Real estate can also be a good investment if the rental yield is right. A new analysis from the Immoscout portal suggests that smaller cities deserve attention.
Anyone who invests in real estate pays attention to rental yields. In addition to covering the cost of the house, the rent should also be profitable. The rental yield represents the economic profitability of the investment. An analysis by Immoscout24 shows which cities and regions have had particularly good rental returns in recent years.
Gesa Crockford, Managing Director of ImmoScout24, explains, "Buying a property is still a lucrative investment. It is increasingly worthwhile to focus on places outside the metropolis. Smaller cities are particularly advantageous because of moderate housing prices.
The data shows that medium-sized cities have the highest returns. The average rental yield for existing buildings in the top 8 metropolises is 3.5%, for new buildings is 3.2%, and for mid-sized cities, it is 5.1%.
Eight Metropolises:
Cologne first, Munich mat behind
- In terms of existing apartments, Cologne ranks first with an average yield of 4%, an increase of 0.6% compared to 2020.
- In terms of new construction, Berlin's growth is the strongest in the metropolis. Rental yields here have risen by 0.7% to 3.6% since 2020.
- Munich has the lowest rental yields. The return on an investor's existing property is only 3%, while the return on a new apartment is 2.9%.
Cologne, Berlin and Frankfurt am Main have already achieved the highest returns in 2020. These cities have also seen the highest growth in recent years. However, the average yield growth rate of existing and new apartments in metropolitan areas is lower than in medium-sized cities.
Medium-sized cities
Where the rental yields are the highest
Property prices in smaller cities are generally lower than in larger cities. The average price of an existing property in Jena, Wiesbaden or Bremerhaven is 2800 EUR/m². The average house price in major cities is 4,900 euros per square meter.
The highest rental yields in Germany are in the city of Hoyerswerda in Oberlausitz. The average rental yield of existing properties is 6.8%. This has increased by 1.1% since 2020. Rental yields at Worms have also seen positive development. It has grown by 0.9% over the past four years and is currently 4.1%. Rental yields on new construction in the city increased by 0.5% to 3.8%.
The return on new buildings in Landau, Pfalz's student town, has increased significantly. Rental yields for new apartments have risen by 0.6% to 3.4% since 2020.
Ordinary big city
University towns and B and C locations have good investment opportunities
Developments in Jena, Bremerhaven and Kaiserslautern have been particularly positive. Buyers there expect rental yields of more than 4% for existing apartments. Hanover and Offenbach am Main saw the strongest growth in new home revenues. This is up 0.8% and 0.7%, respectively.
The average price of an existing property in cities such as Jena, Wiesbaden or Bremerhaven is 2,800 euros per square meter. The average house price in the eight metropolises is 4,900 euros per square meter.
The Managing Director of ImmoScout24 concludes, "There are good investment opportunities in the university town as well as in the B and C locations, both in existing and new construction. "The net rental yield on real estate investments should be around 3.5% to 4%.