Measuring the Residential Markets

How large would a fictional city need to be to accommodate the entire world population?

If the entire global population lived in a city with the density of Paris (20,000 inhabitants per km²), it would be the size of Sweden. Even the less densely populated outskirts of Paris, such as the Seine-Saint-Denis department (9,200 inhabitants per km²), would require an area equivalent to that of Sweden and Finland combined.

In Barcelona, ​​the difference is much more pronounced: the city itself is densely populated (17,300 inhabitants per km²), while the surrounding province has just 500 inhabitants per km². A city with this density that housed the entire global population would be 1.2 times larger than all European countries combined.

The situation is similar in many major European cities, such as Vienna, Copenhagen, Amsterdam, Frankfurt or Munich, whose metropolitan regions are often characterised by urban sprawl. The area surrounding Berlin is especially sparsely populated: a global city with the population density of the Dahme-Spreewald district would be 7.6 times the size of Europe.

The urbanization trend continues in Europe's big cities. This also means that the pressure on the residential markets in major cities will persist, creating corresponding investment opportunities. Against the backdrop of increasingly scarce land and the target of “net zero” land consumption by 2050, conversion areas, high-rise construction and densification of existing stands are becoming more of a focus in urban planning and the real estate industry.

Map description: The blue shading corresponds to the approximate area that a hypothetical global city with the specified population density would occupy. For some suburban regions where the hypothetical global city would exceed the size of Europe (including European Russia), the corresponding factor is indicated.

In Europe's major cities, housing is being redefined: with the influx of young people, flexible life plans and growing job mobility, modern forms of housing such as micro-apartments, student residences, co-living or serviced apartments are increasingly establishing themselves as an important component of the housing supply. They not only offer furnished living space with availability at short notice, but also communal areas (including kitchens, fitness areas, co-working spaces) and services (e.g., cleaning) that the traditional housing market cannot provide. The result? A versatile offering that perfectly complements the traditional housing market – ideal for students, apprentices, young professionals, commuters, project staff and expats.

Even in the vibrant metropolis of Copenhagen, the supply of modern forms of housing can barely keep pace with the rapidly growing demand, and further rent increases are therefore inevitable. Opportunities in terms of market potential are seen in both the student and non-student segments, particularly in central and well-connected locations.

Map description: The map shows the modern housing options in the form of student apartments and serviced apartments as well as the largest universities in the central Copenhagen district of Indre By. The overview map shows the proportion of small apartments (<40 m²) in the individual districts of Copenhagen.

Temperatures in densely populated areas with a lot of impermeable surfaces are already higher all year round than in the surrounding rural areas (referred to as heat islands). The number of hot days will continue to increase in the future. There are regional differences: While there could be an average of 5.4 days per year with temperatures above 30°C in Hamburg between 2036 and 2065 (today: 3.6 days), there will be 12.2 days in Cologne (today: 7.5 days). It will get particularly hot in Ludwigshafen (20 days), Karlsruhe (18.7 days) or Mainz, Darmstadt, Heidelberg and Heilbronn (around 16 days each).

Heat islands are mainly caused by a high level of impermeable surfaces and a lack of vegetation. Dark, impermeable surfaces such as roads and buildings store heat and also heat up the air even more. In contrast, permeable "unsealed" green spaces and trees have a cooling effect through evaporation and shading. This climate-regulating effect is greater the higher the volume of greenery (an older tree population with dense canopies cools better than a grassy area). In German cities with more than 50,000 inhabitants, the average volume of green space is 3.4 m³ per m². Kaiserslautern (6.7 m³) and Baden-Baden (6.2 m³) are especially green.

Heat is particularly dangerous for the health of vulnerable population groups, but affects the well-being of all urban residents. In the long term, microclimatic conditions could also play a role in how people choose a place of residence within Germany. In the future, the most pleasant places to live will continue to be those where as few surfaces as possible are sealed and are instead densely planted with greenery. This applies at the city-wide level as well as at district and property level. Large-crowned trees, green roofs or façades and shading elements increase the quality of life and thus the attractiveness and rentability of neighborhoods and residential properties.

Map description: The map shows how heat-resilient selected German cities are. In essence, the greener the better. The shaded area shows the proportion of settlement and traffic areas that are permanently sealed with buildings and roads. The trees symbolise the green volume (including trees and shrubs, but not just grass areas). The number of hot days (maximum temperature of more than 30°C) refers to the forecast of the Intergovernmental Panel on Climate Change (IPCC) until the middle of the 21st century (2036 to 2065) in the case of moderate climate protection (RCP scenario 4.5).

Trees have a positive effect on the urban climate. They cool with their shade and remove heat and pollutants from the air. The larger the tree (and thus the tree crown), the greater the effect. Between 2003 and 2019, measuring stations in Vienna's inner-city, densely built-up area regularly recorded twice as many hot days with temperatures over 30°C (maximum 63 days in 2018) as in the Wienerwald. The cooling effect of grass lawns is two to four times lower than that of green areas with trees. Not all green spaces are created equal.

• Cities such as Paris, Manchester, Malmö and The Hague therefore follow the “3+30+300 rule” of Dutch urban greening researcher Cecil C. Konijnendijk when greening their cities:
• 3 large trees visible from every building
• 30 percent tree canopy coverage at neighbourhood level
• 300 meters walking distance to the nearest public park or large green space

This approach is not only intended to strengthen city planning principles, but can also be implemented at property level and district level. The quantitative target values enable a targeted and measurable implementation of high-quality greening of properties, project developments and neighborhoods. This not only contributes to increasing the attractiveness of the residential area and the quality of time spent in the outdoor areas, but also has a positive effect on the local microclimate and residents' health.

Map description: The maps show the locations of public trees with crown diameters in Berlin and Vienna.

Germany aims to achieve carbon-neutral heating by 2045. In cities and municipalities with more than 100,000 inhabitants, a municipal heating plan must be in place by mid-2026 in order to determine the best and most cost-efficient way to achieve a climate-neutral heating supply. This should increase planning and investment security for building owners with regard to the existing or planned local heat supply.

District heating plays a crucial role in this, especially in urban areas. Across Germany, 14 percent of households are currently supplied with district heating, which has so far been predominantly (80 percent) from fossil fuels. While 30 percent of households in Eastern Germany are connected to a heating network, the figure in Western Germany is currently just under 10 percent. However, even in urban areas with district heating networks, connection is not always possible. The heating network areas in German cities are generally limited to inner-city locations and new developments. Within these supply areas, not all households are connected to the district heating network.

In light of long planning periods, potential connection obligations and cost factors such as the CO2 tax, consideration of municipal heating plans will play an increasingly important role in real estate investments, project developments and energy-efficient refurbishments.

Map description: The map shows the existing and planned district heating network areas in Düsseldorf, Hamburg, Munich and Stuttgart. Additionally, the existing district heating connections were evaluated based on the 2022 census. The black squares correspond to an area of ​​one hectare on which at least five connections were declared.

One of the biggest challenges in electrifying road transport is the limited availability of charging stations. Currently, an average of 22 electric cars share one public charging point in Germany – in the Netherlands, the figure is only four. Not only the number of charging points but also their location is crucial for a comprehensive and sustainable charging infrastructure. Across Germany, the nearest public charging station is around a seven-minute drive away, and the nearest fast-charging station is an average of around 12 minutes away. Coverage in urban areas is far better than in rural areas. Ideally, an electric car can be charged during working hours, while shopping, or close to home. However, it is crucial that charging points are available within walking distance. This consideration reveals a less comprehensive picture, even in major cities such as Hamburg and Cologne. Only seven percent of apartment buildings in German city centres offer their residents private charging points or charging stations.

In addition to e-mobility, shared services such as car sharing and e-scooters are becoming an increasingly important component of urban mobility concepts in particular. As a result of the consolidation of the shared mobility market, there are fewer and fewer large providers active throughout Germany and Europe. Areas of business on the outskirts of cities are still shrinking due to insufficient demand. Increasing demand for real estate and densification, including in more peripheral locations, could also lead to a regional expansion of services in the future.

Over 90 percent of all journeys start or end at home or the workplace. Micro-locations with a diverse range of different alternative means of transport are becoming increasingly relevant both in the choice of where to live and in the choice of where companies are located. With new, user-centered mobility concepts, living and working locations can be particularly attractive for the multimodal, young, urban clientele.

Map description: The blue shading shows where a public charging station can be reached on foot within five minutes. The yellow and orange areas are the business regions of car sharing provider Share Now and e-scooter service Dott (formerly Tier).

Rising rents and the growing shortage of affordable housing are opening up debates about excessive and rising rental costs, especially in large cities. From a social policy perspective, a rental cost burden of more than 33 percent of net household income exceeds the affordability threshold and the corresponding apartments are therefore too expensive in relation to income.

It is predominantly the attractive urban districts that are the preferred target of demand and where, especially when looking at new leases, above-average rent burdens are often clearly noticeable. Looking at different income classes and household types (single-person households, DINKs, families), however, there are major differences: low-income earners and those living alone are most affected by high burdens, while households with higher incomes or dual-income households have significantly lower burden rates. This kind of differentiated analysis of rental burdens is essential for the housing sector in order to be able to estimate future potential for rent increases depending on the location, and to define and quantify possible target groups.

Map description: The maps show the average rent burden ratio for new rentals for the individual postal code areas. The ratio is based on the quoted rents in the respective postal code area and the net household income. Net household income has been calculated on the basis of the gross pay of full-time employees subject to social insurance contributions (as of 2024) in the respective cities, differentiated by quantile. In Berlin, the net income of single-person households in the first quantile is around €2,040/month, the median is €2,590/month and the third quantile is €3,450/month. For DINK households (two people, two incomes), the gross pay is doubled accordingly. For families, a full and a half gross salary is applied, and an additional 500 euros in child benefit is included in the net salary. The average dwelling size of 1-person, 2-person and 4-person households from the microcensus is used as the dwelling size.

The German rental housing market is made up of various groups of providers. By far the largest group of landlords is private individuals (around two thirds of rental housing in Germany), who usually only rent out a small number of apartments. Then there are professional landlords who operate in the market with different organisational structures and goals: municipal providers (around 2.7 million apartments across Germany), cooperatives (around 2.2 million apartments) and private-sector housing companies (around 2.7 million apartments).

In North Rhine-Westphalia, around 280,000 apartments are in municipal hands. Municipal housing companies play an especially significant role in housing policy. This is because they have the task of providing housing for low and middle-income households in particular. Accordingly, almost a quarter of the municipal housing stock is subject to rent control or occupancy obligations. However, the average rents of the vacant housing stock are also well below the average local rents. The municipal housing stock in Cologne is especially large, with over 55,000 apartments (mainly GAG Immobilien AG), around 13 percent of the total rental housing supply.

The cooperatives, on the other hand, vary greatly in size. While Spar- und Bauverein eG Dortmund, the number one in North Rhine-Westphalia, owns more than 11,600 apartments, more than 70 percent of cooperatives have fewer than 2,000 units. Cooperatives generally offer comparatively low rents, whereby they have increasingly imposed a freeze on acceptance of new tenants due to the shortage of supply, particularly in metropolitan areas.

A significant proportion of the portfolios of private-sector housing companies is located in growth centres and conurbations, and is therefore frequently located in residential markets that have been affected by increasing tension in recent years. In North Rhine-Westphalia, for instance, over 50 percent of all privately offered apartments are located in the ten most populous municipalities. The spectrum of private-sector companies ranges from highly professionalised public limited companies to small private companies with company-owned apartments and investment funds. Private-sector housing companies generally pursue economic objectives, however they also contribute to the provision of housing for low-income households through their rent-controlled housing stock. On average, approximately 15 percent of the private housing stock in Germany has a social commitment.

Map description: The census differentiates between municipal housing companies, cooperatives and private housing companies in terms of the type of ownership of buildings. The map shows the respective holdings of the three provider groups (which can be chosen from the drop-down menu) at municipal level.