The prices for new apartment blocks in Frankfurt have now reached such a high level that it pays off for project developers to build high-rise residential buildings and more towers are being built in the German financial capital boosted by Brexit.
In 2017 alone, asking prices rose by 15% compared to the previous year. A total of eight residential high-rise buildings have been completed since 2014 in the city and 20 more could be added by 2022. Five are currently under construction and another 15 are planned, according to consulting company Bulwiengesa.
“The cost of building skyscrapers is about twice as high as in ordinary multi-story housing,” Sven Carstensen, Frankfurt branch manager at Bulwiengesa, said. “Therefore, you also need correspondingly higher revenue,” he added.
He said the increase in prices was increasing as demand rose. Unlike other cities, Frankfurt offers little land potential, especially in the city centre, he said, so building high is the answer.
A factor should also be the exit of Britain from the EU. “The expected influx of Brexit newcomers will help to absorb the volume of high-rise housing,” Mr Carstensen said.
While it is unknown how many bankers will ultimately move to Frankfurt, there are plenty of forecasts.
“We expect that at least half of London’s declining financial jobs will be relocated to Frankfurt, which will be at least 8,000 employees over a period of several years,” Helaba chief economist Gertrud Traud said earlier this year.
One of the new high-rise residential buildings in Frankfurt is the 51-storey building called the Grand Tower, which has been under construction since the beginning of 2016, and is due to be completed in 2019. “90% of condominiums are now sold to a German and international clientele,” Juergen Blankenberg, managing director of developer GSP Staedtebau, said.
According to the company, the tower will have a height of 172 metres and is currently the tallest residential building under development in Germany.
Bulwiengesa said there is a lot of construction activity underway in Frankfurt. The consulting firm identified 24 projects with around 2,200 apartments in the centre.
The weighted average price of new apartments is around €6,190 per square metre in Frankfurt, according to the data. The prices vary greatly, based on location.
Skyscrapers are not new for Frankfurt. In the office sector, they have long dominated the skyline. But now they are increasingly being built for apartments.