All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.
Yes, the analysis of Munich's property market is included in our pack
Wondering about investing in real estate in Munich? You're not alone!
Many people are enchanted by Munich's Bavarian charm and dream of owning a cozy chalet or a stylish apartment in this city.
Would it be a profitable investment, though? Are property prices increasing in Munich? Is it expensive? Is it wiser to buy property in the city center or Schwabing? Are there any secret taxes? What yields can I expect?
We've solved it for you.
The Investropa team has really dug into this market. As a matter of fact, we've gathered all our findings in a pack. Get it now.
In the lines below, we will share some of this knowledge.
How's the real estate market in Munich?
Is the property market doing fine or not? A data-driven analysis will give us the answer.
Property types
In Munich, you can find various types of properties for sale to suit different preferences and needs.
These include apartments ranging from cozy studios to spacious penthouses, ideal for urban living.
There are also townhouses and single-family homes with private gardens for those who desire more space and a suburban atmosphere.
Additionally, you might come across charming historic properties with unique architecture, as well as modern newly-built residences.
Munich's real estate market offers a diverse range of options to cater to various lifestyles and preferences.
Better to buy or rent?
(If you want to live there yourself and not rent it to others)
Whether you're already living in Munich or considering it for your future, you might be wondering about the advantages of buying a property versus renting.
Without a doubt, you should buy if you want to acquire equity, have more control over your living space, and have the potential to benefit from appreciation in property values.
Actually, decisions become clearer with the property price-to-rent ratio in mind. You can use this number to see how long it will take to recover the property's cost through rental earnings.
According to Numbeo, the property price-to-rent ratio in Munich is around 41.4, which is very high.
If the ratio is high, it indicates that buying properties are more expensive in the short term compared to renting. However, buying can still be a viable option if you plan to live in the property for an extended period or if you believe property values will increase significantly over time.
Property prices in Munich
On average, according to the last data from Europace AG, Germany, purchasing a property in Munich would cost you around $9,200 per square meter.
Obviously, there are big differences. A property in Schwabing may have a higher price per square meter than an apartment in Glockenbachviertel. We actually give you a more detailed breakdown in our pack for buying property in Munich and in Germany.
To put things in perspective, it is similar to the prices you can find in a city like Amsterdam.
Also, it's good to know that housing prices in Munich are higher (15%) than in Frankfurt.
The most expensive neighbourhoods in Munich are probably Altstadt-Lehel, Maxvorstadt, and Schwabing-West, while the cheapest are probably Berg am Laim, Trudering-Riem, and Ramersdorf-Perlach.
Trends
First and foremost, we have to acknowledge that Germany is, today, an incredibly stable country. The last Fragile State Index that has been reported for this place is 23.6.
Keep this in mind when considering whether it's a good idea to buy a property in Munich.
Also, according to the IMF’s forecasts, Germany's economy is expected to soar by 6% in the coming 5 years, resulting in an average GDP growth rate of 1.2%.
If you want to invest in real estate in Munich it's a good thing because when the economy grows, people often experience an increase in wealth, it typically translates to a surge in housing costs.
Also, in Germany, the average GDP per capita has changed by 0.2% over the last 5 years. It's not much, but the growth is here.
However, according to the UBS Global Real Estate Bubble Index, the Munich property market is currently significantly overvalued and presents a risk of a bubble (the index is at 1.8 and there is a bubble risk for a score above 1.5).
Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Germany right now.
Buying property in Munich
Buying real estate in Munich can be a difficult process due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Munich and in Germany.
Buying process
Within our pack, we have outlined the complete buying process. This includes the necessary documents, the applicable taxes, as well as information about where to locate properties, and more.
Here, we are providing you with a simpler version to assist you in better comprehending the information.
This is the step-by-step process to purchase a property in Munich:
- Research the Munich property market and understand local regulations.
- Determine your budget and secure financing, considering German mortgage options.
- Engage a licensed real estate agent familiar with Munich's neighborhoods.
- Start viewing properties that meet your criteria, considering German building standards.
- Make an offer through your agent and negotiate the purchase price and terms.
- Sign a preliminary contract (Vorvertrag) outlining key details and paying a deposit.
- Engage a notary to prepare the official sales contract (Kaufvertrag).
- Conduct due diligence with the notary, who reviews property documents and history.
- Obtain necessary permits and financing approval before the closing date.
- On the closing day, sign the final sales contract in the presence of the notary.
- Pay the remaining balance, transfer property taxes, and cover notary fees.
- The notary will register the property with the Land Registry (Grundbuchamt) and handle official ownership transfer.
Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Germany.
Make a profitable investment in Munich
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Where to find a property
Check out these websites to find properties in Munich:
- Engel & Völkers - A real estate agency in Munich, providing personalized advice for buying and selling exclusive properties.
- Rightmove - A property portal offering houses and apartments for sale and rent in Germany.
- Buy Berlin - A real estate company specializing in property sales and furnished rentals in Berlin, offering a range of apartments in various neighborhoods.
- Rentola - A rental home search engine, offering over 13,000 available rental homes with price comparison and customer support.
- Deutsche Wohnen - A rental property platform by Deutsche Wohnen, offering apartments and commercial rental offers with customer service for tenants.
Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Germany.
Properties & Budget
As mentioned before, the average price per sqm in Munich is $9,200. A 1-bedroom property with 60 square meters would cost approximately $552,000, while a 2-bedroom with 85 square meters would cost approximately $782,000.
However, the amount you pay for a property can be different based on its characteristics and where it's found.
Housing prices in Munich's top areas are usually more expensive. In Schwabing, a residence might cost around $2,240,000, while a house in Glockenbachviertel might be priced at $1,610,000.
Some locations are not as expensive. You may find an apartment in Neuperlach for $300,000, or you could come across an apartment in Neuaubing priced at only $250,000.
We give a more detailed breakdown in our full pack for buying property in Germany.
Mistakes to avoid
Here are the main pitfalls when buying property in Munich, Germany:
- Grunderwerbsteuer: A 3.5-6.5% property transfer tax adds to the acquisition cost.
- Mietpreisbremse: Rental price caps may affect investment returns for buy-to-let properties.
- Denkmalschutz: Historic preservation laws restrict renovations on protected buildings.
- Grundbuchamt: Navigating the German land registry system can be complex and time-consuming.
- Kaltmiete vs. Warmmiete: Beware of extra costs for utilities not included in the rent (Nebenkosten).
- Genossenschaftsanteile: Cooperative housing requires purchasing shares in addition to property costs.
- Energieausweis: Understanding energy efficiency certificates is essential to avoid future liabilities.
- Vorkaufsrecht: Pre-emptive rights granted to tenants can impede property sales.
We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.
Everything you need to know is included in our Germany Property Pack
Living in Munich
Munich is a vibrant city with a well-developed infrastructure, excellent quality of life, and great opportunities for buying property.
Cost of living
Munich is one of the more expensive cities in Germany, with an overall cost of living that is higher than the national average. Rent, groceries, and transportation are all more expensive than other cities in Germany, but the quality of life is generally high.
Here are some examples to better understand the cost of living in Munich:
- Monthly rent for a stylish apartment in the trendy Glockenbachviertel: €1,500-€2,500.
- A Maß (1-liter) of beer at Oktoberfest or a beer hall: €10-€12.
- Monthly public transportation pass for zones 1-4: €70-€100.
- A pretzel (Brez'n) from a traditional Bavarian bakery: €1-€2.
- Admission to the Deutsches Museum: €8-€15.
- Monthly membership at a traditional Munich-style beer garden: €50-€80.
- Fresh produce from Viktualienmarkt for a week: €30-€50.
- A bottle of local Bavarian schnapps (e.g., Obstler) from a liquor store: €10-€20.
Neighbourhoods
Since we aim to make information easy to understand, we've created a summary table outlining the different neighborhoods in Munich. For yields, prices and rents, check our property pack.
| Neighborhood | Description | Strengths | Weaknesses | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Schwabing | Schwabing is a trendy neighborhood known for its vibrant cultural scene, numerous cafes, and proximity to English Garden. | Rich cultural activities, great cafes, and beautiful parks. | Higher living costs and limited parking options. | ||||||||||||||||||||||||||||||
Glockenbachviertel | Glockenbachviertel is a hip area with a bohemian atmosphere, offering a wide range of bars, boutiques, and art galleries. | Lively nightlife, diverse shopping options, and creative community. | Noisy at night, limited green spaces, and expensive housing. | ||||||||||||||||||||||||||||||
Haidhausen | Haidhausen is a charming district with beautiful streets, traditional architecture, and a selection of cozy cafes and restaurants. | Quaint atmosphere, good dining options, and well-connected public transportation. | Less vibrant nightlife, limited large supermarkets, and higher demand for housing. | ||||||||||||||||||||||||||||||
Neuhausen | Neuhausen is a laid-back neighborhood known for its authentic Bavarian beer gardens, local markets, and Nymphenburg Palace. | Rustic charm, proximity to parks, and strong sense of community. | Not as diverse in dining options, traffic congestion during rush hours, and limited entertainment venues. | ||||||||||||||||||||||||||||||
Au-Haidhausen | Au-Haidhausen is a well-balanced district with a mix of residential and commercial areas, offering a relaxed atmosphere and plenty of recreational spots. | Good mix of residential and commercial, ample green spaces, and family-friendly. | Can get crowded, fewer cultural activities, and limited parking availability. | ||||||||||||||||||||||||||||||
Ludwigsvorstadt-Isarvorstadt | Ludwigsvorstadt-Isarvorstadt is a central district known for its vibrant nightlife, diverse dining options, and historical landmarks like St. Paul's Church. | Exciting nightlife, great food choices, and central location. | Noise and crowds, limited green spaces, and higher rent prices. | ||||||||||||||||||||||||||||||
Maxvorstadt | Maxvorstadt is a cultural hub with several museums, universities, and architectural masterpieces like Siegestor. | Rich cultural scene, educational institutions, and beautiful architecture. | High-density population, limited parking, and higher cost of living. | ||||||||||||||||||||||||||||||
Sendling | Sendling is a residential area with a mix of historic buildings and modern apartments, offering a peaceful environment and good shopping options. | Quiet living, variety of shops, and good public transport connections. | Less vibrant nightlife, limited green spaces, and occasional traffic congestion. | ||||||||||||||||||||||||||||||
Moosach | Moosach is a family-friendly neighborhood with several parks, shopping centers, and good transportation links. | Family-oriented, green areas, and convenient amenities. | Limited dining options, fewer entertainment venues, and longer commute to the city center. | ||||||||||||||||||||||||||||||
Milbertshofen-Am Hart | Milbertshofen-Am Hart is a diverse district with a mix of residential and industrial areas, known for the BMW headquarters and Olympiapark. | Proximity to Olympiapark, cultural diversity, and good public transport links. | Industrial areas, traffic noise, and limited green spaces in some parts. | ||||||||||||||||||||||||||||||
Thalkirchen-Obersendling-Forstenried-Fürstenried-Solln | Thalkirchen-Obersendling-Forstenried-Fürstenried-Solln is a large district with a mix of residential and rural areas, offering outdoor activities and historical sites like Blutenburg Castle. | Nature and outdoor activities, historical landmarks, and peaceful living. | Less urban amenities, longer commute to the city center, and limited nightlife. | ||||||||||||||||||||||||||||||
Hadern | Hadern is a quiet residential neighborhood with green spaces, traditional Bavarian architecture, and a relaxed ambiance. | Serene living environment, good schools, and local markets. | Limited shopping options, fewer dining establishments, and longer commute to the city center. | ||||||||||||||||||||||||||||||
Untergiesing-Harlaching | Untergiesing-Harlaching is a peaceful area with a mix of residential and natural spaces, offering scenic views and recreational spots along the Isar River. | Scenic views, proximity to Isar River, and calm atmosphere. | Not as many shops and restaurants, limited nightlife, and less accessible by public transport. | ||||||||||||||||||||||||||||||
Bogenhausen | Bogenhausen is an upscale district known for its luxurious villas, beautiful parks like Englischer Garten, and high-quality living. | <
| Property type and area | Profiles of potential tenants | What they are looking for | Expected monthly rent in $ |
|---|---|---|---|
Apartment in Schwabing | Professionals, students | Urban lifestyle, cultural scene | $800 - $2,000 |
Studio in Glockenbachviertel | Young professionals, artists | Trendy neighborhood, cafes | $700 - $1,500 |
House in Bogenhausen | Families, expats | Residential area, green spaces | $1,000 - $2,500 |
Condo in Maxvorstadt | Students, young professionals | University proximity, culture | $600 - $1,800 |
2-Bedroom Apartment in Sendling | Families, working professionals | Residential area, facilities | $800 - $2,000 |
Penthouse in Haidhausen | Executives, upscale renters | Luxury living, city views | $1,500 - $3,500 |
1-Bedroom Apartment in Neuhausen | Singles, young professionals | Central location, lifestyle | $700 - $1,500 |
Rental yields
As of today, rental yields in Munich are floating around 2 or 3%. It's low. Among other things, this low performance can be explained by Munich's high rental costs, which are among the highest in Germany.
The best rental yields in Munich are typically found in multi-family homes, as the city is densely populated and there is a high demand for rental properties. Additionally, properties located in areas with good public transportation tend to have higher rental yields.
For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.
Finally, be aware that rental incomes in Munich are taxed at 10%, which is very advantageous.
Short-term
You could also decide to rent short-term to business travelers or vacationers who are visiting Munich for a short period of time. Additionally, you could rent short-term to students who are looking for a temporary place to stay while studying in Munich.
If you decide to go with that option, look for properties in the city center, particularly around the Isar River, as well as near the English Garden and Olympic Park. These areas are popular with tourists and offer great rental potential.
Currently, there are approximately 4,000 active Airbnb listings in Munich, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $145, which is quite high.
You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Munich can make around $1600 per month. Also, the average occupancy rate is estimated at 67%.
Is it worth buying real estate in Munich then?
Absolutely, let's cut to the chase. Buying property in Munich can be a fantastic idea if you're in it for the long haul. If you plan to make Munich your home for years to come, owning a property can provide stability and a sense of belonging. It's like putting down roots in a city known for its quality of life and strong economy.
Plus, you get the chance to build equity over time, and Munich's real estate market has a history of stability and potential for growth. Low mortgage rates can sweeten the deal, making homeownership a sound financial choice.
However, if you're just passing through or sticking around for a short stint, buying might not be the best bet. Munich's property prices are high, and the cost-to-rent ratio suggests that renting could be more cost-effective in the short term.
Plus, the market's been flagged as potentially overvalued, which could mean risks and uncertainties. It's also worth noting that Munich's rental yields are relatively low due to high rental costs, making it less attractive for short-term investment.
So, if you're not planning to stay in Munich for the long haul, renting is likely the more practical and financially prudent choice.
Make sure you understand the real estate market in Munich
Don't rush into buying the wrong property in Germany. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.
The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.