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Frankfurt, Germany’s financial hub, has a mixed reputation: known for its huge airport and its cluster of downtown skyscrapers, it is sometimes viewed as a place to pass through without lingering, a place for business rather than pleasure.
Indeed, in real estate terms the city (population 685,000) is “underrated”, according to David Schmitt, manager of Engel & Völkers’ Frankfurt office. And this despite the fact that Frankfurt is the home of the European Central Bank and the venue of an important motor show and book fair.
“Like-for-like properties in Munich are at least a third more expensive,” says Schmitt. “Excellent apartments in very good areas sell for €8,000 per sq metre, with the most luxurious options only now just breaking through the €10,000 per sq metre barrier.”
Schmitt estimates that high-end properties increased in value by 25 to 30 per cent between 2007 and 2011 (without adjusting for inflation), with average hikes of about 6 per cent in the past 12 months. According to Engel & Völkers, two streets in Frankfurt have made the list of Germany’s most expensive residential addresses.
About 20 per cent of buyers of high-end homes in Frankfurt are from overseas, says Schmitt, with north Africans, Chinese and South Americans – particularly Argentines – close to the top of the list. “International buyers are often looking for a safe haven for their money, unlike the majority of German investors, who are usually looking for rental returns.”
A short walk from the city’s popular Palm Garden in the Westend South district, where a number of houses and apartment blocks are listed, a 332 sq metre duplex penthouse in a renovated neo-baroque mansion house with four bedrooms, three bathrooms and an 80 sq metre roof terrace is on sale for €2.8m via Engel & Völkers.
The mansion house, built as a dwelling but used until recently as an office, has since returned to its original purpose. It is an increasingly common transformation in a city with a surplus of office space (particularly in the outskirts) and a large number of people looking for centrally located homes.
These are often time-consuming, root-and-branch conversions. “Everything had to be stripped out, right down to the basic structure of the building,” says Ramesh Vankadari, who headed the sales team at Grand-Westend 24, a nearby scheme of 12 high-end units completed in 2012.
Beyond Frankfurt’s moneyed Westend, the housing boom has undoubtedly given a more general boost to the city’s infrastructure. Take the Westhafen, a river harbour on the right bank of the river Main. The 12-hectare site was neglected but its transformation, which started in 2000, is almost on a par with the makeover of the Potsdamer Platz in Berlin. It is estimated that there are now about 1,600 people living in the scheme in some 850 apartments. The most recent of these were delivered in the summer, when a beach club was open and a sailing school was in full swing.
A three-bedroom, two-bathroom sixth-floor 240 sq metre penthouse with maple parquet floors is on sale for €1.9m through Rhein Main Invest. A private berth for a boat costs €20,000 extra.
Even Frankfurt’s Bahnhofsviertel (literally, “railway station quarter”) – partly a red-light district, and also a popular first port of call for recently arrived immigrants – has not escaped the housing boom. Many locals tend to avoid the area altogether, but the developer of the k.58 scheme – a seven-storey, 38-unit development named for its address on Kaiserstrasse, a main artery – reports that it has sold 90 per cent of its stock in 10 months. One of the most expensive apartment remaining at k.58 is a 157 sq metre top-floor unit, with one bedroom and three terraces. It is available for €1.03m through NAI Apollo Living. As is often the case in Germany, the unit is delivered with bathrooms and floors in place, but without a kitchen.
After a boom between 1989 and 1994 (fuelled by the fall of the Berlin Wall), average prices in Germany’s housing market fell between the mid-1990s and the mid-2000s. Could today’s boom have the makings of a bubble? Not according to Deutsche Bank Research. In July it compared price hikes in Germany with similar periods of house price rises in other OECD (Organisation for Economic Co-operation and Development) countries, and concluded that “current developments [in Germany] are at the lower end of the scale and should be seen as a normalisation of the price level”.
But in October the Bundesbank warned that prices in Germany’s biggest cities could be overvalued by as much as 20 per cent. And with low interest rates and so many overseas investors, some recent – albeit modest – hikes in property transfer tax have done little to dampen demand.
In the countryside, however, the picture is often rather different. In the same region of Hessen, about 160km northeast of Frankfurt, is Rotenburg an der Fulda, a handsome town of well-kept buildings. Some people commute into Frankfurt every day, yet the pretty wooded landscape around the town is the flipside of the German housing success story. “In the villages around here,” says one agent in Rotenburg an der Fulda, “the market has come to a standstill.”
Frankfurt has no such problems. “The city can appear cold and strait-laced,” says Jeroen Meijer, who has lived in Sachsenhausen, a district on the left bank of the river Main, for two years. “But Sachsenhausen has boisterous cider taverns with communal tables where you always strike up a conversation with your neighbour.”
● Buyers pay a property transfer tax of 5 per cent of the purchase price
● Frankfurt has seven Michelin-starred restaurants
● The German government expects the country’s economy to grow by 1.7 per cent in 2014
● Noise from the airport is a problem in some city districts
What you can buy for . . .
€100,000 A 35 sq metre studio flat in Sachsenhausen needing work
€1m A three-bedroom apartment in Westend North
€4m A six-bedroom detached home on a 1,500 sq metre plot, 500 metres from the Palm Garden