2024-12-04 7:35 CET, Europe, Germany | Press release
Residential markets across Europe are undergoing significant shifts: While demand in major cities continues to drive rental prices upward, housing prices are stabilizing after previous declines. Despite economic uncertainties, there are signs of a recovery in several countries. This is due, above all, to lower financing costs and the decline in construction activity across Europe. These insights and more are presented in the latest Catella Residential Market Overview Q3/2024, which examines trends in 58 cities across 16 European countries.
Dr. Lars Vandrei, Senior Research Manager at Catella Residential Investment Management (CRIM), comments: “In addition to the continued strong growth in rental prices, capital values are now also showing a marked upward trend. This is leading to an increasing stabilization of yields, with only isolated minor corrections expected. We are optimistic about the anticipated momentum in transaction markets, which should help stimulate construction activity.”
Key Findings at a Glance:
Rental Market
- Rental prices have risen in 53 out of the 58 cities analyzed. The unweighted average rent is €19.70/m² per month, reflecting a 4.1% increase compared to Q1 2024.
- London remains the most expensive city for tenants, with an average rent of €37.60/m² (+€1.60), followed by Dublin (€35.00/m²) and Geneva (€34.70/m²).
- At the lower end of the price scale are Liège, Belgium, and Graz, Austria, with €11.00/m² each.
- The strongest rental growth was observed in Ireland: Dublin (+€5.00/m²) and Cork (+€4.00/m² to €27.00/m²). The only city to see rental prices decrease was Montpellier, France.
Ownership Market
- Prices for condominiums increased in 45 out of the 58 cities analyzed. The European average price is €5,666/m², a 2.1% increase compared to Q1 2024.
- Switzerland records the highest prices: Geneva remains the most expensive market at €15,770/m² (+€120), followed by Zurich (€14,000/m²) and London (€13,930/m²).
- The most affordable housing prices are found in Finland: Lahti (€1,640/m²) and Jyväskylä (€2,380/m²).
- The highest relative price increases were observed in Polish cities, where condominium prices rose by 13% in Warsaw, 16% in Wroclaw, and 21% in Krakow since Q1.
Yields
- Prime yields for multifamily properties currently average 4.59% (unweighted), slightly up from 4.48% in Q1 2024.
- The lowest yields are recorded in Stockholm and Zurich (2.50% each) and Geneva (2.70%).
- Cork (6.25%), as well as Krakow and Wroclaw (6.00% each), offer the highest prime yields, making these cities attractive to investors.
Focus on Germany
- Rents have increased across all major German cities analyzed. Munich leads with €24.10/m² (+€1.70), followed by Frankfurt (€19.20/m², +€1.00) and Stuttgart (€18.10/m², +€1.40).
- In terms of purchase prices, Munich remains at the top with €9,950/m², slightly below the €10,000 mark, which it had surpassed at the beginning of 2022. Frankfurt is second at €7,070/m², followed by Hamburg at €6,800/m².
- The highest yields can be achieved in Düsseldorf (5.0%), while Munich offers the lowest at 4.2%.
Special Topic: Declining Building Permits Worsen Housing Shortage in Europe
An alarming trend is emerging: Over the past two years, building permits for residential space across Europe have significantly decreased compared to the previous period—by an average of 23%. Finland (-52%), Sweden (-48%), and Germany (-37%) are among the hardest-hit countries. This development exacerbates the housing shortage and drives rental prices higher. At the same time, construction activity in many markets remains at historically low levels. On the other hand, Portugal shows stable trends (+4%), and Spain demonstrates a markedly positive trend in new housing permits (+27%).
About Catella Residential Investment Management GmbH (CRIM)
Catella launched its first European residential property fund in 2007. The team also launched the first specialised pan-European student housing fund in 2013. CRIM is a subsidiary of the Stockholm-based Catella Group and its residential property business includes portfolio management advice, acquisitions and disposals as well as asset management. CRIM manages and advises several funds and mandates with assets under management of around €7bn in ten European countries.
Effective from January 1, 2025, CRIM will be Catella Investment Management, a € 10bn Investment Management platform. Read more here.
For further information:
Catella Residential Investment Management GmbH
Stine Zöchling
Head of Marketing and PR European Residential
Office: +49 (0)30 887 285 29 76
Mobile: +49 (0)151 544 51 005
