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The interior of a microapartment with sofa, table and lamp in front of a window to the city. Microapartments are trending investments – but can they truly contribute to solving the housing crisis in the long term?

Microapartments: A modern alternative in the battle against the housing shortage? 

Yvo Postleb, Managing Director Germany, Cushman & Wakefield
Yvo Postleb
Managing Director Germany, Cushman & Wakefield

 

According to GdW, the Federal Association of German Housing and Real Estate Enterprise Registered Associations, 360,000 new apartments need to be built in Germany every year between 2015 and 2025. So far, the number of apartment completions has failed to meet this target. In fact, the Federal Statistical Office reported a total of just 287,352 completions in 2018. The shortfall prompted the Federal Government to adopt a package of measures designed to stimulate the housing construction market, including tax breaks for the development of new homes and construction grants for families with children.

The German government’s stated aim is to support the construction of 1.5 million affordable apartments. But even this will not be enough: The Germany population is growing steadily and the trend towards single-person households is accelerating. By 2018, one-person households already accounted for 42% of all households. In our recent study on microapartments, we predict that this figure will rise to 44% by 2035. Thus, we conclude, microapartments will play a central role in overcoming Germany’s housing shortages.

 

Microapartments are flexible and promote community 

 

Microapartments combine aspects of the well-established student residence concept and more traditional temporary living. They have compact floor plans with a maximum of 35 square meters of living space and usually comprise a living room, sleeping area, bathroom and kitchenette. Microapartment operators typically charge all-in rents, with tenants making a single monthly payment to cover all regular charges, such as operating costs, electricity, furnishings, Wi-Fi and, in many cases, bed linen. Communal rooms and event kitchens are also included in many schemes, with the aim of fostering a sense of community. And incorporating accessibility into the design of micro-apartments means they can easily be converted for subsequent use by older people – an important aspect in view of current demographic trends.

 

Investors one step ahead 

 

In 2018, we registered a transaction volume of around EUR 1.5 billion in microapartments in Germany. Just one year earlier, investment totaled EUR 810 million. After the United Kingdom, Germany is the European market with the highest volume of investment in this innovative residential trend. Investors have already identified microapartments as an up-and-coming market segment. Politicians, however, still have some catching up to do: More than 20,000 building regulations, for example, urgently need to be reviewed in order to put a brake on ever-increasing construction costs. Negative attitudes toward landlords, many of which are based on little more than prejudice and expropriation fantasies, also need to be eliminated in order to pave the way for the development of new living space – no matter what kind.

 

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