City of water
bthere magazine
Published on Friday December 1, 2006
Hamburg is set for a development boom, with land being reclaimed from the River Elbe to create a new city within a city. Chris Alden tests the water
The riverside area of Hamburg, northern Germany, is an unglamorous sort of place. If the genteel, residential district around Lake Alster is the city’s first-class cabin, then the River Elbe is its engine room: a vast urban wetland of docks and canals, where fishermen sell eels on a Sunday morning – and where, just a few blocks from the river, you can find the Reeperbahn, the most famous red-light district in the world.
But just upstream from this land of fish-hooks and vice, plans are afoot to reclaim land from the river – in the form of the 155-hectare “HafenCity” (harbour city) development, complete with apartments, offices, waterways, cultural spaces and public parks.
Already a symbol of the regeneration of Hamburg, the HafenCity will turn the shabbily atmospheric old Speicherstadt, or warehouse quarter, into a landlocked metropolitan district – and over the next 20 years, help increase the size of the city centre by a startling 40 per cent.
With low property prices and an increasingly young population now taking up jobs in the city, Hamburg is being marketed as a “growing city” – and is starting to look like an interesting opportunity for investors.
Axel Kloth, a spokesman for IVD-Nord, the trade association for estate agents in northern Germany, says Hamburg has been one of the winners from the expansion of the European Union.
“Hamburg was a rather quiet city after the war,” he says. “First, we had quite a conservative government, the Social Democrats, for 45 years. Second, because of the Cold War all of the hinterland had gone; it was 40 miles and then nothing. Third, the Baltic was cut off by the Iron Curtain.
“Since the wall came down, many things changed, and Hamburg has slowly developed. In 2000 we had a change in government, and fresh ideas. Then with the EC opening to the east, the Baltic became an important trading path in Europe, and Hamburg is benefiting from that.”
In common with the rest of Germany, house prices in Hamburg are low. According to the European Housing Review 2006, published by RICS Research, Germany was the only country in Europe where prices fell between 2004 and 2005.
But Kloth says that in Hamburg, prices have recently started to rise, partly thanks to interest from Scandinavia, Britain and France.
“Hamburg is quite an interesting place to invest, a secure place,” says Kloth. “You will not have the huge boom periods as in Frankfurt and Munich, but you will not have huge drops either.
“Many people are moving into the city, and the demand for bigger flats is quite strong,” he says – though he admits there are a lot of one- and two-room flats on the market that are no longer in demand.
According to HafenCity spokesperson Susanne Bühler, there is an influx of young workers to Hamburg. “They find jobs here,” she says, “but also an attractive city with nice architecture, and water. And it’s trendy: there’s a musical scene here, and theatre and culture.”
“A third of the city is green, a third water, and a third buildings,” says Dennis Romeiser, an estate agent at IBH Immobilien in Hamburg. “It’s a beautiful city. And while in other cities people are moving away, Hamburg is one of the cities to move to.”
The landmark cultural and architectural space in the HafenCity will be the Elbe Philharmonic – a vast new riverside concert hall built astride a former warehouse of the city, designed by architects Herzog & de Meuron.
The music hall will be in the Dalmannkai, one of 12 designed ‘quarters’ of the city, each intended to have its own character – some mainly residential, some mainly office space, and so on.
The heart of the HafenCity will be the Überseequartier, or ‘over sea quarter’, with shopping – “not a shopping mall”, Bühler stresses – restaurants, hotels, and a complex housing a giant aquarium and science centre.
The HafenCity also intends to offer different kinds of accommodation for different kinds of resident. At the top end, there are luxury properties such as the Yoo Hamburg development with apartments designed by Philippe Starck (see property ladder); but there are also housing developments aimed at families, such as the Bürgerstadt or “citizen city” development, with views of the harbour basin.
“It’s very important that you have a mix of people,” says Bühler, “luxury apartments but also a possibility for families. We want both; we want a lively social mix.”
Signs are that HafenCity is well planned. First, it will be only three minutes on a new or underground train line, or U-Bahn, from the city centre. Plans have also been put in place to cope with the potential of flood or rising sea levels in such a low-lying district – by building the streets of the HafenCity at a height of seven-and-a-half metres above sea level. By comparison, global sea level is predicted to rise by between 11cm and 88cm by 2100, according to the Intergovernmental Panel on Climate Change.
Businesses have already responded to the mood of optimism by moving into the northern areas of the HafenCity. Software company SAP moved in in 2003, while logistics group Jungheinrich and China Shipping are setting up major offices.
But there are of course still potential headaches for investors looking to move into Hamburg. The first is that, like Berlin, Hamburg has a very low rate of owner-occupation: only around 20% of Hamburgers own their apartment or house.
Rents are also controlled at a local government level, says Kloth, which may affect any decision to buy-to-let.
That 20% figure compares to a planned owner-tenant ratio of around 50-50 in the HafenCity.
Investors should also be aware that the transaction costs of buying a property in Germany can top 10% of the purchase price – including the notary (1.5%), property tax (3.5%), agents’ fees and registration.
But there are optimistic signs too. The German mortgage market has gone through remarkable changes since the turn of the millennium, with more internet lenders and greater transparency in the sector. Experts say that may soon have an effect on house prices.
But perhaps the major reason to consider Hamburg is that, for a city of its size, there are just so many good locations for property. Even if the urban charms of the HafenCity aren’t for you, there are more prime locations around Lake Alster, and all along the canals of the city’s northern reaches.
Hamburg may be a city of water – but with low prices, attractive districts and an increasing population, its aspirations appear to have roots in solid ground.
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