# Sky no longer the limit for Germany’s ‘Mainhattan’ skyscraper boom
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-12-21
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: Frankfurt Real Estate Boom Sparks Bubble Concerns
Meta Description: Discover a high-rise 47th floor apartment in 'Mainhattan' for sale at 9 million euros. Experience Germany's financial hub like never before.
URL: https://financedigest.com/sky-no-longer-the-limit-for-germanys-mainhattan-skyscraper-boomhtml

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By John O’Donnell

FRANKFURT (Reuters) – Towering above a nondescript office quarter of downtown Frankfurt, a 47th floor three-bedroom apartment is on sale for 9 million euros ($10 million), a lofty price some see as a warning.

Dubbed “Mainhattan” by locals in a nod to its skyscrapers and location on the Main river, Germany’s financial hub may be a far cry from New York in terms of nightlife, culture and banking but it did beat it to top a 2021 real estate bubble index.

Having long shunned property ownership, rock-bottom borrowing costs, rising rents and for some the impact of having to pay to keep their [money in the bank](https://www.financedigest.com/marketmind-banks-are-leaking-money.html "Marketmind: Banks are leaking money") have persuaded almost one in two Germans to buy a house or apartment.

The ensuing property rush is seeing 18 high-rise buildings spring up across Frankfurt, a building frenzy replicated across Germany, where [prices have hit record](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc.html "UK shop price inflation hits record 8% in January: BRC") highs, with the cost of houses up roughly 50% since mid-2016.

Frankfurt beat [Hong Kong](https://www.financedigest.com/citadel-accelerates-hiring-push-in-hong-kong-and-london.html "Citadel accelerates hiring push in Hong Kong and London"), Toronto and New York in the 2021 UBS ‘bubble’ ranking, with nearby Munich also near the top.

And since the middle of 2019, German [real estate](https://www.financedigest.com/gold-london-real-estate-and-the-theresa-may-effect.html "GOLD, LONDON REAL ESTATE AND THE THERESA MAY EFFECT") price rises have outstripped much of the rest of Europe, including France and Britain, and during the second quarter of 2021 house prices jumped more than 10% compared to a year earlier.

The demand has been highlighted by moves such as [German insurer Allianz and a local pension fund this year paying 1.4 billion](https://www.financedigest.com/intel-wants-5-billion-more-in-german-subsidies-for-chip-plant-bloomberg-news.html "Intel wants billion more in German subsidies for chip plant – Bloomberg News") euros ($1.6 billion) for one of a development of four new skyscrapers planned for the financial capital.

The project, known as FOUR, includes [offices as well as two bedroom apartments with a price tag of around 3 million](https://www.financedigest.com/black-panther-sequel-ignites-box-office-with-330-million-global-debut.html "‘Black Panther’ sequel ignites box office with 0 million global debut") euros.

We are targeting the Frankfurt area,” the [developers behind the project](https://www.financedigest.com/cordant-projects-to-develop-eleven-moxy-hotels-across-uk.html "Cordant Projects to develop Eleven Moxy Hotels across UK") said. The city is one of the wealthiest in Germany. The demand has [confirmed this was the right approach](https://www.financedigest.com/britains-co-op-bank-confirms-tsb-approach.html "Britain’s Co-op bank confirms TSB approach"). We don’t see a bubble.”

While there has been a steady build-up of interest, coronavirus has turbo-charged [property investment](https://www.financedigest.com/brexit-no-obstacle-as-chinese-overseas-property-investment-doubles.html "Brexit no obstacle as Chinese overseas property investment doubles") as Germany’s traditional savers have had even more money to put aside and deposits have been hit by negative interest rates.

Less than 42% of Germans owned their own home in 2006, but that [climbed during the financial crisis to almost](https://www.financedigest.com/oil-climbs-almost-3-as-recession-fears-begin-to-fade.html "Oil climbs almost 3% as recession fears begin to fade") 47% in 2018.

Borrowing to buy [property has picked up speed](https://www.financedigest.com/immediate-lift-of-oxford-property-prices-to-result-from-new-direct-high-speed-rail-connection-with-london.html "“Immediate lift” of Oxford property prices to result from new direct high speed rail connection with London") during the pandemic, according to the latest data from Germany’s Bundesbank. Home loans reached 1.45 trillion euros at the end of 2020, roughly 6% [higher than a year earlier and data](https://www.financedigest.com/european-shares-edge-higher-on-healthcare-lift-weak-china-data-stokes-worries.html "European shares edge higher on healthcare lift, weak China data stokes worries") for this year show this borrowing has continued to grow.

[‘SKY NOT THE LIMIT’](https://www.financedigest.com/the-sky-is-no-limit-for-vaisala-vaisalas-pressure-and-humidity-sensors-are-soon-again-on-their-way-to-space.html "The Sky Is No Limit for Vaisala: Vaisala’s Pressure and Humidity Sensors Are Soon Again on Their Way to Space")

As the ongoing pandemic curbs immigration and bolsters tenant protection, while Germany’s ageing population shrinks ever faster, some observers [say the seeds have been sown for property prices](https://www.financedigest.com/uk-house-prices-stabilise-after-four-month-fall-halifax-says.html "UK house prices stabilise after four-month fall, Halifax says") to unwind.

The Bundesbank warned in November of the risks of an overheated [property market](https://www.financedigest.com/2017-spanish-property-market-gems-kyero-com-gazes-into-the-crystal-ball.html "2017 Spanish property market gems – Kyero.com gazes into the crystal ball"), cautioning that it could be overvalued by as much as 30%.

We need immigration of roughly 220,000 just to keep the population, and [demand for property](https://www.financedigest.com/frances-axa-q1-sales-rise-2-as-property-policy-demand-grows.html "France’s AXA Q1 sales rise 2% as property policy demand grows"), stable. But immigration has taken a hit from Corona,” Jochen Moebert, an economist with [Deutsche Bank](https://www.financedigest.com/citigroup-to-buy-deutsche-bank-license-in-mexico-for-wholesale-unit.html "Citigroup to buy Deutsche Bank license in Mexico for wholesale unit") Research, said, adding that net immigration fell from up to 400,000 before the pandemic to 220,000 last year.

Moebert forecasts that this, coupled with stricter rules to make [homes energy efficient and rent](https://www.financedigest.com/still-living-at-home-a-third-of-the-nation-cant-afford-to-rent.html "Still living at home? A third of the nation can’t afford to rent") controls mean the property market could turn in 2024.

“We’re reaching the top,” he said.

Barbara Steenbergen of the International Union of Tenants said that the pandemic had tightened [controls on European property investors](https://www.financedigest.com/cryptoverse-bitcoin-investors-take-control.html "Cryptoverse: Bitcoin investors take control") by restricting foreign buyers from snapping up ordinary homes in Amsterdam and elsewhere.

The markets for investors are becoming more regulated [across Europe,”](https://www.financedigest.com/air-pollution-surges-as-heatwave-sweeps-across-europe.html "Air pollution surges as heatwave sweeps across Europe") she said.

In Frankfurt, there are the first signs of a turn, with [plans for a Porsche-branded designer apartment tower dropped](https://www.financedigest.com/elon-musk-drops-plans-to-join-twitter-board-deletes-weekend-tweets.html "Elon Musk drops plans to join Twitter board, deletes weekend tweets").

And local [officials agree the top](https://www.financedigest.com/global-crypto-regulation-body-likely-in-next-year-top-official-says.html "Global crypto regulation body likely in next year, top official says") may have been reached.

The sky is not the limit for [property prices,”](https://www.financedigest.com/greek-residential-property-price-recovery-picks-up-in-third-quarter.html "Greek residential property price recovery picks up in third quarter") a spokesman for Frankfurt’s planning department told Reuters.

For [luxury apartments](https://www.financedigest.com/luxurious-apartments-tick-boxes-royal-leamington-spa.html "Luxurious Apartments Tick All The Boxes In Royal Leamington Spa"), what we have is enough.

(Reporting by John O’Donnell; Editing by Alexander Smith)


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