Top location: Rhein-Main

(interesting historical data - from the year 2001)

The European Central Bank peps up Frankfurt

 

Three years ago we already forecasted it, and now it holds true more and more. The real estate location Rhein-Main upsurges to be the top location of Germany – perhaps even of Europe. The bank metropolis in the heart of Euroland is in the spotlight – where the Euro gets produced, administered, weight and valued. And also the following is official now: the European Central Bank is about to give order to the building project of a new office complex which will hold around 2000 employees starting ca. 2007.

Part of this is to acquire the land of the central market hall in the eastern part of Frankfurt. One can already foresee what this will mean to the eastern districts of Frankfurt: rents and apartment prices will rise. Now that the entry level prices are still low one should use the opportunity and take advantage of the raise of prices that is to be expected.

There are similar situations in the districts Hausen and Roedelheim. Due to the new stock exchange moving there as well as several service providers connected to it, Hausen came out of its shadowy existence outside of the actual city – thousands of employees of the stock exchange business run into the area of the industrial area every day. From the train station of Roedelheim one can reach the stock exchange of Hausen in only three minutes by bus, so this is the moment for smart people to purchase real property here now. Also Bockenheim, which is just around the corner, should gain in value, especially its northern parts.

What’s most wanted is studio apartments and 1-bedroom apartments. Frankfurt holds too little furnished apartments for specialists from inside and outside the country, at a ½-year to 2- or 3-years term of lease. In spite of the fact that the demand for such is higher now than it has been in a long time.

It cannot be ignored any longer: Frankfurt – the financing center – has become Europe’s financing center. London is having a hard time to keep its status as the Old World’s finance capital – the more so as Great Britain still hasn’t dared to step into the European Union. It is true the triumphal procession of the Euro seems to be a long time coming if one takes a look at the exchange rate as compared to the US-Dollar, however, this doesn’t affect the power of the finance capital Frankfurt – which as anyways, as it is known, almost become the federal capital in 1948 – thanks to Konrad Adenauer Bonn had outvoted it by only a few votes.

But Frankfurt is also becoming the metropolis of telecommunications and information technology more and more. One hardly finds more demand for computer specialists anywhere else than in the finance metropolis. No wonder: stock exchange, banks and finance service providers almost depend on the computer skills of their IT-specialist more than they depend on the skills of any other specialists. On top of it there is the increasing importance of the internet as a trading tool for banks and the stock exchange. The online trade- and money transactions blossom – there only needs to be a lot more improvement done on the technique. All this brings about a constant demand for specialists.

Thousands of specialists are currently moving to “Eurotown”. They need a space to live – are looking for pubs and restaurants and are taking advantage of all the numerous service providers, which young people just need.

The ones rich trading town Frankfurt, plunged in debt since years, can look into the future confidently – and with it all other numerous cities in the area of Rhein-Main. The extension of the city railway going to Roedermark-Oberroden across Dietzenbach will raise the value of the south-east; the development of the highway A66 to Fulda will also contribute to numerous cities in the area becoming more valuable.

The most wanted districts in Frankfurt, but also the most expensive ones, are still Westend, Sachsenhausen, Nordend, Bornheim, Bockenheim and the City. Currently, someone who wants to buy a freehold flat in one of these areas usually needs to pay prices between € 2.800 and € 5.000 per square meter of residential space. In districts like Hausen or Roedelheim one can still get prices around € 2.300 per square meter, providing that one finds offers at all.

Former areas of the US military are still getting newly developed and covered with buildings, for example northern from the main cemetery around Friedberger Warte. Other construction areas, such as Eschersheim, have become a rarity. The activity of new development, as concerning residential space, leaves a lot to be desired since long, but Frankfurt really hardly has any free space to construct on.

So it makes sense to purchase what already exists, meaning refurbished old buildings. A freehold flat of around € 130.000, when furnished attractively and equipped with Sat-TV, ISDN and washing machine, can be rented out at a yearly rent of around € 8.000 – 9.000, which comes up to a profitable yield of about 6 – 6,5%.

Boomtown “Mainhattan”

Perhaps Frankfurt Main is heading the biggest boom it has ever had. Once the Euro gets implemented as the single currency and the people have gotten used to the new coins and banknotes, the role of the currency keepers will gain more and more importance to the international events. The stock exchange of Frankfurt, which has become a corporation itself just recently and is traded at the stock exchange, gained importance internationally by the Euro being a stock exchange currency. It can even be expected to be number 2. worldwide (after New York) soon – ahead of London, Tokio and Chicago.

But above all, Frankfurt is also a young city, a city where more and more young people from all countries live. These people are mainly quite well-earning, solvent and also willing-to-pay public – people searching for and cherishing the quality of life. Whereas families keep moving into the hinterland since years, young people keep moving in, and not just in Frankfurt but also in other cities (based on an article in the Frankfurt Newspaper “FAZ” from the 23rd Feb 2001).

The fact that mainly large international investors have “discovered” the German real estate market is another indicator for the prices going further up in the future. Many of the investors are evaluating Germany as the most interesting investment market by now. Though this mainly applies to large projects in their analyses, it also affects the property market in general; the raising property prises will also push up the prices for residential apartments.

Additionally there is another, rather psychological component, which will come along with the introduction of the Euro. Probably one won’t even need to get used to calculating half the prices – for the trends, concerning the basic prices and thus also the sales prices for rented residential space, might as well go toward a level of € 3.000 - € 5.000 rapidly. Rents that are currently at a level of 15-20 DM per square meter could become € 10-15 soon; perhaps not in one go, but certainly within a short time period. Even though this is just a speculation, the reason for it is obvious: we have been getting used to these numbers for a long time and one could assume that the subconscious will bring back a condition that it is acquainted with – for it thinks with bare numbers, not with currencies (compare the value of one Dollar in the US). (There is a lot of pertinent technical literature available on this subject).

So also from this point of view it is more profitable than ever to purchase a rented out or rentable residential apartment. The Rhein-Main area is not likely to disappoint a capital investor. And if you are looking for a rental administration or for trustable partners for renting out we are glad to help you with this, or to help you find a suitable real estate as a capital investment.

 

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