Happy Holidays at the Baltic Seaside

Happy Holidays at the Baltic Seaside

Background Residential
15.06.2019 Author/s: André Adami and Antonia Wecke

The market for holiday properties has seen upward growth, as the Baltic seaside is highly attractive for many potential buyers. On behalf of PRIMUS Immobilien, we put together a comprehensive portrait of the Baltic seaboard in Mecklenburg-West Pomerania and outlined the investment potential. All holiday trends suggest that the market opportunities will stay as auspicious as they are.

The Baltic seaboard of Mecklenburg-West Pomerania is a holiday destination of long-standing tradition. It was here that Germany’s first seaside resort was built 150 years ago. Bearing the moniker “Berlin’s bathtub” because of its convenient proximity to that city, the Baltic seashore with its diverse leisure and recreational options in combination with a scenic landscape remains highly popular. Inversely, the Baltic seaboard benefits considerably from the brisk growth in jobs and purchasing power in the German capital.

The island of Usedom is popular with holidaymakers, property buyers and investors

Driven by booming demand for accommodation in Germany and for investment opportunities, the market for holiday properties has developed rather handsomely in recent years. Building activity, transactions and selling prices have all gathered momentum, and the pace will continue to accelerate in response to mega trends that stimulate the trend.

PRIMUS Immobilien AG, the company that commissioned the Market Report, is active as property developer on the Baltic seaboard of Mecklenburg-West Pomerania, most notably in the segment of premium holiday properties.

Trend toward Shorter but More Frequent Trips

Tourism has seen enormous growth in Germany in recent years. The Federal Statistical Office counted a total of nearly 478 million overnight stays in 2018, an increase by more than one fourth over a ten-year period. The figure also marks the ninth consecutive increase in the number of overnight stays as well as a new record level. Roughly four out of five guests are domestic travellers. The average length of stay is currently around 2.6 days per trip. By contrast, holidays on the Baltic seaboard last five to six days. Aside from the fast-growing demand for trade fair and urban tourism, the growth is most conspicuous on the market for wellness- and sports weekends on the seaside or in the mountains. The number of short vacations has increased by more than 50 % in the years since 2003. The shift toward shorter but more frequent trips is a long-run trend. Predictably, the trend has increased the significance of destinations inside Germany that are easy to reach, not least because environmental aspects are taken into consideration.

According to a recent survey that Allianz Global Assistance conducted in 2018, nearly half of the respondents like to take short trips (44.2 %). At the same time, extended domestic holidays are also becoming more attractive and popular. Roughly one in three Germans actually favours longer domestic trips of three or more overnight stays. A poll conducted in 2018 by the BAT Foundation for Future Studies revealed that 52 % of the German respondents now prefer to consider and select domestic destinations over long-distance travel.

Source: state property reports of Mecklenburg-Western Pomerania

As a result of strong demand, selling prices have soared over the past years. Average prices rose at around 48 % to a current level of c. 4,600 euros/sqm since 2012. The mean annual growth rate was around 6.8 %. This has pushed return expectations down to a level of 4 % to 5 % lately, depending on the quality of location and property.

Conclusion: From bulwiengesa’s point of view, the demand for new-build holiday properties is likely to persist in the years ahead, while robust tourism performance indicators will drive further price growth. Investments in holiday real estate therefore encouraged by great market opportunities.

Contact person: André Adami, Head of Division Residential for North, West and East Germany at bulwiengesa, adami [at] bulwiengesa.de