Real Estate Location: Invest in… – Lukinski Rating / Investment Atlas Germany

Location makes the difference between investments with the aim of yield (direct income, mostly B and C locations) or in an investment property (“speculation” on appreciation, A locations). The current Lukinski Rating 09/21 on the attractiveness of cities in Germany, over 40,000 inhabitants. After that it gets interesting, because we take a look at the hidden champions, with top Lukinski A+ rating and D- rating and higher risk.

Lukinski Rating: Location & Attractiveness

If you’re looking to buy your first property, you’ll quickly hear about the different types of storage. But how can you assess the attractiveness of cities? Especially if it is not about the all-known cities in A-locations, as well as Munich, Hamburg, Berlin, Frankfurt or Düsseldorf.

Ranking parameters

There are many parameters for the evaluation of a specific location (macro perspective), for example the economy, its distribution among trade, industry and production, the infrastructure, educational facilities, as well as doctors, leisure activities, but also the surrounding area, districts and neighbouring towns.

Another factor is of course the purchase price (or rent), the higher the price per square metre, the more people are attracted to the suburbs of the big cities.

All of this ensures that individual layers lose their attractiveness or gain in attractiveness for people.

The Capital Investment Atlas Germany also takes a look at almost 500 cities in Germany and compares their attractiveness and development.

Current version:

• Status: 09 / 2021
• Evaluation: Cities in Germany
• Criterion: At least 40 000 inhabitants

Here is an excerpt, with these 4 lists:

1. Metropolises over 500,000 inhabitants
2. Large cities of 100,000 – 500,000 inhabitants
3. Hidden Champions: Top 10 A+ Ratings
4. Risk Champions: Top 10 D-ratings

Rating A+ to D-

For real estate investors, the Capital Investment Atlas divides the attractiveness of individual cities into 4 categories. From the Lukinski A+ rating, for particularly attractive regions that experience a high influx, to the D- rating, cities that have been stagnating for years and decades, little attractive people and economy.

Inflation protection is our priority. The higher the rating, the more attractive the location is for real estate investors to enter.

Investment Atlas considered:

Factor: attractiveness of a city

From this you can in turn deduce which location type you have in front of you. This classification is usually made into A-location, B-location and C-location.

Cities compared

In the following you will first find the most important German cities, in comparison. Metropolises with over 500,000 inhabitants, plus major cities with between 250,000 and 500,000 inhabitants and once again all major cities with between 100,000 and 250,000 inhabitants. After that, it gets interesting, because we take a look at the hidden champions, with top Lukinski A+ rating and D- rating and higher risk.

1. Metropolises with a population of 500,000 or more
2. Large cities: 250,000 – 500,000 inhabitants
3. Large cities: 100,000 – 250,000 inhabitants

Metropolises with a population of 500,000 or more

Cities over 500,000 inhabitants

City	BL	Rating
		Note	Value	Short Term	Long-term
Berlin	BE	B+	5,8	A-	B+
Hamburg	HA	B+	6	A+	B-
Munich	BA	A+	11,9	A+	A+
Cologne	NRW	A	8,7	A+	A
Frankfurt am Main	HE	A+	12,6	A+	A+
Stuttgart	BW	B+	5,2	A	B-
Düsseldorf	NRW	B+	5,8	A	B+
Leipzig	SA	A+	13,1	A+	A+
Dortmund	NRW	C-	0,2	D-	C
Food	NRW	D-	-1,7	D-	C

Click here for the full list of metropolitan areas:

• Rating: Metropolises with 500,000 or more inhabitants

Advantage metropolis?

Metropolises / large cities at a glance – tends to be more A-locations, with investment properties. This means little surplus from rental income, but a high increase in the value of the property, whether selling an apartment or a house.

Large cities: 100,000 to 500,000 inhabitants

City	BL	Rating
		Note	Value	Short Term	Long-term
Duisburg	NRW	D-	-1,8	D-	C
Bochum	NRW	D-	-4,8	D-	D-
Wuppertal	NRW	D-	-1,7	D-	C
Bielefeld	NRW	B-	3,5	B	B-
Bonn	NRW	B+	5	A+	C
Munster	NRW	A+	13,7	A+	A+
Mannheim	BW	D	-0,8	D	D-
Karlsruhe	BW	A-	6,6	A+	B
Augsburg	BA	A+	11,4	A+	A+
Wiesbaden	HE	C+	2,8	A-	C-

Here you can find the list with all 67 major cities in Germany, from 100,000 to 500,000 inhabitants:

• Rating: Large cities up to 500,000 inhabitants

Advantage big city?

Overview of large cities with up to 500,000 inhabitants – Tendency towards good B-locations with yield properties. That is, the costs (repayment of the loan, interest and maintenance), are covered by current rental income. On the other hand, the value growth is lower than in A-locations.

Advantage small city?

Overview of large cities with up to 250,000 inhabitants – tends to be a mix of B locations and often good C locations with yield properties. This means, as in the case of large cities, that the costs (repayment of the loan, interest and maintenance) are covered by current rental income. On the other hand, the value growth is lower than in A-locations. However, be careful with real estate in C-location, because the risk that apartments or houses are empty once, is greater than in B- and much greater than in A-locations.

Cities up to 100,000 inhabitants

Your advantage in cities between 40,000 to 100,000 inhabitants? You have less national and international competition. Especially if you live locally, a good strategic advantage, even for real estate newcomers. What’s your city’s rating? Find out here:

• Rating: Cities up to 100,000 inhabitants

Hidden champions for your capital investment

Now it gets interesting, because we take a look at the hidden champions, with top Lukinski A+ rating! After that you will find a list of cities with a very negative development on trips and with D- rating higher risk.

Top 10 A+ Ratings

Here you can see the top 10 A+ ratings:

1. Bernau near Berlin (Brandenburg), Rating: 25.2
2. Falkensee (Brandenburg), Rating: 22.3
3. Oranienburg (Brandenburg), Rating: 17.7
4. Potsdam (Brandenburg), Rating: 17.0
5. Bad Kreuznach (Rhineland-Palatinate), Rating: 16.6
6. Dachau (Bavaria), Rating: 15.8
7. Landshut (Bavaria), Rating: 15.3
8. Giessen (Hesse), Rating: 15.2
9. Goslar (Lower Saxony), Rating: 14.8
10. Ostfildern (Baden-Württemberg), Rating: 14.6

All A+ / A ratings in Germany

You want to get to know even more Hidden Champions in Germany? Then take a look at all A-Rated in Germany here! These cities are extremely popular, read more here, Lukinski A+ / A Ratings for Real Estate Investors:

• A+ / A ratings in Germany

A+ Rated Hidden Champions at a Glance – Strong overall development, influx of people, you can get good returns here, especially with condos you buy and rent.

All B- / B / B+ ratings

All B ratings show cities with solid development. Here you can also find yield properties that immediately provide income that covers your monthly burdens around repayment, interest and maintenance. Ideally with additional extra, for active asset accumulation.

• B- / B / B+ ratings in Germany

All C- / C / C+ ratings

All C ratings show cities with lower growth rates. Here, real estate as an investment should be treated with caution, because the vacancy risk is greater. This means that you pay more for every month in which your property is not rented out. In addition, the increase in value of the property is very low, to hardly available.

• C- / C / C+ ratings in Germany

Risk Champions: Not for Beginners

Real estate beginners should rather avoid these cities. These cities are at the lower end of the rating scale and therefore carry the greatest risk of vacancies and negative property value development.

Top 10 D-ratings

Here you can see the least, most attractive D-ratings:

1. Frankfurt Oder (Brandenburg), Rating -20.9
2. Gera (Thuringia), rating -18.5
3. Neubrandenburg (Mecklenburg-Western Pomerania), rating -15.6
4. Zwickau (Saxony), rating -15.1
5. Dessau-Roßlau (Saxony-Anhalt), rating -13.7
6. Wilhelmshaven (Lower Saxony), rating -12.3
7. Wismar (Mecklenburg-Western Pomerania), rating -12.3
8. Cottbus (Brandenburg), rating -11.5
9. Schwerin (Mecklenburg-Western Pomerania), rating -10.8
10. Unna (North Rhine-Westphalia), rating -10.3

All D / D ratings in Germany

Risk situations for real estate investors:

• D- / D Ratings in Germany

Risk Champions with D- Rating at a glance – You should only buy properties in poor C-locations if you already have experience. Not only with buying and renting, but also with renovation and refurbishment.

Excursus: A-location, B-location and C-location for real estate

With the help of the Lukinski Rating, you can now more easily classify regions into the different locations of properties.

The 3 types of storage of real estate essentially look at the difference between:

• Purchase price (price per square metre)
• Return (rental income)
• Performance (real estate)
• Risk (vacancy)

Thus, the location of a property can be easily categorized, by the factors.

A-list

Properties in A-locations are investment properties. This means that you make your profit from the increase in value that the property will or should experience over the long term. It is important to note that no bet is certain; these are also speculations. Who knows what the world will look like in 20, 30 years? Of course, nothing should go wrong in a good location, like Munich or Frankfurt. For real estate beginners, however, A-location is not the best, because most need direct income, for the coverage of financing (repayment, interest and additional maintenance).

A-Lage. Top locations like Munich:

• High purchase price
• Lower return
• High performance
• Low vacancy risk

B location

Properties in B-location are quasi perfect for real estate beginners. If you have calculated the rental yield in advance, you can directly generate income that not only covers the financing costs, but also contributes to asset accumulation. At the same time, the risk of vacancy is not so high that you have to expect frequent reletting. You will find such properties in markets that are not overheated.

B-location. Top locations like Potsdam

• Moderate purchase price
• Moderate to good return
• Moderate performance
• Low vacancy risk

C-location

C-location is relatively difficult for real estate beginners, because they have to reckon with vacancies. As long as your apartment or your house is empty, you pay every month the costs, for repayment, interest and maintenance. At the same time, the increase in the value of the property is very small, sometimes even non-existent. Accordingly, you need to bring more knowledge so that you can market properties in C-location well.

C-location. Weak structure, locations like Gelsenkirchen

• Low purchase price
• High return
• Stagnating performance
• Higher vacancy risk

Learn more about buying real estate at real-estate-experience.com:

• A, B, C location for capital investment (external)

As mentioned at the beginning, location makes the difference between investments in yield (direct income, mostly B and C locations) or investment property (“speculation” on appreciation, A locations). Learn more here on my new project Immobilien-Erfahrung.de:

• Return or investment property (external)