Leipzig – an attractive location for capital investors

Something New in the East – Leipzig as an attractive location for Investors

If you are looking to the future and thinking about your retirement, you will hardly be able to avoid thinking about a private pension plan. Whether additional company pension plans, savings plans, insurance policies, equity funds or real estate – few people will be able to enjoy their old age with the state pension alone. No wonder that more and more people are using real estate as a sustainable capital investment. Not least due to particularly low interest rates, this possibility of making provisions for the future is becoming increasingly attractive. But where and how do I invest?

Attractive returns in the Leipzig region

While average prices per square meter were already well into the upper four digits in 2019 in metropolitan areas such as Munich (9,569 euros per square meter), Frankfurt am Main (7,280 euros), Stuttgart (7,158 euros), Hamburg (6,324 euros) or Berlin (6,056 euros),[1] capital investors should keep an eye on the real estate market in the east of the country. Particularly noteworthy is the city of Leipzig, which has gained significant popularity in recent years and also promises very good prospects in official statistics and forecasts. In addition, attractive yields are possible in comparison to the cities just mentioned.

The future looks bright for Leipzig – Germany’s fastest growing city by 2035

While rural regions are losing inhabitants, cities are booming and gaining in importance as places to live and do business. After Berlin, Leipzig is the second-largest city in eastern Germany and has been recording an upward trend in its population figures for years: in 2019, the city of Leipzig reported more than 600,000 inhabitants for the first time, and in 2021 it will already exceed 605,000[2]. A trend that will continue, according to the Berlin Institute for Population and Development. A forecast showed that Leipzig will be the fastest-growing city in Germany – with a full 16 percent increase in population by 2035.

Leipzig has a modern and lively downtown.
Many old buildings are beautifully renovated.
Old factory buildings were converted into apartments.

Leipzig has a lot of upside potential

According to the HWWI[3]/Berenberg[4] city ranking, Leipzig performs very well in the overall index and also in the comparison of Germany’s 30 largest cities, coming in second (after Berlin in first place). Various aspects were examined, such as current economic performance (trend index), future demographic developments (demographic index) and important location factors namely education, innovation, internationality and accessibility (location index).

In terms of economic performance, no other city has improved as significantly and dynamically as Leipzig. Apart from this Leipzig does exceptionally well in the trend and demographics index. Prof. Dr. Henning Vöpel, Director of the HWWI, sees significant upward development potential especially in the location factors of education & innovation, internationality & accessibility[5].

One more reason for capital investors to take a closer look at the Leipzig region and profit from this potential. The city not only bundles research and economic potential, but has also gained significantly in attractiveness and quality of life in recent years. A wide variety of districts offer a glimpse of history and culture. Gohlis attracts with its mansions and parks, Lindenau with its proximity to the water, Plagwitz with its young startup mentality, Connewitz attracts many students and young families. Südvorstadt, close to the city center, is a colorful place to live. Karl-Heine-Strasse is one of the most popular streets in the city. Many small cafés, pubs, bars, restaurants and alternative stores, which offer, among other things, individual fashion, art or decorative items, are lined up next to each other. On warm summer evenings, the lively flair of the city is particularly noticeable.

The fact that Leipzig will continue to gain in appeal is not only promised by Burkhard Jung’s (Leipzig’s mayor) plan to make the city the most livable one in Germany, but is also visible through various urban redevelopment measures to further develop, improve and make individual districts more attractive in a targeted manner.

„I praise my Leipzig“

Thus, “Mein Leipzig lob’ ich mir” (I praise my Leipzig) is not only emblazoned in large letters glowing above the Brühl – Leipzig’s large shopping center directly between the picturesque main train station and Leipzig’s historic Old Town – but also speaks from the soul of many Leipzigers. According to a survey[6], 77% of respondents said they were very happy with their lives and 65% were optimistic about the future. Meanwhile, Leipzig could even claim the title of “Germany’s happiest city”. And the second “Herzlich willkommen” (“Welcome”) sign shining on the Brühl also makes it clear how open and forward-looking Leipzig is.

Secure future and attractive returns

The city’s vital future seems more than secure, which is also reflected in Leipzig’s real estate market. It is impossible to overlook the fact that both rental and purchase prices have shifted upwards in recent years. Whereas in 2017 it was still possible to buy for an average of €1,600 per square meter, the average price per square meter in the second quarter of 2021 is just under €2,300,[7] representing an increase of 43.75%. It is hardly to be expected that prices will stagnate or even fall in the coming years. Demographic and economic development is too dynamic.

So for capital investors, the answer to the question “What’s new?” should be: A property in Leipzig.

 

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[1] Quelle: Statista 2019 (https://de.statista.com/statistik/daten/studie/6654/umfrage/immobilienpreise-fuer-eigentumswohnungen-in-deutschen-staedten-2008/)
[2] Quelle: https://www.leipzig.de/buergerservice-und-verwaltung/unsere-stadt/statistik-und-zahlen/einwohner-und-bevoelkerungsentwicklung/
[3] Hamburgische WeltWirtschaftsInstitut
[4] Privatbank Berenberg
[5] Quelle: https://www.presseportal.de/pm/56380/4433177
[6] Quelle: https://static.leipzig.de/fileadmin/mediendatenbank/leipzig-de/Stadt/02.1_Dez1_Allgemeine_Verwaltung/12_Statistik_und_Wahlen/Stadtforschung/Kommuale-Buergerumfrage-2020_Vorabbericht.pdf
[7] Quelle: Immoscout