Munich

CITY PROFILE

  • Munich is the federal capital of the Free State of Bavaria and is one of the most significant economic metropolises in Germany and Europe. The city offers a broad mix of different business sectors.
  • The city with approximately 1.4 million residents has a high appeal due to rising employment figures.
  • Internationally, Munich is one of the cities with the highest level of quality of life. The mountains and the seas in the surrounding region are popular recreational areas for Munich’s residents. The city has several parks, a diverse cultural programme and a picturesque cityscape. Additionally, Munich has many international tourists.
  • An exceptionally low crime rate contributes to the quality of life in Munich. In no other major city with more than 200,000 inhabitants is it less.
  • Munich is an interesting location for real estate investors who don’t shy away from high investment sums. 

    STUDY: EUROPE’S REAL ESTATE MARKET

Population

  • There is a dynamic population growth in the Bavarian capital. In the last years the population grew by 7 %. This demographic growth is due to a birth surplus as well as study and work-related migration.
  • By the end of 2018 Munich is expected to have more than 1.6 million residents. Experts prognosticate 1.7 million residents by 2028. This would equal a population growth of 15.4 % between 2013 and 2030.
  • In regards to its demographic structure, Munich is like other big cities in developed countries. The proportion of young adults is relatively high, which prevents an aging population. Trends indicate that the baby boom of 1964 could be surpassed with 17,280 births with 1.2 million inhabitants in 2020.
  • Due to the pluralisation of lifestyles and the progressive trend movement towards a reduction of the classical household, new forms of housing may become increasingly in demand.

Infrastructure

  • Munich has an excellent infrastructure, which is continuously being expanded. It is the most important transport and traffic hub that connects the north with the sound and the west with the east.
  • Train or car: Munich can easily be reached from anywhere thanks to the good connections. 8 motorways lead to the provincial capital.
  • Germany’s second largest airport is located in Munich and handles approximately 41 million passengers yearly.

Work / Economy

  • Munich's employment rate is steadily rising due to a high demand in the labour force. The growth sectors include biotechnology, media, the automotive industry and information and communications technology. Over 80% of all employees are employed in the service sector. This trend has been growing steadily.
  • The strong labour market is also reflected in the low unemployment rate of 4.3 %. No other German city has such a low unemployment rate.
  • The Bavarian capital is Germany’s leader when it comes to technology. There are approximately 22,000 high tech companies specializing in telecommunications, electronic engineering, aerospace as well as mechanical and automotive engineering. They profit from an excellent network, a high supply of qualified highly skilled workers as well as being located centrally in Europe.
  • A close link between the economy and university provides for visionary growth impulses.
  • The greater area of Munich is the economic centre of the southern German federal state. 21.8 % of the Bavarian population lives in greater Munich. They make up about 30% of Bavaria’s total GDP.

Education / Culture

  • The cultural programme in Munich is diverse. The theatre and opera scene alone has five state, 50 private and three urban theatres.
  • Munich is internationally renowned for its opera festivals, the Oktoberfest on the Theresienwiese and the Christkindlmärkte.
  • Munich has many primary and secondary schools. Additionally, Munich also has two top universities: Ludwig-Maximilians-Universität München und der Technische Universität München. Furthermore, there are also private universities and universities by the church that offer specialized higher education.
  • The Max-Planck-Gesellschaft and its many institutions as well as the Fraunhofer-Gesellschaft are the most significant research facilities. Both of them have their headquarters in the Bavarian capital.

Leisure / Sports

  • Munich has numerous impressive parks and gardens, that are like a green oasis in the big city for joggers and walkers. In the surrounding area there are countless possibilities to hike or do water sports. Lake Starnberg, Chiemsee, the Alps as well as the prealps are all in close vicinity.
  • There are two internationally known sports venues: The Olympiapark and the Allianz Arena. The Allianz Arena hosts home games of the popular soccer team Bayern Munich.

BEST RESIDENTIAL LOCATIONS

  • Munich’s real estate market is one of Germany’s most expensive real estate markets. The boom continues because the housing supply does not meet the demand. The lack of building land reinforces the current housing situation.
  • In Munich’s top neighbourhoods the prices are high. Rent and purchase prices may vary considerably depending on the property and micro location even within the same neighbourhood.
  • Some of the most expensive areas are Altbogenhausen/Herzogpark with its extraordinary Jugendstil architecture. There are also very exclusive locations in Altstadt-Lehel and Ludwigsvorstadt-Isarvorstadt.
  • The beautiful building structures and the close vicinity to the Englischer Garten make Schwabing-Freimann also very appealing. The same goes for Nymphenburg located close to the castle and its gardens.
  • Haidhausen/Au, Harlaching and Neuhausen are also areas in demand. Due to their proximity to the university and bars, those looking for housing are drawn to the Maxvorstadt.
  • Solln, a neighbourhood in the south of Munich, is very exclusive with it’s exquisite villas and single family homes.

INVESTMENT FACTORS

  • There is a steady economic as well as population growth in Munich, which effects the demand for housing. The federal capital’s short and long term predictions are thus very positive.
  • The low unemployment rate, the high purchase power and the high quality of life add to Munich’s continuous appeal.

PROGNOSIS

  • Although Munich’s rental price level is already very high, rents are increasing constantly in almost all parts of the city. The supply of living space is scarce and will continue to remain so in the future.
  • There will to be a shortage of family-friendly, affordable housing in good neighbourhoods. Even more critical is the situation for small-scale apartments due to the high rental rates, the many trainees and the high number of students.
  • Residential real estate prices will continue to rise over the coming decades, which will lead to a sustained high rental level.

ASSESSMENT

Munich is one of the most sought-after locations in Germany for real estate investments. The price level is correspondingly high. If one doesn’t shy away from this, there will be lucrative opportunities for making a secure investment as a capital investor.


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