Within ten years, project developers have increased their space in the seven class A cities by around 30 percent - not enough to meet the demand for apartments and offices. And now our study "Real Estate Developers 2020" shows: Even before the Corona crisis, the total volume had already fallen significantly. Here are the most important results.

For the 14th time we have examined the market for project developments in the seven German class A cities. To do this, we analyzed over 5,000 individual projects and evaluated them. We examined the uses of office, living, retail and hotel. A detailed market overview of the players and their projects is provided on the basis of extensive project lists.

Weak Growth in the Seven Class A Cities

Within ten years, between 2010 and 2020, the classical project developers, who build for sale, have increased their building volume in the seven German class A cities by around 30 percent. Nevertheless, this volume was not sufficient to meet both residential and office demand.
Currently the situation is worsening: whereas in 2017 the market for project developments in the seven class A cities grew by 4.2 percent, and 2018 showed a growth of a whopping 7.2 percent, in the current study year 2020 project volume is growing only weakly at 1.1 percent (approx. + 500,000 sqm).

In particular project developments for residential property in the seven class A cities are declining by 2.9 percent - even though property owners such as municipal housing companies are continuing to build heavily. At the same time, there has also been a significant decline in the growth of commercial property.

The project developer market is clearly drifting apart also in terms of its players: On the one side, the investor developments (building for own use or to hold), are still growing by 5.4 percent. On the other side, the trading developments (building for sale) has declined for the first time since the series of studies began 14 years ago. Compared to the previous year, 1.9 percent less space was developed for resale. The trader developers are withdrawing.

The 2020 study analyses the project development volume (in square meters) of trading and investor development together. Investor Developments have been surveyed for the study since 2016.

Less Residential

For trader developers, the residential segment in the seven class A cities continues to lose considerable appeal, as already shown in the chart of the month for April. For these classic project developers, the project volumes both in 2018 and 2019 were already slightly but consistently declining. Now this trend has become extremely strong with a very significant -1.16 million sqm or -6.8 percent. Even if the project volumes of the investor developers, such as the municipal housing companies, which continue to grow in the class A cities, are also considered, there is still a significant decline in the residential market of 719,000 sqm or -2.9 percent. This is the first decline in residential project volume since the first Real Estate Developers 14 years ago.

It should be noted, however, that this trend only applies to the seven class A cities, which are clearly defined with their municipality borders. However, this development should not be equated with a nationwide trend, especially in the residential segment. Residential project developers remain loyal to the German housing market, but are much less active with residential projects directly within the class A cities. Their activity is shifting to the surrounding communities and the smaller class B and C cities.