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Top 6 Bavarian cities for property investment

Germany is currently one of the most reliable real estate markets in Europe. Affordable financing fuels demand. In Munich, quality apartments typically have 20 to 40 potential customers.

Bavaria is known as the richest and safest state in Germany. Property is expensive: prices in Munich average €7,700/m², compared to the nationwide average of €2,700/m². As profitability in premium locations is quite low, many investors are looking to smaller Bavarian cities, so-called B-locations, where real estate is not as expensive as in Munich.

Tranio analysts recommend the following cities in Bavaria: Augsburg, Ingolstadt, Landshut, Nuremberg, Regensburg and Fürth (Table 1). In these cities, prices have the potential to grow because of several factors:

  • Developed transport infrastructure
  • Population growth
  • High purchasing power
  • Low unemployment
  • The presence of the major employers in the city

Table 1: Bavarian B-cities for investment

Data: Statistics Office of Bavaria, Federal Agency for Labor of Germany, Michael Bauer Research, Wohnungsboerse.net (November 2017)
Forecast for population growth, 2015–2035, % Purchasing
Power Index
Unemployment,
%
Price increase,
2011–November 2017, %
Increase
in rental costs,
2011–November 2017, %
Germany 3 100 5.4 61 35
Bavaria 5 108.1 2.9 86 41
Munich 14 133.9 2.5 110 41
Augsburg 11 96 5.1 119 54
Ingolstadt 9 112.6 2.9 66 14
Landshut 11 113.1 2.3 89 40
Nuremberg 5 103.8 5.6 130 38
Regensburg 9 111.1 3.1 80 22
Fürth 10 107.5 5 99 32

Augsburg

Said to be founded in 15 BC, Augsburg is one Germany’s oldest cities. It is located just 30 minutes from Munich, and is part of the country’s "Romantic Road" – a popular tourist route stretching from Würzburg to Füssen.

Modern Augsburg is a university city and a major research centre
Modern Augsburg is a university city and a major research centre Photo: manfredxy / Depositphotos

Augsburg is the third-largest city in Bavaria after Munich and Nuremberg. According to the 2015 data, its population is 286,000. It is one of the fastest growing cities in Bavaria. According to the Statistics Office of Bavaria (Bayerisches Landesamt für Statistik), its population has been growing since 1998, growing 12% by 2015. By 2035 it will grow by another 11% to 316,000.

According to the Federal Agency for Labor of Germany (Bundesagentur für Arbeit), the unemployment rate in Augsburg (5.1%) is below the German average (5.4%). Its major employers include insurance company Allianz, it company Fujitsu, automobile manufacturer MAN, online retailer Amazon, and electronics giant Siemens. Its purchasing power is slightly below the German average: €21,600 per year against €22,500 nationally.

According to the website Wohnungsboerse.net, the price of real estate in Augsburg grew by 119% to almost €4,100/m² from 2011 to November 2017. The rental price also grew by 54% to €10.9/m² per month during the same period. At the same time, property prices are almost twice cheaper than in Munich. Due to relatively low prices and its proximity to Munich, Augsburg is great for those who work there but want to save on buying or renting a home, which makes the city an excellent location for real estate investors.

Ingolstadt

First mentioned in the 9th century, Ingolstadt is famous for its medieval architecture that is preserved in the old part of the city and the fact that the University of Munich, named after Ludwig and Maximilian, was founded here in the 15th century (it was moved to Munich four centuries later). Like Augsburg, Ingolstadt is not far from Munich: it takes only 40 minutes to get there by car.

In the novel by Mary Shelly, Ingolstadt is the place where Frankenstein’s monster was born
In the novel by Mary Shelly, Ingolstadt is the place where Frankenstein’s monster was born Photo: Circumnavi / Depositphotos

According to official data, about 132,000 people live in Ingolstadt. the population has been growing for more than 20 years. From 1995 to 2015, the population increased by 18%, and according to the forecasts of the Statistical Office of Bavaria, it will increase by another 9% by 2035.

Ingolstadt is characterised by a low unemployment rate: only 2.9%, which is almost twice lower than the national average. The Audi automobile factory is located here, as well as the manufacturer of Continental tyres, the headquarters of electronics retailer MediaMarkt, telecommunications company Telefónica and the office of Kaspersky Lab. The purchasing power of Ingolstadt residents, at €25,300 per person, is higher than the German average.

According to Wohnungsboerse.net, property prices have increased by 66% from 2011 to November 2017, exceeding €4,700/m². This is slightly higher than the average in Germany, but almost 40% lower than in Munich. the rental price increased by 14% to €11.8/m² per month during the same period. German business daily Handelsblatt named Ingolstadt the best city for investment in real estate in West Germany in 2014.

Landshut

Built at the beginning of the 13th century as a fortress, Landshut was considered the capital of Bavaria until the beginning of the 16th century. The city has preserved the buildings of the Middle Ages, Renaissance and Baroque. Landshut is located 45 minutes from Munich and half an hour from Munich Airport (in fact, closer than from the capital of Bavaria itself).

Property in Germany
>Landshut's wedding – one of the biggest folk performances in Europe – is held every four years Photo: Tinieder / Depositphotos

Landshut is one of the fastest growing cities. From 1995 to 2015, the population here increased by 16% to 154,600. According to the Statistical Office of Bavaria, by 2035 the population will increase by an additional 11%.

Landshut has the lowest unemployment rate (2.3%) of the cities surveyed. the city is home to companies including automobile company BMW, British gas company E.ON, electric motors and fan company Ebm-papst, and clothing retailer C&A. The purchasing power of Landshut, at €25,400 per person per year, is second only to Munich (€30,100).

According to Wohnungsboerse.net, property prices in Landshut grew by 89% to €4,300/m² from 2011 to November 2017, while the cost of rent increased by 40% to €10/m² per month during the same period.

Nuremberg

Nuremberg was founded in the 11th century and has witnessed many historical events, including the opening of the first railway in Germany, connecting Nuremberg with Fürth, and the Nuremberg trial of 1946 - the largest trial in history. There are almost no historical buildings in the city. Nuremberg was the target of severe bombardment during World War II.

Nuremberg is a major transport hub, lying along the main highways connecting Munich to Berlin and Frankfurt to Cologne. It is also a high-speed railway hub. It only takes 1 hour to reach Munich by train, but over 2 hours by car.

Property in Germany
Nuremberg – the economic centre of historical region Franconia Photo: Bertl123 / Depositphotos

Nuremberg is the second-most populous city in Bavaria after Munich. According to the Statistical Office, the city's population increased by 4% from 1995 to 2015, and, according to its forecasts, will grow by another 5% by 2035.

Unemployment in Nuremberg (5.6%) is slightly higher than the national average. Many industries are well established here: information and communication technologies, publishing, energy, electronics, chemicals and textiles. Among the large enterprises in the city are Siemens, Nokia, Dell, Ericsson, Intel, KMPG, the head office of research company GfK, household appliance manufacturer Electrolux, and electric vehicle manufacturer Tesla. Purchasing power there is €23,300 per person per year – higher than the German average but lower than Bavaria.

According to Wohnungsboerse.net, real estate prices in Nuremberg more than doubled from 2011 to November 2017, growing by 130% to almost €4,000/m². The rental price for the same period grew 38% to €10.8/m² per month.

Regensburg

Regensburg is located at the northernmost point of the Danube – the river connects the city with nine countries, including Austria, Hungary, Croatia and Ukraine. In 2006, the Old Town of Regensburg, including the Stadtamhof district, was added to the UNESCO World Heritage List. The city’s Romanesque and Gothic buildings that survived World War II have been preserved in almost original form. It is about 1.5 hours away from Munich by car.

Property in Germany
St. Peter's Cathedral - the best example of Gothic architecture in Bavaria Photo: Leonid_Andronov / Depositphotos

According to the Statistical Office of Bavaria, the population of Regensburg grew by 16% to 145,500 people from 1995 to 2015, and will increase by another 9% by 2035.

Unemployment in Regensburg (3.1%) is much lower than the national average. the automobile industry, engineering, electrical engineering and microelectronics are well established in Regensburg. The representative offices of world-famous companies such as Aldi, Amazon, BMW, Continental Automotive, Flipkart, General Electric, Osram, Siemens and Toshiba are located here. the purchasing power of local population is €24,900 per person per year.

According to Wohnungsboerse.net, between 2011 to November 2017, housing prices in Regensburg grew by 80% to €4,700/m², and the cost of rent grew by 22% to €10.7/m² per month.

Fürth

Fürth, founded as a Franconian settlement in the middle of the 8th century, is located just 9 kilometres from Nuremberg. Today it is possible to reach the neighbouring city by subway in just 5 minutes. Fürth is 1.5 hours away by train from Munich, and 2 hours by car.

Property in Munich
The Old Town of Fürth Photo: Leonid_Andronov / Depositphotos

The population of Fürth is actively growing. Between 1995 and 2015 it grew 15% to 124,200 people, and by 2035 it will grow by another 10%.

The unemployment rate (5%) is below the national average. There are few large international companies, but there are many small enterprises involved in gold leaf manufacture, electrical engineering and toys. Purchasing power is higher than most other German cities, at €24,200 per person per year.

According to Wohnungsboerse.net, housing prices in Fürth almost doubled to €3,700/m² between 2011 and November 2017, and the cost of rent has increased by 32% to €10.2/m² per month.

Data: Wohnungsboerse.net, November 2017
Average purchaseprice, €/m² Averagerentalprice, €/m²
Germany 2,700 8.7
Bavaria 4,400 12.4
Munich 7,700 18.5
Augsburg 4,100 10.9
Ingolstadt 4,700 11.8
Landshut 4,300 10
Nuremberg 4,000 10.8
Regensburg 4,700 10.7
Fürth 3,700 10.2

Yulia Kozhevnikova, Tranio

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