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Suburbs Getting more Popular, Liveability Gaining in Significance

Both living and working reality have shifted in decisive ways in the wake of the corona virus crisis. Many of these shifts are probably here to stay. In what ways they could impact the demand for housing was recently examined in a survey by real estate service provider JLL. Its findings suggest that private outside areas and the working areas in homes have gained in significance more than other aspects. Since new requirements go hand in glove with an increased need for residential floor space, demand could conceivably shift to some extent from the centre of conurbations to the outskirts.1

Aside from the available housing supply, which is larger on the periphery, this is also a matter of pricing. Since prices in the urban centres are comparatively high already, and since housing costs would rise significantly if the footprint increased, overflow movements are the predictable consequence. As work is becoming increasingly mobile, according to the JLL survey, the willingness of people to move out into the suburbs and to accept longer commutes to the workplace increases.

Price Gradient the Key Factor

The probability of such overflow movements grows in proportion to the price gradient between centre and periphery. The survey quotes a minimum price difference of 25 percent. On top of that, the housing cost burden in the inner city must be massive, so as to generate sufficient pressure on residents to make them prefer to withdraw into the suburbs.

Another requirement is that a certain home-office potential should be given. In a region with plenty of white-collar workers, outbound migration into the periphery is more likely than in a region where most employees have to work on the employer’s premises. JLL found that south-west Germany has an industry structure particularly suitable for home office work.

Metropolises Offers Particularly Great Potential for Overflow Movements

The cities with the greatest potential for overflow movements that JLL identified on the basis of these criteria are the metropolises Munich, Cologne, Düsseldorf and Frankfurt am Main, while Berlin, Hamburg and Dresden also made it into the top ten. But the lead group also included smaller cities, such as Darmstadt, Jena, Karlsruhe and Münster, which either act as sole high-order centres within their regions or which are characterised by high population density.

For the purpose of the survey, JLL polled employees living in a variety of domestic arrangements. As it turns out, the greatest changes as far as the relevance of residential qualities goes have affected the aspects “private work area,” “private outside area” and “broadband internet,” all suggesting an increased use of the home office. However, JLL’s survey highlights the fact that it remains to be seen whether or not such overflow movements into the suburbs will actually happen. At this point, only ten percent of the polled employees stated their actual intention to move from the city out into the suburbs.