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What is happening in Munich’s real estate market? Are prices continuing to rise, or is there a shift on the horizon? Is Munich still a prime location for international investors? How are local government policies and taxes shaping the real estate landscape in 2025?
These are the questions we hear every day from professionals, buyers, and sellers alike, from Schwabing to Maxvorstadt and beyond. Perhaps you’re curious about these trends too.
We know this because we stay closely connected with local experts and individuals like you, exploring the Munich real estate market daily. That’s why we crafted this article: to deliver clear answers, insightful analysis, and a comprehensive view of market trends and dynamics.
Our aim is straightforward: to make sure you feel informed and confident about the market without needing to search elsewhere. If you think we missed the mark or could improve, we’d love to hear your thoughts. Feel free to message us with your feedback or comments, and we’ll strive to enhance this content for you.
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1) Affordable rentals will become scarcer, increasing competition among tenants
In recent years, finding affordable rental options in Munich has become increasingly difficult. This trend is expected to continue, leading to more competition among tenants. One of the main reasons is the rising property prices in Munich. For instance, by 2024, prime rents in the city increased by 14.4% to 51.50 euros per square meter, driven by strong demand for central locations where tenants are less sensitive to price changes.
Another factor contributing to the limited availability of affordable rentals is the decreasing availability of rental properties. The construction pace in Munich has not kept up with the demand, with only around 6,500 apartments completed each year, falling short of the required 10,000 new apartments annually. This gap is further widened by the high costs of materials and construction.
Additionally, the increasing demand for housing due to population growth exacerbates the situation. Munich's population is projected to grow significantly, reaching up to 1.8 million residents by 2040. This growth means more people are competing for the same limited number of rental properties, driving up prices and making it harder to find affordable options.
Sources: The Munich Eye, Julius Baer, Finexity
2) New environmental rules will boost the development of energy-efficient buildings
New environmental regulations are set to encourage the development of energy-efficient buildings.
Starting January 2024, the German government will require new heating systems to use at least 65% renewable energy. This is part of a larger push to enhance energy efficiency across buildings, companies, and data centers. In Munich, for instance, the number of energy-efficient certified buildings has surged, with certified space growing by 122% over the past five years.
By mid-2024, 14% of office spaces in Germany's major cities, including Munich, were either certified or awaiting certification. This shift highlights a clear move towards sustainable building practices. People are increasingly looking for sustainable housing options, with both tenants and investors showing a strong preference for environmentally friendly and energy-efficient spaces.
This demand is fueled by a growing awareness of sustainability's importance in real estate. The German Buildings Energy Act plays a crucial role here, ensuring that energy efficiency standards are integrated into national building codes. This aligns with the EU Energy Directive, providing a solid legal framework for the transition to more energy-efficient buildings.
Sources: AOShearman, JLL
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.
3) Middle Eastern buyers will increasingly target Munich properties for its stable economy
Munich is a city that stands out for its economic stability and growth, even when Germany faces broader challenges.
In 2023, Munich's unemployment rate was a manageable 4.1 percent, and the city boasted a record high of 960,000 employees in socially insured jobs. This is thanks to its diverse industries, especially in high-tech and digitalization, which keep the economy robust.
By 2024, Munich's commercial investment market saw a remarkable transaction volume of €2.25 billion, almost doubling from previous years. This shows a stable property market, with new-build condominium prices at EUR 10,100/m², making it the priciest spot in Germany for property purchases.
Middle Eastern investors are increasingly eyeing European real estate, and Munich is on their radar. The city is seen as a safe and secure investment destination, and favorable exchange rates for Middle Eastern currencies make it even more attractive for luxury property buys.
Munich's reputation and economic strength are drawing interest from Middle Eastern buyers, who are looking for stable investments amid global uncertainties. The city's appeal is further enhanced by its high-value property market.
Sources: Munich Economy Spring Report, Cushman & Wakefield, IamExpat
4) Munich’s luxury property prices will keep rising due to limited supply
Munich's luxury property market is experiencing price increases primarily due to limited supply. One of the main reasons for this is the limited availability of land for new developments. The city's construction sector is struggling to keep up with the growing population, which is projected to reach 1.812 million by 2040.
Additionally, there's a significant influx of international buyers, particularly from Russia and the Middle East, who are attracted to Munich's excellent medical facilities and high-quality living environment. This international demand further tightens the market, leading to higher prices. Historical data also shows that Munich's luxury real estate market has consistently seen price growth, with condominium prices rising significantly from €3,428 per square meter in 2012 to €9,187 per square meter at the beginning of 2022.
Moreover, existing luxury properties in Munich have high occupancy rates, indicating strong demand and limited supply. Government restrictions on new construction projects and rising construction costs also contribute to the limited supply of luxury properties. Surveys show strong interest from high-net-worth individuals, and media reports frequently highlight Munich as a desirable location for luxury living.
Sources: 1-Property.ru, Airbtics, Mr. Lodge
5) Stricter regulations will lead to a decline in short-term rental yields
Munich's short-term rental market is facing tighter regulations, especially in 2023 and 2024.
These rules, enforced by Social Services and the Office for Housing and Migration, mean you can only rent out your entire home for up to eight weeks a year without needing a permit. This has led to a drop in short-term rental listings, with only 2,385 Airbnb listings in the city. The average occupancy rate is just 32%, and the daily rate is around €134, which isn't very encouraging for potential hosts.
Many landlords are now opting for long-term rentals instead. This shift is reducing the number of short-term rental options, which means less potential income from these properties. The local media often talks about how tough it is for short-term rental operators to stay profitable under these conditions.
For those considering buying property in Munich, it's important to know that the short-term rental market is becoming less lucrative. The stricter rules are making it harder to make a good return on investment from short-term rentals.
Insiders say that the trend is pushing more property owners towards stable, long-term leases. This is because the regulatory environment is more favorable for long-term rentals, offering more predictable income without the hassle of frequent tenant turnover.
So, if you're thinking about investing in Munich's property market, consider the impact of these regulations. Long-term rentals might be a safer bet given the current climate.
Sources: Airbtics, European Parliament, The Munich Eye
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6) Rent prices in some outer districts will stabilize as new developments finish
In 2023 and 2024, Munich's outer districts saw a boom in residential project completions.
Take Trudering-Riem, for instance, where a new neighborhood with about 1,500 apartments was being built. This surge in housing is a big reason why rent prices are expected to stabilize.
Government data from those years showed a construction backlog of roughly 6,300 apartments. This backlog highlights a strong push to increase housing supply, which is essential for balancing demand and keeping rent prices steady.
Real estate market analyses from that time suggested that as these new developments wrap up, rent prices would likely level off. This is good news for anyone looking to rent or buy in these areas.
Media reports also pointed out ongoing projects in outer districts, like the Neufreiraum Schwabing-Freimann project with around 5,500 residential units. These developments are expected to boost the local housing market and help stabilize rents.
With these projects underway, some outer districts are set to see a stabilization in rent prices as new developments are completed.
Sources: JLL Germany, Mediatum UB TUM
7) Munich rents will keep rising due to high demand and limited supply
Rents in Munich are climbing and show no signs of slowing down.
In 2024, the cost of renting new apartments in Munich hit an average of 23.50 euros per square meter. This jump from last year highlights the city's growing housing demand. Munich's charm and economic opportunities are drawing more people, pushing rental prices up.
Munich's population is on the rise, with the metro area expected to reach 1,591,000 residents by 2025. This steady influx of newcomers keeps the housing market buzzing. The city's history of urbanization suggests that this demand isn't going anywhere soon.
On the flip side, Munich struggles to keep up with housing needs. The city needs about 10,000 new apartments each year but only manages to build around 6,500. This gap is partly due to limited land and rising construction costs, which slow down new projects.
Finding land for new buildings in Munich is tough, and the cost of materials isn't helping. These factors make it hard to meet the housing demand, keeping the pressure on rental prices.
With more people moving in and not enough homes being built, rents are likely to keep rising. Munich's housing market is a classic case of high demand meeting limited supply.
Sources: The Munich Eye, Macrotrends, Deutsche Wealth
8) A weaker euro will draw more foreign investors to Munich's real estate market
The weakening euro is drawing more foreign investors to Munich's real estate market.
When the euro dips against currencies like the US dollar and British pound, foreign investors find they can stretch their money further. For instance, in December 2023, the euro was trading at about $1.06 USD, a notable drop from its 2022 peak.
Historically, a weak euro has led to increased foreign investment in German real estate. In 2023, foreign buyers made up 12.4% of all property transactions in Germany, up from 9.4% in 2022. This uptick shows that international investors are seizing the opportunity presented by favorable exchange rates.
Real estate agencies like Engel & Völkers have noticed that 71% of their international clients are attracted to German properties due to these favorable rates. This surge in interest from foreign buyers underscores the appeal of a weaker euro.
Economic forecasts suggest the euro will continue to weaken, which is expected to further boost foreign investment in German real estate. This trend is likely to persist as long as the euro remains weak, making Munich an increasingly attractive spot for international investors.
Source: Wise
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.
9) Tax incentives for green buildings will affect property values in Munich
Tax incentives for green buildings can significantly impact property values in Munich due to several key factors. First, the city has shown a proactive approach to promoting sustainable construction, as seen in the City Council's studies on high-rise buildings and sustainability. This indicates a supportive environment for green architecture, which can enhance property values.
The growth in green-certified buildings is another crucial factor. By mid-2024, Munich experienced a dynamic growth of 122% in certified space, adding 1.82 million sqm since mid-2019. This increase in certified buildings suggests a rising demand for eco-friendly properties, which can drive up property values.
Moreover, the trend of higher resale values for energy-efficient properties is supported by broader market analyses. For instance, in 2022, the investment volume in certified green buildings in Germany remained high, with a 30.6% share in the investment market. This trend indicates that energy-efficient properties are likely to command higher prices.
Additionally, successful green building projects like the Prinz-Eugen-Park in Munich demonstrate the benefits of sustainable construction, such as reduced CO2 emissions and long-term carbon storage. These benefits can make green buildings more attractive to buyers, further boosting property values.
Sources: JLL Research, Munich City Report, BNP Paribas Real Estate
10) Foreign buyers from Asia will increasingly target Munich for investment opportunities
In recent years, Munich has become a hotspot for real estate transactions, with over 500 million euros in deals in just the third quarter of 2024. This shows a strong interest in Munich's real estate market, making it an attractive option for investors.
Asian investors have been increasingly active in European real estate markets, including Munich. This trend is partly due to the growing wealth in Asian countries like South Korea and Singapore, which has led to more overseas investments. South Korean investors, in particular, have been expanding their investments into Central and Eastern Europe, including Germany.
Munich's economic stability and growth are key factors that attract international investors. The city boasts a highly diversified and high-performing economic base, with vibrant sectors such as finance, advanced manufacturing, ICT, and media. This stability makes Munich an appealing location for foreign investors.
Additionally, Munich's reputation as a safe and lucrative investment destination is supported by its strong economic performance and high quality of life. This reputation is likely to attract more foreign investors, including those from Asia.
Sources: City Survey Colliers, Savills, Brookings, Greenberg Traurig
11) Brexit will drive more UK buyers to seek properties in Munich
Brexit has led to significant changes in the way UK citizens and businesses view their options for living and working in the EU. One of the key outcomes has been a noticeable increase in UK buyers looking for properties in Munich.
Firstly, there has been a surge in British firms setting up in Germany, including Munich, as a direct result of Brexit. This trend indicates a growing interest in relocating to Germany, which naturally translates to increased inquiries for properties in Munich. Additionally, reports have shown that British companies are not only relocating their operations but also bringing employees with them, who may seek housing in the area.
Moreover, surveys have highlighted a growing sentiment among UK citizens who regret the decision to leave the EU, with many considering EU residency options. This sentiment is further supported by media coverage that reflects a broader trend of UK citizens exploring opportunities to live in the EU, including purchasing properties in Munich. The changes in UK citizens' rights to live and work in the EU post-Brexit have also created uncertainty, prompting some to seek alternative residency options in Germany.
Finally, economic reports have emphasized Munich's attractiveness as a business hub, which not only draws businesses but also their employees, increasing the demand for properties. Real estate agents in Munich have likely experienced an increase in inquiries from UK clients, as they navigate the changing landscape of EU residency and property ownership post-Brexit.
Sources: Al Mayadeen, The Independent
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12) Young professionals will boost demand for modern apartments as they keep moving to Munich
Munich is a hotspot for young professionals thanks to its thriving tech and finance industries.
With giants like Siemens, BMW, and Allianz calling Munich home, the city offers plentiful job opportunities for those eager to advance their careers. This makes it a magnet for ambitious individuals looking to make their mark.
Munich isn't just about work; it also boasts a high quality of life. The city consistently scores well in surveys due to its low crime rates, political stability, and top-notch education and healthcare systems, making it a great place to settle down.
Expect Munich's population to grow by 5% by 2025, mainly from people moving in from other parts of Germany and Europe. This influx is driven by the city's appealing lifestyle and job market, which in turn boosts the demand for modern apartments.
Rising rental prices are a clear sign of the high demand for housing, especially for modern apartments. Young professionals are flocking to the city, seeking comfortable and contemporary living spaces that match their lifestyle.
As more young professionals continue to move to Munich, the demand for modern apartments will only increase, making it a prime location for property investment.
Sources: Internations, ISOCARP, Invest in Bavaria, Brookings
13) Schwabing will attract more interest for its vibrant culture and closeness to universities
Schwabing in Munich is catching eyes for its vibrant cultural scene and proximity to major universities.
In 2023 and 2024, property prices in Schwabing held steady at over €10,000 per square meter, showing just how desirable the area is. This isn't just about numbers; it's about the district's rich culture and the buzz from nearby educational institutions.
Rental demand is through the roof, with net rents between €22 and €25 per square meter. Students and young professionals are flocking here, drawn by the cultural attractions and the closeness to universities like Ludwig Maximilian University and the Technical University of Munich.
Schwabing's cultural vibe is electric, thanks to its artistic quarter, theaters, and a calendar full of cultural events. The district is experiencing a revival, with new culinary spots and restored cultural landmarks making it a lively place to call home.
Public transportation in Schwabing is top-notch, adding to its appeal for those who value easy access to the rest of the city. This connectivity is a big plus for anyone considering a move here.
With its mix of culture, education, and accessibility, Schwabing is a hotspot for anyone looking to invest in Munich's property market.
Sources: Mr. Lodge, Simply Munich, Datappeal
14) Rising student numbers will boost demand for affordable housing near universities
Munich's student population is booming, especially around its universities.
At Ludwig-Maximilians-Universität (LMU) Munich, enrollment hit a record 54,522 students for the 2024/25 winter semester, up from the previous year's 52,530. This surge means more students are hunting for places to live near campus.
International students are a big part of this growth. There are now 11,178 international students at LMU, making up over 20% of the student body, which is higher than the national average. They often want to live close to campus for convenience and to feel more connected to the university life.
Munich is feeling the squeeze with a shortage of student housing. More students mean more demand, and this is putting pressure on the housing market. As a result, finding affordable places to live is becoming tougher.
With demand rising, rental prices in university areas are likely to climb. This is a common trend in cities where student numbers are on the rise, making it harder for students to find budget-friendly options.
For anyone considering buying property in Munich, especially near universities, it's worth noting that the student housing market is under strain. This could mean opportunities for investment, but also challenges in terms of affordability and availability.
Source: LMU Munich Newsroom
We made this infographic to show you how property prices in Germany compare to other big cities across the region. It breaks down the average price per square meter in city centers, so you can see how cities stack up. It’s an easy way to spot where you might get the best value for your money. We hope you like it.
15) Interest in co-living spaces will grow due to the desire for community living
The desire for community living is driving interest in co-living spaces, especially in cities like Munich.
Munich is facing a housing crunch, with a demand for 10,000 new apartments each year but only about 6,500 being built. This shortfall has made co-living spaces a more attractive option for those seeking affordable housing. With rental prices soaring, especially after the Ukraine crisis, traditional living arrangements are becoming less accessible.
New constructions in Munich average 23.50 euros per square meter, pushing many to consider co-living as a more budget-friendly and community-oriented alternative. This isn't just a Munich phenomenon; cities like Denver, Minneapolis, and Seattle are also seeing a rise in converting underused commercial spaces into housing, including co-living spaces.
Social media is buzzing with trends that promote minimalist and shared lifestyles, which align perfectly with co-living principles. This is particularly appealing to younger people who are looking for community-oriented living. Reports from organizations like UN-Habitat highlight the social and environmental perks of shared living, such as reduced energy use and better community ties.
These benefits make co-living an attractive option for those seeking a sense of community. The trend is gaining traction globally, with more people looking to co-living as a way to find affordable housing and a sense of belonging. Co-living spaces offer a solution to the housing challenges faced by many urban areas.
As more people embrace this lifestyle, the demand for co-living spaces is expected to grow. The combination of affordability, community, and sustainability makes co-living a compelling choice for many. It's a trend that's here to stay, offering a new way to live in increasingly crowded cities.
Sources: The Munich Eye, Pew Trusts, UN-Habitat
16) Suburban rental yields will dip slightly as more people relocate to city centers
In Munich, more people are choosing to live closer to the city center as of 2023.
This shift is largely due to the rising demand for urban living. People are drawn to the city center because of the limited living space and a preference for smaller apartments. The allure of city life is further enhanced by increasing property prices in Munich's core, where new constructions are booming.
Munich's public transportation has also seen major improvements, making city living even more appealing. The S-Bahn, for instance, is getting a significant upgrade with new energy-efficient trains, which makes commuting within the city much easier and more sustainable.
As more people move closer to the city center, suburban rental yields are expected to decline slightly. This trend reflects a broader shift in lifestyle preferences, where convenience and accessibility are becoming more valued.
For potential property buyers, this means that investing in the city center could be a wise choice, given the steady population growth and the increasing demand for urban living spaces.
With these changes, Munich is becoming a vibrant hub for those seeking a dynamic urban lifestyle, making it an attractive option for property investment.
Sources: JLL Germany, Rail Technology Magazine, McKinsey
17) Suburban property prices may dip slightly as city living becomes more popular
In Munich, urban living is becoming increasingly popular.
With a steady population growth of 0.51% in 2024, more people are drawn to the city for its vibrant lifestyle and convenience. The desire for shorter commutes and easy access to amenities is a big part of this shift.
Munich's public transport system has seen significant investments, making city life even more appealing. This means residents can enjoy all the perks of urban living without the hassle of long commutes.
Financially, urban areas offer higher rental yields compared to the suburbs, which is a strong incentive for many to move closer to the city center.
As families flock to urban areas, school enrollment in the suburbs is dropping. This trend is evident in real estate, where suburban properties are taking longer to sell.
Media reports highlight that people are increasingly drawn to the city for its cultural events and dining options, further emphasizing the lifestyle shift towards urban living.
Sources: Global Property Guide, Wolf Street, World Population Review
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.