Munich. It sounds paradoxical: in expensive cities and regions, the prices for building plots are falling, as the latest land values from the Boris-D portal show. However, this development has only a minor impact on residential property prices. “This is due to the fundamental shortage of living space – whether for sale or rent,” says Munich real estate agent Thomas Aigner.
As a rule, cities and regions collect new land values every two years; in some places the update takes place annually. The local appraisal committees determine the value based on purchase price collections based on actual transactions from the past.
Each city or region determines the deadline for the survey. Significant price differences also arise depending on whether a property is intended for residential, commercial or office use.
Nevertheless, the land value is very important for buyers and sellers. It is not only considered an important indicator for the development of property prices. It also serves as the basis for levying various types of taxes - including property tax, inheritance and gift tax, real estate transfer tax, income tax, trade tax and corporation tax.
Especially when looking at the most expensive real estate markets in Germany, there is now an easing in standard land values - both in metropolises such as Munich and Berlin as well as in particularly expensive regions such as Baden-Baden, Bad Homburg or on Sylt.
The same trend can be observed everywhere: until the interest rate turnaround in 2022, land values in Germany rose massively in view of the high demand for real estate at the time. Afterwards they declined or stagnated. The reasons for this were rising interest rates and the lower number of transactions.
The most recent example of falling land values is Munich. After peaking in 2022, the survey presented a few weeks ago now shows the second and even greater decline since 2024. Like every other city, Munich is divided into numerous zones, each of which has its own land value determined. The benchmark is multi-story apartment construction: Here prices fell between ten and 30 percent. There are significant differences between the expensive inner city locations and the periphery.
Thomas Aigner is one of 34 members of the Munich expert committee. “To put it simply, we have fallen back to the level of 2018,” says the well-known Munich real estate agent. By then, however, the standard land values had risen massively - both in the booming 2010s and in the first phase of the corona pandemic.
In his view, the fact that the standard land values have fallen again after 2024 is due to the interest rate development and, above all, to the sharp slowdown in sales of new apartments. As a result, land prices in multi-story apartment buildings came under massive pressure. This in turn made lenders more cautious. Since then, banks have only financed new properties very cautiously and at absolutely realistic sales prices, Aigner observes in practice.
From his point of view, existing properties that have already been completed benefit. The lower land values have less influence on their prices. They are supported by the fundamental shortage of existing living space in Munich - whether for rent or purchase.
However, the market must be viewed very differently depending on the situation. The Bavarian capital is an example of the development in other German cities. The standard land values everywhere are now well below the highs of 2021 and 2022.
In general, standard land values are under pressure, especially in the particularly expensive cities and regions of Germany. This applies not only to metropolises but also to popular holiday regions. On Sylt, for example, the average standard land value of the values published between March and June fell by 4.6 percent to 1,480 euros per square meter, as the Land Standard Values Germany portal shows. Germany's number one holiday island reached its highest level in 2021 at 1,622 euros per square meter. Since then the decline has been around nine percent.
For Sylt real estate entrepreneur Ole König, however, the new land values only have a limited influence on the purchase prices of completed properties. “If the location and amenities are right, they hardly matter,” says the 43-year-old, who is the third generation to run König Immobilien. In many places on Sylt, too, the level was back to 2018. Subsequently, land prices rose significantly as a result of the corona pandemic.
However, the long-term comparison shows that falling land values on Sylt are the exception. The last time they fell was in 2008, when the financial crisis at the time caused the average value to fall to 999 euros per square meter. Compared to the situation 18 years ago, the standard land values today are still on average almost 50 percent higher.
The wide range of standard land values for residential and mixed development on Sylt shows how uninformative the average value of 1,480 euros per square meter that has now been achieved is. It ranges from 475 to 9,400 euros per square meter. Kampen, List and Wenningstedt-Braderup tend to be particularly expensive.
With construction activity increasing recently, the days of falling land values could soon be over. There are first signs of this in Hamburg. The standard land values there rose this year by an average of 4.6 percent to 549 euros per square meter. This means they are still below the high of 2021, when 560 euros per square meter was reached.
