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What will happen in Hamburg’s real estate market? Will prices go up or down? Is Hamburg still a hotspot for foreign investors? How is Germany’s government impacting real estate policies and taxes in 2025?
We’re constantly asked these questions because we’re deeply involved in this market. Through our work with notaries, real estate agents, and clients who buy properties in Hamburg, we’ve gained firsthand insights.
That’s why we created this article: to provide clear answers, insightful analysis, and a well-rounded perspective on market predictions and forecasts.
Our goal is simple: to ensure you feel informed and confident about the market without needing to look elsewhere. If you think we missed the mark or could do better, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll work hard to improve this content for you.
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1) Hamburg’s property prices will keep rising because demand is high and land is scarce
In recent years, Hamburg has seen a steady increase in residential property prices. In the fourth quarter of 2023, newly built apartments sold for 3.9% more than they did in the same period in 2022. This trend is expected to continue, with projections indicating a 3% to 6% rise in property prices in 2025.
One of the main reasons for this increase is the limited availability of undeveloped land in the city. In 2023, there was a significant 43% decline in housing construction permits compared to the previous year. This shortage of new housing developments will likely lead to higher prices as demand continues to outpace supply.
Hamburg's growing population and its status as a major economic hub also contribute to the high demand for housing. The city attracts businesses and professionals, which increases the need for residential properties. Additionally, the trend of remote work has led to more professionals seeking high-quality living conditions in Hamburg.
Another factor is the ongoing housing shortage, which has put pressure on the market. In the last six months, there were only 29 rental flat offers for every 1,000 flat requests, highlighting the severe shortage. This scarcity of available housing options is driving up both rental and purchase prices.
Sources: Statista, HCob Bank, Hamburg Business
2) More foreign investors will enter Hamburg’s residential market because of the city’s economic stability
Hamburg's residential market is seeing a surge in foreign investment.
In 2024, 44% of the total investment volume in Hamburg's real estate came from international investors, a jump from 34% the previous year. This shows a growing confidence in the city's property market. One big reason for this is Hamburg's economic stability, which is a magnet for investors. The city ranks 51st in the Global Financial Centres Index, making it a reliable choice for those seeking stable returns.
Hamburg's property market is less volatile than other major German cities, thanks to its strong financial services sector. This economic resilience is a key factor attracting foreign investors. The demand for housing is high, with only 29 rental flat offers for every 1,000 requests, showing a market under pressure and ripe for investment.
International real estate agencies and consultants are well-established in Hamburg, making it easier for foreign investors to navigate the market. This supportive environment is crucial for facilitating entry and operations, further boosting investor confidence.
With low vacancy rates and high demand, Hamburg's housing market offers strong potential for growth. The city's economic stability and robust property market make it an attractive destination for those looking to invest in real estate.
As more foreign investors recognize these opportunities, Hamburg's residential market is likely to see continued growth. The city's economic resilience and supportive environment for investors are key factors driving this trend.
Sources: Global Property Guide, HCOB Bank, Place Brand Observer, Cushman & Wakefield, CBRE News
We created this infographic to give you a simple idea of how much it costs to buy property in different parts of Germany. As you can see, it breaks down price ranges and property types for popular cities in the country. We hope this makes it easier to explore your options and understand the market.
3) Property values in Wilhelmsburg will rise significantly due to major urban renewal projects
Wilhelmsburg is on the brink of a property boom thanks to major urban renewal projects.
The International Building Exhibition (IBA) is transforming Wilhelmsburg with its "Climate Protection Concept Renewable Wilhelmsburg" initiative. This ambitious project has united 150 private companies and the local community to work on over 70 projects, aiming for a 100% local renewable energy supply by 2025. Such efforts not only boost sustainability but also make the area more appealing to buyers, likely pushing property values up.
Wilhelmsburg's urban railway station is getting a facelift, which will improve accessibility and connectivity. The new design features a pedestrian bridge linking the station to key spots like vocational colleges and Island Park. This upgrade will make the area more accessible and attractive, potentially increasing property values.
Hamburg's reputation as a major port city continues to draw businesses and professionals, creating a steady demand for homes. This demand, combined with a limited housing supply, is expected to drive up property prices in Wilhelmsburg. The area's strategic location and ongoing developments make it a hot spot for potential buyers.
Wilhelmsburg's transformation is reminiscent of HafenCity, where property values soared due to its strategic location and mixed-use development. This trend suggests that Wilhelmsburg could experience a similar rise in property values as it undergoes its own urban renewal.
Sources: Metropolis, Internationale Bauausstellung Hamburg, Trinity College Digital Repository
4) Demand for senior-friendly housing in Hamburg will grow as the population ages
Hamburg's elderly population is on the rise, with more seniors than ever before.
Back in 2020, 18.2% of Hamburg's residents were aged 65 and over, and this number has been climbing since the 1990s. The Baby Boomer generation is aging, and in the next 25 years, the population aged 80 and above is expected to grow significantly. This shift is reshaping the city's housing needs.
With more seniors, there's a growing demand for healthcare services and assisted living facilities. The senior housing market is booming, but the 80+ population is outpacing the available housing inventory. This mismatch highlights the urgent need for more senior-friendly housing options in Hamburg.
Older adults often want homes that are easy to navigate and convenient. They look for features like pet-friendly spaces and off-street parking. In Hamburg, there's a noticeable interest in properties with accessibility features, reflecting this preference. Urban planners are also focusing on creating age-friendly infrastructure to support this demographic shift.
As the city's population ages, the demand for accessible and senior-friendly housing is set to increase. This trend is not just about numbers; it's about creating a city that meets the needs of its residents.
Sources: NIC MAP Vision Senior Housing Market Outlook Report, Statista
5) Property prices in Winterhude will stay stable because it’s a sought-after residential area
Winterhude has a long-standing reputation for stable property prices, even when the broader Hamburg market faced challenges in 2024. This stability is largely due to its consistent ranking as a top residential area, which has helped keep property values steady over the years.
One of the key reasons for this stability is the low property turnover rate in Winterhude. This means that people tend to stay in their homes for a long time, indicating satisfaction with the area and contributing to stable property prices. Additionally, the high demand for properties in Winterhude compared to the limited supply further supports this stability. In 2024, there were only 29 rental flat offers for every 1,000 flat requests, highlighting the area's desirability.
Winterhude's appeal is also bolstered by its proximity to key amenities like parks, schools, and public transport, making it a convenient and attractive place to live. The district's high-income population and low crime rates add to its desirability, ensuring that property prices remain stable. Furthermore, positive reviews from residents and the presence of cultural and recreational facilities enhance the quality of life, making Winterhude a sought-after neighborhood.
Sources: City Wohnen, HCOB Bank, Von Poll
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6) Short-term rental demand will rise, increasing yields in tourist-friendly areas
In recent years, Hamburg has seen a significant rise in tourism, with the first half of 2024 recording approximately 7.54 million overnight stays. This marks a 5.1% increase compared to the pre-pandemic year of 2019. Such growth in tourism naturally leads to a higher demand for accommodations, including short-term rental properties.
Additionally, Hamburg attracts around 100 million day visitors annually, contributing significantly to the local economy. This influx of visitors, spending around EUR 4.1 billion, indicates a thriving tourism industry that supports the need for more short-term rental options. As more tourists flock to the city, the demand for these rentals in tourist-friendly neighborhoods is likely to increase.
Moreover, Hamburg's local government policies are supportive of tourism and short-term rentals. The Senator for Economics, Melanie Leonhard, has highlighted the stable and pleasing trend in guest popularity, which further encourages investment in short-term rental properties. This supportive environment, combined with the city's growing popularity as a tourist destination, suggests that yields from short-term rentals will continue to rise.
Hamburg's investment in infrastructure and attractions, such as the Open Mouth Hamburg Food Festival and various musical premieres, also plays a crucial role in drawing more visitors. These events not only enhance the city's appeal but also boost the demand for short-term rentals, as tourists seek convenient and comfortable places to stay during their visits.
Sources: Hamburg Business, Travel and Tour World
7) Demand for affordable housing in Hamburg will rise, pushing prices up in cheaper neighborhoods
The demand for affordable housing in Hamburg is expected to keep rising due to several key factors. First, the city's population has been steadily increasing, with a notable jump from 1,853,935 in 2021 to 1,892,122 in 2022. This growing population naturally leads to a higher need for housing.
Additionally, the proportion of residents with an immigrant background rose to 39.3% by the end of 2022, further contributing to the demand for housing. At the same time, the number of housing construction permits has been declining, which means fewer new homes are being built to meet this rising demand.
Moreover, the rental market is under significant pressure, with only 29 rental flat offers for every 1,000 flat requests in the last six months of 2023. This shortage of affordable rental options is driving up prices, especially in central neighborhoods. Gentrification in traditionally lower-cost areas like Altona is also pushing up prices as these neighborhoods become more desirable.
Sources: The African Courier, Urbistat
8) Rents in Hamburg’s city center will keep increasing because demand is high and supply is limited
Rents in Hamburg's city center have been on the rise, and this trend is likely to continue. In 2023, the average rent for a one-bedroom apartment in the city center ranged from €1,300 to €1,600 per month, significantly higher than areas outside the center. This indicates a strong demand for city-center living.
One of the main reasons for this high demand is the increasing population and urbanization rates. Hamburg's metropolitan area has over 5.1 million people, and the number of households is growing as more people choose to live alone. This trend fuels the demand for housing, especially in the city center, where people prefer to live due to its vibrant lifestyle and proximity to job opportunities.
On the supply side, the availability of new housing developments is limited. The number of new construction starts has been declining since 2017, and the vacancy rate for apartments is extremely low. For instance, SAGA, a large municipal housing association, reported a vacancy rate of only 0.2% in its 140,000 apartments in 2023. This scarcity of available apartments makes it difficult for people to find housing, further driving up rents.
Sources: HCOB Bank, DZ Hyp Residential Market Report, Kummuni
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Germany versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
9) Rents will increase in new areas as they become more desirable with better amenities
Hamburg's newly developed areas are becoming increasingly attractive due to significant investments in infrastructure and public transport.
Take Wilhelmsburg, for instance, where projects like Quartier21 and Water Houses have turned it into a sought-after residential spot. These improvements have not only enhanced the area's appeal but have also led to a noticeable rise in property values. In the last quarter of 2023, newly built apartments in Hamburg saw a 3.9% price increase compared to the same period in 2022.
This uptick in property values signals a growing desirability for these neighborhoods. The influx of higher-income residents is a testament to this trend, as they are drawn to the improved amenities and vibrant community life. As more people move in, the demand for housing is naturally pushing rents higher.
Community projects like the Village Community Hub are playing a crucial role in this transformation. By enhancing local amenities and supporting businesses, these initiatives are making the neighborhoods even more appealing. This development is not just about new buildings; it's about creating a thriving community atmosphere.
As these areas continue to evolve, rents are expected to rise further, reflecting their growing desirability. The combination of improved infrastructure, community projects, and an influx of new residents is reshaping the landscape of Hamburg's real estate market.
For potential buyers, this means that investing in these areas could be a smart move, as the trend of rising property values and rents is likely to continue. Hamburg's transformation is a clear example of how urban development can drive real estate dynamics.
Sources: Statista, HOCHTIEF, Buffalo Rising
10) Older property values will drop as new environmental rules raise maintenance costs
New environmental regulations, like the ones introduced in Hamburg, require older properties to be retrofitted with solar panels starting in 2025. This is part of the Climate Protection Act, which aims to reduce carbon emissions by making buildings more energy-efficient. These upgrades can be quite costly for property owners, as they involve significant changes to existing structures.
Historically, Germany's energy efficiency standards have been criticized for being too high, which has made both new construction and the maintenance of older buildings more expensive. This has led to a shortage of affordable housing, as the costs associated with meeting these standards are passed on to property owners and, eventually, to tenants. The financial burden of these upgrades is a major concern for property owners, as it directly impacts their bottom line.
Studies have shown that the costs of deep energy efficiency renovations are substantial, with long payback periods that make them economically challenging. This means that property owners may not see a return on their investment for many years, if at all. As a result, the market value of older properties that do not meet the new standards tends to decrease, as buyers prefer newer, compliant properties that promise lower future costs and better energy efficiency.
Sources: SDG21, Clean Energy Wire, IMF eLibrary
11) Interest in eco-friendly properties will grow as more foreign buyers invest
There's a growing trend in the real estate market towards eco-friendly properties.
In recent years, the rise of green finance has been remarkable, with sustainable bonds increasing fivefold. This surge shows that investors are eager to put their money into eco-friendly ventures, and real estate is no exception. As more people look for ways to invest sustainably, the demand for green properties is on the rise.
International buyers are also becoming more conscious of climate change, which is affecting their investment choices. Many now prioritize sustainable housing, especially in bustling cities like Hamburg. This shift in preference is reshaping the real estate landscape, as developers respond to the call for greener living spaces.
The media has been instrumental in highlighting the perks of eco-friendly homes. With a spotlight on sustainability and green architecture, people are more aware of how their homes impact the environment. This awareness is fueling the demand for sustainable developments, making them increasingly appealing to foreign buyers.
In places like Hamburg, the push for green living is evident. New developments are incorporating sustainable features to meet the growing demand. This trend is not just a local phenomenon but is being mirrored in other major cities, where the focus is on creating environmentally friendly urban spaces.
As the world becomes more eco-conscious, the real estate market is adapting. Developers are keen to meet the needs of buyers who value sustainability, leading to a rise in eco-friendly property options. This shift is likely to continue as more people recognize the benefits of living in harmony with the environment.
Sources: World Economic Forum, Hamburg Climate Futures Outlook 2024, IMF
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12) Property values in HafenCity will rise as it becomes a center for tech startups and creative industries
HafenCity in Hamburg is on the brink of a property value surge, largely due to its transformation into a hub for tech startups and creative industries. In the past, specifically in 2023, there was a slight dip in property prices, but this was more of a temporary blip rather than a long-term trend. The area has seen significant investment, with around €10 billion funneled into its development, which is expected to boost property values as the district continues to modernize and attract high rental yields.
The district has become a magnet for tech startups and creative companies, with innovative businesses like Blockchance Campus and Finhaven setting up shop in the area. This influx of young, dynamic companies is drawn to HafenCity's inspiring surroundings and creative atmosphere, particularly in neighborhoods like Elbbrücken, which is rapidly becoming a startup hub. The presence of these companies not only enhances the district's reputation but also increases demand for both residential and commercial properties.
Government initiatives have played a crucial role in this transformation. Programs like City-UpTrade and the (Con)temporary Crafts Studio provide financial support and promote creative urban production, attracting both national and international companies. These efforts ensure a balanced urban environment, making HafenCity an appealing choice for potential buyers and investors. Additionally, the development of coworking spaces like EDGE Hafencity, equipped with smart technology and flexible rental options, caters to the needs of modern businesses and further solidifies the district's status as a tech and creative hub.
Sources: HafenCity, Von Poll Real Estate Blog
13) Rental yields in suburban areas will rise as more people relocate from city centers
Hamburg's housing trends are shifting as more people look beyond the city center.
With rising property prices downtown, suburban areas are becoming more attractive. For example, while city apartment prices climb, the cost of one- and two-family houses in the suburbs has dropped by 9.19% in 2023. This makes suburban living a more affordable option for many.
There's a strong demand for housing in Hamburg, pushing the city to aim for 10,000 new homes annually. However, city center developments can't keep up, so suburban areas are stepping in to fill the gap. Improved transport links, like those in Altona, make commuting easier, adding to the suburbs' appeal.
Families are increasingly drawn to the suburbs, seeking larger living spaces and proximity to green areas and schools. The rise of remote work also gives people the flexibility to live further from the city, making suburban areas more desirable.
City centers face issues like overcrowding, with only 29 rental offers for every 1,000 requests in Hamburg. This high demand and limited supply make suburban living a more viable alternative.
Sources: HCOB Bank, GlobeSt, Global Property Guide
14) Property prices in Hamburg's suburbs will rise moderately as remote work remains popular
In recent years, particularly in 2023 and 2024, there has been a noticeable shift in how people work and where they choose to live. One of the key trends has been the rise of remote work, which has significantly influenced housing markets, especially in suburban areas around major cities like Hamburg.
As remote work became more prevalent, with over 80% of firms in the information economy offering remote work options, people started to prioritize larger living spaces. This is particularly true for families who are looking for homes with outdoor spaces and proximity to green areas and schools. These factors have made suburban areas more attractive, leading to increased demand for family-sized apartments and larger homes.
Moreover, the reduced necessity for daily commuting to city centers has made suburban living more appealing. With more employees working from home, the need to travel to the city every day has decreased, allowing people to enjoy a better work-life balance in quieter, more spacious environments. This shift has been supported by infrastructure improvements in suburban areas, such as the extension of tram lines, which further boosts property values.
Additionally, the affordability of suburban properties compared to city center properties has made them an attractive option for remote workers seeking better value for their money. This affordability, combined with the lifestyle benefits of suburban living, such as more space and better schools, has driven higher demand and prices in these areas.
Sources: ZEW, Hamburg Business, Redfin
We have made this infographic to give you a quick and clear snapshot of the property market in Germany. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
15) Luxury rental yields will drop as demand for high-end rentals weakens
Rental yields in luxury properties are on the decline as demand for high-end rentals softens.
Since 2023, local real estate agencies have noticed a steady drop in interest for luxury rentals. For instance, the Realtor.com October Rental Report highlighted a 15-month streak of falling rents, with the median asking rent dipping by 0.8% to $1,720 in October 2024. This trend is particularly evident in urban areas where luxury apartments once thrived.
There's also been a boom in the construction of luxury properties, leading to a market oversupply. This glut of high-end units is pushing rental prices down, squeezing rental yields. The South and Midwest have seen the most significant increases in new multifamily housing, including luxury options, which adds to the pressure.
Economic factors are playing a role too. With rising interest rates, potential renters have less disposable income to spend on upscale living. Higher borrowing costs mean people are tightening their belts, making luxury rentals less appealing.
Surveys show a shift in renter preferences, with many now favoring affordable housing over luxury amenities. This change is driven by a need to prioritize budget-friendly options, as financial constraints become more pressing.
As a result, the luxury rental market is feeling the pinch, with fewer people willing to pay top dollar for high-end living spaces. This shift is reshaping the landscape, as developers and landlords adjust to the new reality.
Source: PR Newswire
16) Rental yields in central Hamburg will fall as property prices rise faster than rents
In recent years, property prices in central Hamburg have been on the rise. For instance, in the third quarter of 2024, the median apartment price increased slightly by 0.49% year-over-year, reaching €4,517 per square meter. This trend is expected to continue due to Hamburg's appeal as a major university and business hub.
On the other hand, rental prices have not been increasing at the same pace as property prices. Although rental yields have seen some growth, they are not keeping up with the rising property values. The low vacancy rate in Hamburg, which was just 0.2% in 2023, contributes to this slower growth in rental prices.
Historically, rental yields in Hamburg have been declining. For example, between 2013 and 2021, the net office prime yield fell year-on-year, hitting a record low of 2.55% in 2021. By 2023, the prime yield was at 4.25%, showing a continued decline in rental yields.
Sources: Global Property Guide, DZ HYP Residential Market Report, Statista
17) Property prices in Eimsbüttel will rise as more young professionals move in
In recent years, Eimsbüttel has become a hotspot for young professionals, and this trend is expected to continue. The neighborhood's eco-friendly urban projects, along with the construction of new schools and parks, have made it an attractive place to live. This surge in demand for housing is a key factor driving up property prices.
The rise of remote work has led many professionals to seek a high quality of life in cities like Hamburg. Eimsbüttel, with its improved public transportation links, offers easy access to the city center and other desirable areas, making it even more appealing to this demographic.
Additionally, the development of new cultural and commercial spaces in Eimsbüttel is increasing its desirability. The neighborhood's higher rental yields compared to other areas in Hamburg also indicate strong demand for housing, suggesting that property prices will continue to rise.
Sources: Hamburg Business, BNP Paribas Real Estate
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility. Finally, please note that we are not affiliated to any of the sources provided. Our analysis remains then 100% impartial.