Anyone who wants to live in Germany’s tallest skyscraper has to dig deep into their pockets.

The 300 square meter penthouse of the Grand Tower in Frankfurt’s Westend is currently being offered for sale for 9,115,200 euros. At least there is an unobstructed view of the neighboring Taunus.

In the banking metropolis on the Main, real estate prices have risen more recently than in global cities such as Hong Kong, Toronto or New York, as experts from the Swiss bank UBS have analyzed.

While new skyscrapers in Frankfurt are springing up like mushrooms, warnings of a price bubble are increasing. The corona pandemic is also likely to leave its mark.

“We reach the top”says Jochen Möbert, economist at Deutsche Bank Research. Stricter rules for energy-efficient construction, rent controls and falling immigration figures are holding back his view of the growth in the real estate market.

The tide could turn in 2024. “We need around 220,000 immigrants in Germany to keep the population and the demand for real estate stable. But immigration suffered from Corona. ”Barbara Steenbergen from the International Tenants’ Association also assumes that the market for residential real estate is reaching its limit.

Bundesbank considers residential real estate to be overvalued

In November, the European Central Bank (ECB) warns of price corrections, especially on residential property markets in countries where valuations were raised before the pandemic.

In the second quarter, house prices in the euro area rose faster than they have been since 2005. At the same time, a loosening of the standard for mortgage lending had become apparent.

The Bundesbank already considers real estate prices to be significantly overvalued in some locations.

In some cases, they are ten to 30 percent above the guaranteed level. According to the Bundesbank, prices for apartments and houses rose by an average of 6.7 percent in 2020 – an end to the increase is not in sight. “Alarmism is out of place, but greater caution is required, and this is noticeable throughout Europe,” said Fritzi Köhler-Geib, chief economist of the state development bank KfW.

“We don’t see a bubble”

Germany has overtaken other countries in Europe such as France and Great Britain in property prices.

In the third quarter of 2021, it rose by twelve percent compared to the previous year, as the Federal Statistical Office explains. A skyscraper in the center of Frankfurt was sold to the insurance group Allianz in the summer for a record price of 1.4 billion euros. In the two complexes called “FOUR” from four skyscrapers, apartments are also to be built – at a price of around three million euros each.

There are probably enough financially strong buyers in Frankfurt. In 2020, Deutsche Bank alone – across the group – produced 684 income millionaires, including bankers, who earned one million euros or more a year.

“We are targeting the greater Frankfurt area,” says the development company behind the FOUR construction project. The city is one of the richest in Germany. “Demand confirmed that this was the right approach. We don’t see a bubble. ”