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PROPERTY

Ikea planning ‘to build new district in Hamburg’

Swedish furniture giant Ikea plans to build a whole housing and shopping district in Hamburg, it has admitted – and is on the hunt for a 50,000 square metre area of the north German city to develop.

Ikea planning 'to build new district in Hamburg'
Photo: DPA

“We want to build a new area of the city from which Hamburg can benefit,” Harald Müller, manager at property subsidiary Landprop told the Hamburger Abendblatt newspaper.

He said the firm was looking for an area of the city to start developing – preferably near an Ikea outlet.

The new district would include housing for thousands of Hamburgers, as well as shops and offices. Potential locations are, the paper said, near the city’s airport or more central, depending where they can find the space.

Plans are yet to be submitted to the city council, though the company said it wanted to include residents in the design process so that the district was “integrated into city life and not elitist.”

Either way, Ikea “wants to stir up the market,” Müller added.

A similar plan has been devised for an area of east London, where Ikea is eying a patch of land twice as big as the one it hopes to develop in Germany. The company has designs for 1,200 houses, offices hotels and retail spaces, all of which should be built in the next five to six years in an area south of the Olympic park.

While Hamburg’s Ikea-quarter does not have a time scale, in the meantime the firm is set on opening a string of budget hotels and student residences across Europe, including Germany.

“We will announce the first location for our budget hotel in Germany in the next few weeks and we are in talks with hotel operators to rapidly implement our concept,” Müller told Swedish paper Svenska Dagbladet newspaper last week.

There will be no Ikea branding in the hotels, neither will the rooms be furnished with the company’s furniture as they are to be opened under an established hotel operator.

Opening hotels and student housing is the company’s first move in a step towards joining the property market and it hopes to have them open by 2013 to 2014, Müller told the Hamburger Abendblatt.

Reports that the Ikea homes and hotel rooms will be locked and unlocked with a giant allen keys have not been confirmed.

The Local/jcw

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PROPERTY

Why house prices in Munich are starting to fall

The real estate market in the southern German state of Bavaria is changing due to the precarious economic situation, a new report has found.

Why house prices in Munich are starting to fall

What’s happening?

Germany’s largest state – Bavaria – is known for many positive things, such as stunning nature, culture and festivals. But it also has a reputation for being an expensive place to live. Many cities, especially Munich, are notorious for having some of the highest rental and property costs in the country. 

But it looks like the trend of rising house prices is beginning to dampen. 

According to the latest report by the Real Estate Association Germany South Region (IVD Süd e.V.), inflation and increased mortgage interest rates have put an end to the period of significant hikes in the Bavarian real estate market – at least for the time being. 

“The rapidly growing financing costs and the uncertainties associated with the impending recession in Germany as a result of the Ukraine war are inhibiting the dynamics of market activity and, in particular, the price dynamics in the residential real estate market,” said Professor Stephan Kippes, head of the IVD market research institute.

It reflects a general trend that we’ve been starting to see in Germany as the tough economic situation bites. 

According to a recent study by property search portal ImmoScout24, the number of people buying houses in Germany fell dramatically in the second quarter of 2022. And In many of the major metropoles, property prices also went down as people struggled to find interested buyers.

READ ALSO: How property prices are dropping in major German cities 

Where can we see this trend?

The price changes can be seen clearly in the state capital Munich, reported regional broadcaster BR24.

According to the study, the average property price, which was €9,500 per square metre in spring, has now dropped to €9,450. 

In some Bavarian cities, the trend reversal is not yet as noticeable. In Nuremberg, for example, property prices are still rising but at a slower rate than previously seen. The price of a property in spring was on average €3,630 per square metre, and is now €3,710, according to the study. 

Experts say it shows how the situation is developing. 

“The state capital of Munich, where the first price declines for residential real estate were identified in the fall of 2022 for the first time in a long time, could serve as a seismograph for future developments in Bavaria’s large and medium-sized cities,” said Kippes. 

Homes in Erfurt, Thuringia.

Homes in Erfurt, Thuringia. Photo: picture alliance/dpa | Martin Schutt

Interest increases for buyers

At first glance, this development could seem tempting for those looking to buy property in Germany.

But Kippes points out that buyers are hardly benefitting from the decreasing prices – because interest rates have risen. 

“A few months ago, you could get an interest rate of 0.8 percent,” said Kippes. “If we take a purchase price of €500,000, let’s assume that €150,000 is equity and a €350,000 loan is needed; two percent repayment, 10 years fixed interest rate. Then, you would have paid €817, but today it would cost you €1,473.”

The IVD study said that the historically low-interest rate level of the past years in Germany “made it possible to compensate, at least partially, for the massive increases in purchase prices in many places”.

READ ALSO: The rules foreigners need to know when buying property in Germany 

“Now that the relief provided by low-interest rates has largely disappeared, but at the same time purchase prices have remained at dizzying heights, owner-occupiers in particular, who traditionally often finance with a high proportion of borrowed capital, are increasingly dropping out as buyers,” said the study. 

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