they were static at almost three times that level.
The reason for the town’s relative strength is that its reputation for comfort and safety is attracting affluent buyers – both domestic and international – in search of retirement properties. Baden-Baden claims to have the nation’s highest concentration of doctors, dentists and surgeons, and three times the national average number of retirees. The town is also famous for its Liszt, Brahms and Berlioz summer festivals. “It’s a mineral health resort, holiday location and a centre of media and the arts,” says Klaus Hemetsberger of Von Poll, an associate of Christie’s International estate agency.
It is also well-located for European buyers. The town’s railway station has services to Basel in Switzerland and to Munich, Stuttgart, Strasbourg and Paris. Baden Airpark, 15km from the centre of Baden-Baden, has direct flights to the UK, Spain and Portugal as well as domestic services.
“For international buyers the appeal of Baden-Baden is that its market is strong by German standards but there is no bubble. Prices have never risen by anything like 10 per cent in a year but have generally risen small amounts over much longer periods,” says Roger Grube of Pamina Immobilien, an associate of Engel & Völkers.
Grube says there is a matrix of just 10 roads where most top-end buyers want to live, located between the Kurhaus spa resort and the casino. His company’s research shows that within that area, the four streets that are regarded as the town’s most exclusive addresses have either held or increased their value over the past two years in spite of the eurozone crisis.
Villas on the leafy Lichtentaler Allee, which is part of a 3km-long park, are the most expensive properties in Baden-Baden (and the 14th highest in Germany, according to Engel & Völkers) at an average of just over £8,000 per sq metre, the same as mid-2010. But at the next most expensive addresses in the town – Kaiser-Wilhelm-Strasse, Staufenbergstrasse and Bäderviertel – prices have gone up by £400 per sq metre since mid-2010 to £6,000, £5,600 and £5,200 respectively.
These values are in excess of many German cities, according to property consultancy Jones Lang LaSalle. It says prices in prime residential areas of Frankfurt and Berlin are about £3,330 per sq metre, even after better-than-average rises over the past year.
Agents in Baden-Baden say that demand has exceeded supply throughout 2012. Among homes currently for sale, Pamina Immobilien is marketing Villa Eckberg, a 390 sq metre house, for £2.42m. It is also selling two new-build apartments – unusual in a town where planners rarely grant consent for new homes. The 380 sq metre units are being sold as a pair for £4.04m. Meanwhile Von Poll is marketing a 1930s 10-bedroom villa with large south-facing grounds for £2.4m.
Although local agents report regular sales to Swiss, US, Australian and Scandinavian buyers, mostly as holiday homes used for up to four months of the year and rented out at other times, by far the largest international group is Russian. Following disinterest in the 1960s-1990s, Russians are back in force: agents routinely translate property details into Cyrillic, and one agency, Bereit Exclusive, has a Cyrillic website and employs four Russian speakers in its local office.
“I recently sold a 3,000 sq metre villa to a Russian in 15 minutes,” says Grube. “He looked right and left, didn’t complete the tour and just said ‘This is fine.’ It was €6m. Russians always go for big-ticket properties and pay top dollar, although they may use it for only two weeks of the year because they own homes around the world.”
There are signs they may be joined by more international interest. A Chinese buyer, who is believed to be the town’s first, purchased a villa for €2m this summer, and two agents claim they have been approached by prospective Indian buyers. If Germany’s reputation as one of western Europe’s most stable economies in these most unstable of times continues, its international appeal – once considered very limited – may grow further.
• Baden-Württemberg has the lowest crime rate of any German region
• Some 11 per cent of the region’s population was born outside of Germany
• Busiest June to August when an average of 300,000 tourists visit
• Estate agent, legal and property registration fees can total 12 per cent of purchase price
• Daytime temperatures range from just above 0°C in winter to 25°C in summer
What you can buy for ...
£500,000 A 2,500 sq ft three-bedroom villa on the edge of town
£1m A 4,000 sq ft three-bedroom villa near the centre
Copyright The Financial Times Limited 2015. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.