Market & Figures / 03-05-2023
The real estate market in North Rhine-Westphalia, which is extremely diverse simply because of its size, has developed remarkably in recent years: The appeal of the two metropolitan areas of Cologne and Düsseldorf is unbroken – while the Ruhr region is proving surprisingly robust in the midst of structural change. Investments in future technologies are strong there, often from disused mines and industrial halls. Many old factories have been converted into attractive apartments, offices and cultural facilities.
Apartments in old factories
North Rhine-Westphalia is one of the economically strongest German states and a major industrial location with a high density of companies, especially in the chemical, electrical and mechanical engineering sectors. And this strength is also reflected in the real estate market: A combination of economic stability and a high demand for housing has ensured that NRW has become an attractive place to buy property.
Prices for multi-family homes have risen in the Rhine cities of Düsseldorf, Cologne and Bonn in recent years, but are well below the national average in the rest of the state. Condominiums in NRW currently fetch an average price of €2,797 per square meter, down 4 % year-on-year but up 49 % on 2017. Cologne stands out here at €5,123 per square meter, down 5 % year-on-year but up 41 % on 2017. In second place is Düsseldorf with an average of €4,780 per square meter, up 38 % on 2017. Completing the Rhine range is Bonn at €3,988 per square meter.
However, the greater growth rates can be experienced in the Ruhr region: Dortmund recorded an increase of 60 % on 2017 at €2,776 per square meter and was almost able to maintain the value year-on-year. Essen is on a par in terms of price with €2,781 per square meter and growth of 55 %, while in Duisburg the square meter can already be had for €1,971.
But what about the rental yield, the ratio of the annual cold rent to the price per square meter? Here, Duisburg comes out on top with 5.4 %, because a low price per square meter meets a rent that is in the middle of the pack at €8.16 per square meter. In second place is Bielefeld in the east of the state with an average yield of 4.8 %. Here, prices per square meter have also fallen (to €2,411), but at the same time the average rent has increased to €9.73. Essen is also well above the 4 percent yield mark, with an upward trend. There, the price per square meter has remained stable, but rents have increased.
If you look at the situation through the eyes of an investor, there is no getting around NRW: the population is rising, mainly due to an influx from abroad, prices outside the major cities are moderate, while rents still have potential. Prices and rents are rising faster in B-cities than in Cologne and Düsseldorf. Cities such as Krefeld and Mönchengladbach, for example, were stepchildren on the market for many years. Today, they are among the fastest-growing target markets for private investors.