Spinning outwards

Frankfurt tests the limits of trendy real estate

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By the waters of Westhafen. Source: Getty Images

It’s difficult to believe that Niederrad, a bland commercial district near Frankfurt’s loud and busy airport, could ever become the next residential hotspot. By 7 pm the main thoroughfare, Lyoner Strasse, rapidly empties as the last office workers vault into their cars, eager to escape the aircraft noise. But just a stone’s throw away, a construction site the size of a football field shows that Niederrad (pictured below) is undergoing a transformation.

At Mainwald, a sprawling housing project just off Niederrad’s freeway into Frankfurt, pristine forest is being cleared for 700 new apartments, including 300 “micro-apartments” aimed at singles and commuters. Some takers might come from London, amid the exodus of Brits heading to the Continent to prepare for Brexit. But even without these well-to-do migrants, Mainwald is sure to fill up fast. Since 2015, more than 3,000 new apartments have emerged in Niederrad, and another 5,000 to 10,000 are slated to be built in the next few years, many of them conversions of vacant offices.

Developers are rediscovering rough gems like Niederrad because Frankfurt’s housing market is incredibly tight. Urban planners say there’s a shortage of around 40,000 homes, and the number is set to grow. From 2010 to 2016, the population grew nearly 11 percent to over 740,000, making it Germany’s fastest-growing big city; forecasters say 800,000 people will reside here by 2030.

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Budge over, will you. Source: DPA

Prices of detached and semi-detached houses went up 10 percent last year, while those for apartments rose by nearly 13 percent. On average, home buyers in Frankfurt have to pay €4,700 ($4,050) per square meter (m2), second only to Munich, at €7,200. Rents rose a mere 5 percent in 2017 but remain expensive in a national comparison. The average for new rental contracts is €13.40 per m2, excluding utilities.

Clearly, the price pressure is even bringing satellite districts into focus. Frankfurt has plugged almost every conceivable hole in its city center, in places like the fashionable Westhafen (pictured above), once part of a western riverport on the Main River, or the Schönhof Quarter, with 2,000 new apartments emerging on old industrial grounds of the Siemens conglomerate.

Brexit is not yet a price driver, despite early estimates by the Frankfurt School of Finance that up to 20,000 bankers could relocate from London to Frankfurt. So far, only around 20 banks and financial service providers have opted to expand their Frankfurt footprint since the Brexit vote two years ago. Stefan Winter, head of the Association of Foreign Banks in Germany, now expects Brexit will create just 3,000 to 5,000 new jobs in Frankfurt. Many of them, moreover, could be filled locally. It’s possible there will be little overall jobs growth, Mr. Winter says, as German banks are also reducing staff.

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Frankfurt-Niederrad, still an ugly duckling. Source: BriYY Creative Commons

Regardless of how much demand Brexit eventually generates, Frankfurt has big plans to cover its ballooning needs for residential homes in the years ahead. A huge dormitory district, as yet unnamed, is on the drawing board on the northwest fringe, with up to 12,000 apartments for 25,000 to 30,000 people slated to be built on both sides of highway A5. Citizens’ initiatives are scrambling to block the project, arguing, somewhat implausibly, that the development will cut off the supply of fresh air into the center of Frankfurt, which sits in a valley.

It will take some time to make ugly Niederrad truly fashionable. In any case, city elders are buffing its image, starting with a new name. The office district will be redubbed “Lyon Quarter,” an attempt to channel the comely old town of Frankfurt’s twin city in France, Lyon. Good luck with that.  

Matthias Streit is a correspondent for Handelsblatt. Jeremy Gray, an editor at Handelsblatt Global, contributed to this article. To contact the author: m.streit@vhb.de

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