corona pandemic : millionaires in the home office – luxury real estate on trend
Hamburg/Frankfurt good things can also be expensive: the corona pandemic has spurred the desire among millionaires for a cozy luxury home – preferably as a second residence.
By carsten hoefer and alexander sturm, dpa
the corona pandemic has boosted the business with expensive luxury residences in europe. Real estate brokers and experts report a sharp rise in interest among financially strong clientele.
This is the report of the hamburg-based brokerage firm engel&, which operates in a good 30 countries volkers that in 2021, compared to the first crisis year of 2020, it brokered almost twice as many properties (plus 97 percent) in the price segment between 5 and 10 million euros.
"especially for premium properties of two million euros or more, we have significantly higher demand," says ralph kunz, director of premium management at von poll immobilien in frankfurt. When it comes to top prices, the location and the degree of privacy are the most important factors. "here, prices sometimes reach the double-digit million range for detached houses and villas in prime locations."
This is confirmed by an expert who does not broker real estate himself: "we have a very, very strong market in luxury properties," says stephan kippes, the market researcher for the IVD sud real estate association in munich. Kippes sees one factor at work that has been driving the real estate market for years: long-term low and penalty interest rates make many other capital investments not very profitable. "this money is wafting through the market," says kippes.
Often intended for own use
Yet expensive residences are often not intended purely as capital investments: "vacation homes and luxury properties are very often owner-occupied," says kippes. "one treats oneself, and then still has the effect of the increase in value."
Prices vary widely from country to country. "while the top prices in the premium segment in hamburg, for example, range up to 30.000 euros per square meter, thus approaching the international level of paris with 35.000 euros per square meter, prices in italy top out at 9000 euros," reports engel& volkers ceo sven odia.
On the German market for second homes and vacation homes, foreign buyers do not play a dominant role, contrary to what is often assumed or feared by many long-established residents. in reality, this tends to be the other way around: rich german, swiss and austrians go looking for vacation spots outside their own borders, especially in the mediterranean region.
"in greece, most buyers come from the DACH region, followed by interested parties from france and the UK," says odia. In mallorca, the majority of foreign "search customers" come from germany – 66 percent. far behind are the british with 9 percent.
Trend toward the home office
Corona is now also blurring the line between primary and secondary residence: "properties in secondary residence markets are in demand like never before," says odia. "especially in the luxury segment, we are observing a trend towards home offices in second homes as a result of the corona pandemic."
Many customers now spend more time in their secondary residences and no longer consider them only as investment properties, or as a second home for a few weeks a year. "thus, classic secondary residence markets and mediterranean vacation destinations are increasingly becoming primary residence markets."
Prerequisites are a good infrastructure and fast internet, as expert kunz reports. High inflation also plays a role. "above all, capital investors and also wealthy customers are hedging against inflation by purchasing real estate," says kunz. The market price of the property rises in line with inflation, but the loan amount decreases and falls as a percentage of the market price. "Real estate is increasingly preferred to equities as a stable and crisis-proof investment option."
Not always welcome
But by no means only the finca in mallorca is popular. "secondary residences in popular vacation regions in germany have already been an ongoing topic since the beginning of 2021," says kunze. there are understandable reasons for this, as market researcher kippes explains: "even in corona times, you can still get there relatively easily."
Second home and vacation home buyers are not very welcome in many german resorts, just as there are reservations against german buyers in tirol and salzburg. On the one hand, prices are rising. At the same time, living space is being lost for the less affluent local population.
One example is the bavarian alps. Many communities along the alpine fringe now levy a tax on secondary residences, according to a spokesman for the bavarian municipal association. administrations designate little building land, and when they do, it is often only for locals. This is particularly clear in Berchtesgaden: anyone who wants to use apartments or hotel and boarding house rooms there as a second home must obtain special permission to do so if the rooms are vacant for more than half the year.