Co-living stands out amongst Germany’s alternative line-up

2 MIN READApril 02, 2019
GRI Club Deutsche met in Berlin on 26 March to discuss alternative investment strategies and developments in German residential real estate. Rents, rates, construction costs and permitting were all taken into consideration, as well as the important issue of where to find yield in a late-cycle market.

Reiner Braun, CEO of economic research house Empirica, presented an overview of Germany’s macroeconomic environment, including a startling analysis of supply and demand dynamics in the residential market. Looking at data for approved residential construction projects, as compared to the number of new developments required in order to meet Germany’s housing needs, he highlighted the possibility that there might be an oversupply and that the housing bubble might burst, if everything was actually built. 

Participants discussed the impact of residence and relocation behaviour, based on Braun’s observation of demographic patterns in relation to housing. In particular, Braun pointed out how large numbers of students in Germany - which has the largest undergraduate population in Europe - favour attending university in B or C locations, where the cost of living is cheaper, whereas A location cities are more dependent on international students. He also noted the displacement of young, urban families, and how some professionals are now living in city centres and commuting outwards for work.

Co-living curious

The attractions of different, alternative residential strategies were weighed up, including co-living, student housing, retirement and micro-apartments.

However, the discussion focused very much on co-living projects, ranging from essential details such as bathroom requirements and how they vary across cultures and demographics, to the greater challenge of creating a co-living community. It was suggested that new forms of living are not solely driven by necessity, but also as a result of a lifestyle choice. Furthermore, with the growth of the co-living sector, it was felt that projects could become more inclusive and cater to diverse communities.

Energy constraints

Technology and digitisation were generally considered to be key drivers for residential projects and markets. At the same time, concerns were expressed over rising energy costs and their possible impact on residential markets, especially in A locations.

In conclusion, it was agreed that more courage was necessary when investing and developing alternative strategies in residential markets.

Trends and opportunities  in Germany’s residential real estate markets will be discussed further at Deutsche GRI 2019 on 8-9 May in Frankfurt.
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