The Impact of Demographics on the Real Estate Landscape

The Impact of Demographics on the Real Estate Landscape

06.01.2020 Author/s: Martin Steininger

A growing number of elderly, a widening gap between affluence on the one hand and poverty on the other: Housing and living conditions in Germany are changing. The effects are felt not least in the real estate landscape. Together with Berlin Hyp, we compiled a compact market report on demographic trends.

What sort of ramifications do the demographic effects actually have? For obvious reasons, demographic trends have significant consequences for the real estate industry. But this is not to say that demographics represent an inescapable threat – after all, even the incoming migration to cities and metro regions does not happen overnight but has been felt in the industry for many years. You will find an impressive example of it below: Between now and 2060, the number of care-dependant individuals will grow so quickly that the number of care homes would have to triple or even quadruple in order to satisfy demand. Will new-build construction live up to the challenge, or will we have to develop new residential formats for the swelling number of seniors? And if the latter were true, what would these formats look like? Germany’s real estate industry is going to have to address all of these questions.

You’re lucky if you still manage to keep your house in order. In future, new residential formats for seniors will be needed.

Key Facts from the Market Report

  • 1.97 persons per household

“Fewer, older and also more singles”: The trend toward singularisation is manifest across age groups. While German households averaged 2.14 persons as recently as the year 2000, that household average was down to 1.97 by 2017.

  • 46,282 care homes by 2060

The so-called Baby Boom generation is creating enormous demand for care homes and social real estate: Assuming the number of beds per care home remains the same, the number of care homes, based on the total of 2015 (13,596) would have to triple or quadruple in order to meet demand by 2060 (46,282).

  • Number of supermarkets to decline by 11.5 percent before 2030

One in nine supermarkets (-11.5 percent) may be forced out of business by 2030. The states of Saxony-Anhalt, Thuringia, Saarland and Mecklenburg-West Pomerania will be particularly hard hit. This threat is attributable to the shrinking population but also to the growing significance of online retailing and increasing floor-space productivity.

  • Potential workforce to shrink by 26.9 percent

The labour shortage emerging as members of the Baby Boom generation are gradually entering retirement will impact the office real estate market too: Between now and 2060, the potential workforce is expected to shrink by 26.9 percent.

So, What Does this Imply for the Cities?

Although German conurbations have grown significantly during the past five to ten years, the long-term population decline in remote rural communities progresses unchecked. In the longer term and on the level of administrative districts, the major growth trend since 1990 reflects demographic losses through 2035. The gap between economically underdeveloped rural regions and booming cities appears to be widening continuously – and future megatrends (such as digitisation or the energy policy shift, among others) could well exacerbate the regional disparities. Without political intervention, the equivalence of living conditions will be at risk.

  • Swarm behaviour and migration as re-urbanisation drivers

Cities have become the economy’s powerhouses. With their initiatives and services, as well as with their forward-thinking ideas, they boost Germany’s innovative strength and thus keep contributing massively to technological progress and national growth.

  • Student migration a key motive for inflow of residents

One of the main drivers for the inflow of residents to Germany’s major cities has traditionally been student migration, drawn specifically by the centripetal pull of higher education institutions. It appears that especially major campus towns that offer flourishing labour markets as well as an extramural infrastructure are particularly interesting for young people.

  • Residential locations in inner cities remain popular

The modern philosophies of life cultivated by a young and mobile society has shifted the centre of gravity to residential areas in the inner cities of Germany’s urban centres. Attractive educational and professional opportunities, the advanced cultural and recreational benefits, great transport links as well as a comprehensive spectrum of services and local amenities are key factors informing people’s choices not only of their place of residence but also of a given residential format.

For more details, go to the homepage of Berlin Hyp.

Contact person: Martin Steininger, Chief Economist at bulwiengesa, steininger [at]