• Michael Reiss

"I believe in the city."

(Reading time: 2 - 4 minutes)

Real estate trends. Globally, the market for larger homes in suburbs and resorts is booming. "This will calm down again," says Michael Reiss, managing partner of Sotheby's International Realty in Munich, "I expect the big city to make a comeback."

"For a long time, the Hamptons were seen as the quintessential retirement retreat for tired New Yorkers - not very appealing to cool urbanites. Now the Hamptons are sold out," says Michael Reiss.

The flight of wealthy urbanites during the Corona Crisis has left its mark on real estate markets. "From the Rocky Mountains to the Côte d'Azur, from vineyards in Tuscany to vacation homes in the ski resorts of the Alps - many wealthy people recently invested in second homes, mostly in their respective home countries. They favored large complexes in order to create independence and privacy or to be able to take in adult children again," explains Reiss.

Regions previously considered second-home-only markets are in greater demand than ever as supposedly safe getaways in the year of the home office. Given the limited supply, prices there are also rising correspondingly steeply. In contrast, there is a breath of fresh air in the big cities. Very ambitious ideas of sellers can no longer be enforced or not as quickly.

"This will change again in perspective," suspects the real estate expert, "in a very special situation, very special needs were served in the last twelve months. Whether the price level for holiday homes and in all rural areas will last on a five-year view, is rather questionable. When the pandemic situation has eased, many will think about whether they and their children really want to live in the country. Then the demand for real estate will return to the cities. That's where life is, where the restaurants are, where the schools are, where the universities are, where the recreational opportunities are and where the social contacts are. A large number of those who isolate themselves today will appreciate the short distances and seek personal interaction again tomorrow. That's what only the city offers."

The market expert therefore sees the greater potential for value appreciation in the long term in properties in the big city. "The coming months should be a good time to position yourself. After all, the housing issue is not going to relax." On the contrary: the demand for space continues to increase, because many potential buyers now want an extra room to take advantage of the home office, without having to move the entire center of life out of the city to do so. "Because, of course, the newfound freedom of being able to work from home every now and then is a valuable achievement. It's something no one would want to do without," Reiss explains. "In the upscale residential sector, properties with additional work, fitness and wellness spaces will be in demand. More convenience through technology - smart homes - is also high on the wish list."

The next challenge for the German real estate market, he said, will come after the federal election. "It's about reducing the pressure in the housing market. Mutual recriminations between politicians and market participants won't help - politicians, the real estate industry, tenants, owners and investors have to look for solutions together."

The expert sees the greatest danger in pushing issues such as wealth tax and intervention in the rental market. "Some big investors say that if this comes, we will only do commercial construction," informs Michael Reiss and concludes, "Ironically, this is a risk especially for those who are looking for housing. The supply in the city won't increase then, and prices will just keep going up." ®

Special Publication:

Munich | Sotheby's International Realty Michael Reiss; 49 (89) 744 24 18 90


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