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Microliving study: the German microapartment market is second in Europe for attracting investment

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Internationally-active property consultancy company Cushman & Wakefield is today presenting the results of its most recent study, “Microapartments – The Next Big Thing in Property”. What the Cushman & Wakefield research shows is the extent of the trend towards new microliving concepts, revealing how this is primarily a result of the lack of available housing in urban centres and changing ideals in terms of contemporary living. The report examines this fast-growing market segment from both a commercial and legal perspective, highlighting the opportunities and risks inherent as well as the role this asset class plays in the wider German property market.

Seen as a future trend in urban living, microapartments are currently experiencing a rapid surge. As an asset class, its roots are in long-established market segments such as student halls of residence and short-term lettings, but what is characteristic for the new generation of purpose-built microliving spaces is floor-space of between 20m² and 35m² (including bathroom and kitchenette) and locations primarily in urban centres or university towns with good public transport connections. Rents are generally inclusive of all charges and bills (including internet access), furnishings, and, frequently, bedclothes. “The concept is very clear,” say the authors of the study Andreas Polter, Head of Residential Portfolio Investment, and Simon Jeschioro, Head of Investment Advisory at Cushman & Wakefield: “Move in, unpack your suitcase, and start living.”

Microapartments are attractive to students and young professionals

It is most often students and millennials who opt for microapartments, but young professionals and long-distance commuters are increasingly seeing the segment as an alternative to dysfunctional urban property markets sorely lacking in bedsit and one-bedroom-flats. “In order to meet the demands of what are referred to as ‘digital natives’”, adds Andreas Polter, “operators are continually adapting their concepts. One provider in Berlin has installed beehives on the roof so that residents can go up and watch a beekeeper at work harvesting honey, while in Cologne,” he continues, “there is a co-living building with chicken coops on the grounds. Residents can even adopt one of the hens.” Community spaces and event kitchens are another way of encouraging people living in microapartments to meet each other, and it is this sense of community – as well as an increasing focus on sustainability – whose importance is growing across all segments, including business travellers and holidaymakers, who are increasingly booking microapartments for their stays away from home.

Microapartments are growing fast

In 2018, the property experts at Cushman & Wakefield registered around 1.5 billion Euros of transactions in the microapartment segment; compared to the 810 million Euros they tracked in the previous year, this represents an 85% increase. A particularly large number of new microapartments came onto the market in or around Berlin, Hamburg, and Frankfurt am Main. “After the United Kingdom, Germany is the European market with the highest levels of investment in this new form of living,” explains Jeschioro, forecasting continued growth in the years to come. According to the report, Germany’s major urban centres can expect sustained increases in population through until 2030, with Berlin slated to grow by 9%, Hamburg by 5.6%, and Munich by 18.3%; at the same time, the number of single-person households in Germany is set to climb to 44% by 2035 – up from 36% in the year 2000. “The veritable explosion in the price of land and in construction costs is a key challenge,” says Jeschioro, before underlining the responsibility of lawmakers in this issue: “Changes must be made to building regulations so that demand for affordable housing can be serviced.” Jeschioro also sees microapartments playing an important role in housing Germany’s ageing population in the near future: “If issues such as step-free access are taken into account from the start of the planning stage, it is easy to convert microliving spaces to suit other age groups at a later point in time,” he explains.

The study also includes guest contributions by Christina Marx at GSK Stockmann and Dirk Lembke of Upartments Real Estate.

The study can be downloaded by clicking here.