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09072020

Up-and-Coming Regions Concentrated in East Germany

The IW Economic Institute conducted a survey to find out which regions in Germany achieved above-average growth over the past decade. The survey returned four up-and-coming regions characterised by a particularly robust performance, and all four of them are located in the eastern part of the country.

The fastest growing region was Havelland-Fläming in Western Brandenburg, the largest city being the state capital of Potsdam. Runner-up was Prignitz-Overhavel, another region in Brandenburg. Both regions are defined by their close proximity to Berlin, and being inside the city’s gravy belt is a key driver of the above-average performance of either region. The other growth regions are Western Saxony with Leipzig as its centre of gravity, and Central Thuringia around the cities of Erfurt and Weimar.1
 

Leipzig Excelling with Robust Labour Market

The survey’s authors studied seven locational factors for their analysis: unemployment rate, purchasing power, average age, broadband expansion, population density, private and municipal debt. The region of Havelland-Fläming around Potsdam scored particularly high in all seven aspects. The region around Leipzig (Western Saxony) did especially well in the employment category, lowering its unemployment rate from 13.5 down to 7.1 percent. The Prignitz-Overhavel region north-west of Berlin registered a particularly brisk increase in purchasing power.

In addition to the short-listed four regions just discussed, the IW institute presented another eight hot spots labelled “expanded group of up-and-coming regions.” This group includes Berlin, as the city returned the sixth highest point score among the regions surveyed in Germany. The long list of up-and-coming regions also includes two other areas in the eastern German Länder, namely Central Mecklenburg/Rostock, Upper Elbe Valley/Eastern Ore Mountains with Dresden as its economic powerhouse. Something of a surprise is that Hamburg also made it into the expanded group of up-and-coming regions. Although the port city has long been a strong and established economic region, it outperformed most other regions during the past decade.
 

Real Estate Prices Saw Particularly Fast Growth in Up-and-Coming Regions

The IW survey examined moreover whether the identified up-and-coming regions also boast a particularly brisk growth in real estate prices. And indeed, this turned out to be the case, with the exception of Central Thuringia and Göttingen whose price dynamics were not quite as strong. This means that investing in places with above-average growth in employment and purchasing power, among other aspects, is likely to be rewarded with a stronger property performance.

The IW Institute suggested, by the way, that the up-and-coming regions in East Germany could actually consolidate their lead over other German regions as a result of the corona virus crisis. The reason being that its sector diversification has generally left East Germany less exposed to the crisis than Southern Germany whose dominant industries have been hard hit.


1 www.iwkoeln.de/studien/iw-reports/beitrag/christian-oberst-michael-voigtlaender-aufsteigerregionen-in-deutschland-go-east.html