MAP Market Insight
In recent years, living concepts tailored to a growing clientele of predominantly younger people have increasingly emerged in the major cities of Europe and Germany. Basically, the micro-apartment trend is about reducing living space and accommodating everything you need in a small apartment. This is particularly popular with young professionals, but also with students and, increasingly, the older generation. They are looking for minimalist and affordable apartments in attractive residential areas, especially in city centers. At the same time, they do not want to compromise on quality of life. The spectrum of micro-apartment concepts is broad and ranges from student living, business apartments and co-living to serviced apartments and senior living, which is tailored to the needs of retired professionals and golden agers.
This has created a new asset class which, while still generating higher returns than the traditional residential sector, has proven to be much more crisis-resistant. In addition, numerous social trends indicate that demand for micro-apartments will continue to develop positively in the future, as their target groups will continue to grow. Particularly in view of the current housing shortage in German cities, which will become even more acute in the medium term due to the sharp decline in construction activity, micro-apartment concepts offer an excellent way out by making efficient use of scarce space.
In this Market Insight, we present the micro-apartment asset class in detail and examine its opportunities and risks from an investor's perspective. First, we briefly describe the different types of modern housing that currently belong to this asset class. We then highlight social trends that will increase the potential for micro-apartments in the future, before providing an overview of the German market based on current data. Finally, we analyze in detail the strengths and weaknesses of the new asset class from an investor's perspective and highlight the opportunities and risks of the market.
Note: The Market Insight was completed in July 2023. We updated the section on yields in February 2024.
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