Micro-Apartments: a Booming Market in Germany

Germany is a great nation that boasts a great history. Who doesn’t know that the country’s capital, Berlin, was completely destroyed during WWII, rebuilt almost immediately into two divisions separated by the famous Berlin Wall, and later reunified? Germany’s development momentum is something that no one can dare describe in one word, and the country is an attractive place for those looking for the connecting thread between creativity and history. Having said this, the demand for micro-apartments in Germany tends to increase every day mainly as a result of the high number of students in the country. In 2016 alone, the student property transactions hit €750 million, which was about five times more than the preceding year.

Investors in Germany usually purchase micro-apartments mainly to lease the properties to students, seasonal workers, tourists, business travelers, young professionals, and others in need of affordable yet private accommodation. In some cases (though rare), buyers acquire these properties for their own use.

Since micro-apartments are smaller in size, purchasing them is cheaper than buying other residential properties. In Berlin, Nuremberg, Munich, and other large cities in Germany, the prices for obtaining a fully furnished micro-apartment range from €120,000 to €300,000. As an investor, you can buy your apartment either through a mortgage loan or with your own money.

Owners of micro-apartments in Germany can either lease their property independently or as a group, if an apartment is owned by several people. In the latter case, the management of the apartment is entrusted to a property manager who leases the apartment and proportionally distributes the rental income to the owners based on their shares.

In terms of management and maintenance, you will need to sign an agreement with your property manager who has full charge of the apartment. Typically, micro-apartment owners in Germany part with €1,200 to €2,400 every year as maintenance costs, which cover management fee and rental income tax.