With real estate becoming increasingly expensive, is it still worth buying? Is it better to wait and see? How can real estate provide financial security for private individuals despite the high initial investment? Is it better to move in yourself or rent it out? And what about renewable energies? These and similar questions are currently on many people's minds. Find out why buying a new-build property is almost always worthwhile and why now is exactly the right time to invest.
Why is real estate so expensive right now?
Whether for tenants or buyers, real estate prices remain high. Many interrelated factors play a role here: the cost of raw materials has risen significantly. Energy, logistics, and personnel costs have also risen, and the process of obtaining building permits is lengthy. There is no change or reduction in construction prices in sight.
That's why now is the right time to buy real estate. Prices are unlikely to fall in the future. Real estate prices currently average €4,718 per square meter in Cologne and as much as €5,197 per square meter in Berlin, with ultra-modern condominiums in sought-after neighborhoods sometimes costing twice as much. And according to real estate experts, prices will continue to rise rapidly.
Unbroken high demand
Bureaucratic hurdles and lengthy approval procedures make the process from planning to completion of new construction projects a lengthy one. But once built, their value rises steadily: according to the house price index of the Federal Statistical Office, by an average of 5.5 percent annually.
This is because demand for real estate remains high, especially in metropolitan areas such as Berlin and Cologne. And new construction activity is nowhere near as high as actual demand. According to a study by the RWI Leibniz Institute for Economic Research, around 300,000 new homes need to be built every year. However, construction activity and successful completion of projects are lagging far behind demand.
The right time: Better late than never
As with many investment opportunities, the question arises: Would the investment have been better or more worthwhile ten years ago? This applies not only to cryptocurrencies or tech stocks. Investing in your own home or investment property is also better done sooner rather than later. The next best time to buy real estate is right now.
Cologne is a good example of the potential buyers can expect: districts such as Deutz, Mülheim, Porz, and Ehrenfeld show high potential for appreciation. This is because urban living space in particular remains scarce and sought-after. But even outlying areas in the so-called "Speckgürtel" (affluent suburbs) of major cities are experiencing high demand. This is because the population continues to grow, and with it the gross value added. According to experts, this is likely to lead to a further rise in real estate prices until 2030. The trend is clear: in the Cologne district of Deutz, for example, the price of apartments for sale has risen by 19% since 2017.
Sustainable building and living
While unrenovated buildings are expected to lose a lot of value, there's a growing social and political demand for energy-efficient, sustainable real estate and new ways of building. And that means more potential value for these buildings. Lots of cities are investing big bucks to become climate neutral. Cologne, for example, has set itself the goal of achieving its climate protection targets by 2050, while Berlin wants to become climate neutral by 2045 and drastically reduce its CO2 emissions.
An important component of this are concepts for the use of renewable energy, including in new buildings and especially in urban real estate. But even residential buildings can hardly do without photovoltaics or electric charging stations today. Project developers and builders are an important source of innovation in this area.
New heating concepts such as heat recovery from wastewater, as seen in the "L&Uüm;CK" project, are redefining the way we live and the energy concepts of the future, making capital investment all the more interesting. After all, modern, future-proof thermal insulation has long been a matter of course in new-build apartments.
Use it yourself or rent it out
Investors also benefit from attractive depreciation options such as declining balance depreciation and can look forward to positive forecasts regarding the expected increase in value: according to the Federal Statistical Office, houses and apartments have increased in value by 5.5 percent every year since 2010.
So there are many good reasons to invest in your own property. If you would prefer to move in yourself rather than rent out the property, a state-of-the-art, energy-efficient new build can significantly help to reduce your ancillary costs. The following still applies: buying is often cheaper than renting. This is because the monthly rental costs could also cover interest and loans. Calculate how much rent you pay per year. And how quickly the investment in your own property could pay for itself.
