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Weird News Despite corona crisis: Real estate association does not expect falling rents

14:00  10 april  2020
14:00  10 april  2020 Source:   handelsblatt.com

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Langfristig werde es nicht zu sinkenden Mieten kommen, glaubt IVD-Präsident Michael Schick. © dpa In the long term there will be no falling rents, believes IVD President Michael Schick.

Even after the corona crisis, demand on the rental market will remain high and living space will remain scarce. That's what real estate association president Michael Schick says.

From the perspective of the real estate association Germany (IVD), the corona crisis will not lead to falling rents in large cities in the long term.

"Our thesis is: Demand on the rental apartment market will continue to be high and living space will remain scarce," said IVD President Michael Schick on Thursday in Berlin. The market is currently experiencing a dent at best.

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Many moves would be postponed but not canceled. "For this year, we expect rental prices to change at the level of the previous year," said Schick. According to this, rental prices rose by around three percent nationwide last year, and thus weaker than in previous years.

The assumptions of the association coincide with data from the real estate portal Immoscout24. "The prices would drop if there were an oversupply of rental apartments on our side," said Managing Director Ralf Weitz of the German Press Agency. “We don't see this effect. There are no longer any offers and there is no significantly lower demand. ”

The number of offers on the site had declined by around ten percent after the contact restrictions came into force in mid-March.

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"However, we can also see that it has already recovered by almost 6 percent," it said. Mass visits in the crisis are prohibited. However, many companies would rely on individual visits or offer video switching.

There was a strong excess demand before the crisis, said Weitz. "In the case of rental apartments in top cities, offers had up to 100 inquiries in just a few hours."

Even if that were to be halved due to the crisis, demand is still very high. Immoscout24 uses data from the evaluation of offers and searches on its own portal. They only show a section of the entire rental and real estate market.

From the perspective of the tenants' association, which represents the interests of tenants, it is still too early to speculate about the effects of the Corona crisis on the housing market.

"We still do not know how the rental market and rental prices in cities and metropolitan areas will develop after the heyday of the pandemic, at the moment the market seems frozen for the time being," said a spokeswoman on request.

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The tenants' association advises interested parties to postpone apartment visits until after the pandemic. "Video circuits do not replace an on-site visit, since only a real on-site visit enables a comprehensive impression and the exact examination of the offer." The tenant only sees online what is shown to him.

The data on the real estate portal also shows a clear increase in offers in the “temporary living” submarket, where apartments are only offered for a limited period, usually a few months.

In the seven largest German cities, this offer grew by almost a third between mid-March and early April, and almost half in Düsseldorf alone.

"Many private landlords seem to be rededicating their apartments and returning them to the rental apartment market," says Immoscout24. How many of them were previously offered on the holiday home portal Airbnb cannot be said.

IVD President Schick does not believe that this development will relieve the general rental market. He can understand that Airbnb tourism is currently slumping and that many providers are now switching to the regular housing market. "But I think it's a small market niche that doesn't have a major impact on the overall market."

More: The recession is burdening providers of flexible offices. While their tenants can cancel at short notice, they cannot get out of their long-term contracts.

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