Record high prices for building land
Average prices per square meter for building land have reached historic highs. This continuous rise in prices, which has been observed for years, has far-reaching consequences: Many people cannot afford to buy a plot of land and build their own home at the moment. And the legal regulations surrounding development plans also do not make it easy for future property owners to build up their own asset reserves. The purchase of digital shares in real estate offers alternative investment options for private investors.
Prices are particularly high in cities and residential areas
According to the Federal Statistical Office, one square meter of land ready for construction cost in 2019 An average of almost 190 euros. In 2009, it was still around 122 euros. As expected, prices are particularly high in metropolitan areas. In cities such as Berlin and Hamburg, buyers even had to spend over 1,000 euros per square meter each. In rural areas, on the other hand, building land costs considerably less. In Mecklenburg-Western Pomerania, Thuringia and Saxony-Anhalt, buyers in rural areas pay less than 60 euros per square meter.
This rapid price development is having a major impact on the real estate market. This is because many can no longer afford the coveted living space, particularly in metropolitan areas. In addition, the cost range between building land in the city and in the countryside is widening more and more. The price difference is now almost 80%. Does the increased rise in purchase prices make Burst of the conjured real estate bubble More likely in Germany, or are these exaggerated anxiety scenarios?
Even though, according to the German Institute for Economic Research, the probability of the real estate bubble bursting At the end of 2019, it was over 80 percent, purchase and rental prices rose steadily in 2020 despite the corona crisis. In addition, solid lending in Germany continues to be ensured by strict checks of buyers by banks, which ensure that real estate purchases are covered by sufficient equity. The problem is rather the lack of building land due to the high density in the city.
Excursus: What is “building land” in Germany?
A plot of land is not synonymous with building land. In order for the area to become building land, the area must be suitable for development and must be included in the so-called development plan.
In Germany, there is a development plan for most areas. In many cases, this was set up before 1960 and is still valid today. This plan defines how and where construction may take place. For example, the permitted house type (detached, terraced, semi-detached or multi-family house), number of floors, roof shapes or even permitted colors of the house can be defined. Builders must comply with the development plan. In the event of violations, the building authority can impose penalties or even demand the dismantling of unapproved components.
In the preparation process for a development plan, there are several criteria that are weighed against each other. An important part of the planning process is an environmental assessment. This provides a forecast of how the building land is likely to change in terms of land, animal or plant life, for example, with or without development. If environmental disadvantages are expected as a result of the planned construction measures, the development plan will determine which measures should be taken to prevent or reduce the potential environmental damage that may be expected.
In addition, potential contaminated sites on the building land are also taken into account in the development plan. This could mean areas polluted with pollutants — as a result of industrialization, for example. Whether and under what circumstances can construction be carried out on this land and what obligations this entails for the owner of the property depends on the individual case.
With all these rules and regulations and ultimately the large financial investment, building your own home represents an enormous effort for future property owners, which cannot be managed by everyone.
Participate in the increase in the value of real estate through tokenized shares
Instead of buying their own plot of land, private investors can also by acquiring tokenized shares in increasing the value of real estate Participate — even with small sums of money. So-called investment tokens represent digital shares that are stored and issued on a blockchain.
This makes blockchain technology a decisive component for driving forward the liberalization of investments. In addition, buyers and sellers also save time and money with the new technology: The purchase of tokenized shares can be completed without usually involved parties, such as a notary.
