German data platform Quis has published a new study analysing and ranking the most populous 400 Germany cities and districts based on their future economic potential, and hence - hopefully - should be a good indicator of likely buoyant real estate markets.
The "Quis Zukunftspotenzial 2021" study from Immo Analytics, a subsidiary of Hamburg-based consulting firm Analyse und Konzepte, is based on a proprietary evaluation method consisting of 13 indicators of primary relevance to the labour market, including the proportion of employees with university degrees among employees subject to social insurance contributions and the proportion of employees in knowledge-intensive industries. Cities also scored well with a large number of young workers and a high proportion of foreign students and employees.
On a scale of one to ten (low to high future potential), 34 cities and districts received top marks. Frankfurt ranked first, followed by the city and district of Munich. As expected, the largest cities are to be found far in front: Düsseldorf takes fourth place, while Stuttgart, Cologne and Hamburg are in the top ten. Berlin comes in 22nd place.
According to the analysis, attention should also be paid to the surrounding areas of the metropolitan cores. In addition to Frankfurt, the top 20 also include the Main-Taunus district, Offenbach and the Hochtaunus district, in the Frankfurt surrounds. Among the cities beyond the metropolitan regions that received full marks are Ulm, Münster, Jena, Osnabrück and Kaiserslautern.
Perhaps surprising (for us at REFIRE) in the study is how many smaller 'big' cities (more than 100,000 inhabitants) scored the full ten points, including Ulm (18th), Münster (27th), Jena (30th), Osnabrück (31st) and Kaiserslautern (32nd). Notably, too, cities like Oldenburg (39th) and Mülheim an der Ruhr (40th), both of which placed ahead of cities Dresden (50th) and Bielefeld (51st), which boast a number of 'high-tech' and semiconductor-driven employers.
According to Bettina Harms-Goldt, managing director at Immo Analytics, "In the knowledge society, the jobs of tomorrow will be created where young, international and very well-educated people come together. The good incomes paid here have an impact on demand in the housing market, making investments attractive."
Harms-Goldt thinks it makes a lot of sense to look at "very well-placed C and D locations." As examples, she cites Aschaffenburg, Oldenburg, Mülheim an der Ruhr and Bayreuth, which have nine points in the ranking and are thus ahead of Dresden (50th), which is quite popular with investors. Harms-Goldt said these cities perform so well because they are very well connected in terms of infrastructure, have a high proportion of employees with a high level of education, attract many commuters and their business tax revenues are above average.
The future is not quite so rosy in the eastern part of Germany, even after thirty years since reunification, says the Immo Analytics study. Apart from Berlin, only Jena, Potsdam, Dresden, Leipzig and Frankfurt/Oder are in the top third of the scale (90 cities rated with at least eight points).
