Markets: Land values rise, yields fall
According to the market rent and building land indices of Fahrländer Partner AG Raumentwicklung (FPRE), land values of investment properties increased significantly in the third quarter of 2016.
In particular, building land for multi-family houses with rental apartments has become more valuable, with the increase in value amounting to more than ten percent in the third quarter, according to FPRE. According to the data, building land for office buildings is also gaining in value, but the increase is significantly lower at three percent.
Over the same period, however, both residential and office rents declined: Newly built apartments were rented out at 1.2 percent lower prices, while the decline in office space was as much as 3.4 percent. The fact that land values are nevertheless rising is due to the continuing decline in yield expectations among real estate buyers, FPRE concludes. (ah)
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