We know you’ve seen this headline before – inflation continues to affect the housing market. Such is the case across Europe as high interest rates keep would-be buyers in rental units, increasing the demand for rental housing especially in popular urban centers, even as supply continues to be reduced due to cost, regulation, and limited new construction. Add in other factors like geopolitical risks, the cost of energy, and disruptions in international trade, and the European housing market remains a challenge for employees moving to the region on assignment. Overall, with some limited exceptions, rental market conditions remain unchanged from the third quarter, with some hope for the year ahead, as inflation and interest rates stabilize in 2024.
Thanks to the work of Dwellworks’ local Consultants and our research team, here is a summary of the rental market updates in 8 European global relocation hubs, moving west to east.
Dublin: Jobs are Plentiful but Housing is Not
Irish and multinational companies continue to welcome highly skilled talent from around the world, but when these new employees arrive, they’re met with a 1% apartment vacancy rate. Rental stock in the country has decreased by 75% in the past 20 years. Landlords are finding new regulations too restrictive, and as a result, they are exiting their rental properties. Despite the Irish government offering incentives for new construction, developments are slow to come into the market, and finding apartments for rent, especially in the affordable-mid price ranges, requires maximum flexibility and responsiveness from would-be renters.
Multinational companies with operations outside of Dublin, in markets like Cork or Limerick, will find lower costs of living overall, but limited housing options. Dwellworks consultants are able to schedule showings due to our landlord and agent relationships and market know-how, but we advise clients and customers alike that leasing agents are very particular in their demands and have their choice of tenants.
London: The Good, the Bad, and Some More of the Same
There is good news and bad news to report here. Let's start with the good news: the pace of rental rate increases in most London neighborhoods has decreased compared to a year ago, to a 13.7% annualized increase versus a 10% quarterly increase. The bad news is more of the same as in most European cities: demand is outpacing supply. As one young professional put it, “properties updated online at 6 a.m. are normally gone by 6 p.m.” The current vacancy rate stands at 3.5%.
There is some increased affordability in ‘brand name’ neighborhoods such as Knightsbridge, Chelsea, and especially Hammersmith. But for context, the average rental rate in London is now at 2650 GBP ($3200) per month, and much higher in highly desirable neighborhoods. Some relief may be on the horizon though, with hundreds of building permits issued and more high-density housing coming to market this year and next.
Amsterdam and the Netherlands: New Laws, More Property Requests, Fewer Apartments
In Amsterdam, there are 50% fewer rentals available now than in 2021. The current vacancy rate of 5% is due in part to new laws that went into effect in July of this year, expanding social housing for residents, while effectively decreasing housing supply for other mid-market renters, including global expatriates. As landlords exit the market and the supply of housing decreases, the number of requests to see available listings has skyrocketed, with ‘bidding wars’ and rental contracts above listing prices. According to a local real estate website, the number of inquiries per apartment listing in Amsterdam rose from seven to 50 and in Utrecht from 10 to 58. While rental prices are lower and availability increases outside of Amsterdam city center, the same tight market conditions apply to Rotterdam, Den Hague, Utrecht, and Eindhoven and their nearby suburbs.
Luxembourg: An Unchanged but Challenged Rental Market
Luxembourg has experienced limited economic growth this year but remains stable and prosperous as a ‘steady state’ financial hub. Its stability makes the grand duchy a preferred relocation site for multinationals, and as a result, the rental market is tight (at about 3% vacancy) with limited new construction. Landlords here require strict compliance with local guidelines, such as the number of persons allowed per bedroom in an apartment, and we strongly recommend the use of our local Consultants in navigating the local culture and landlord expectations. For those who choose to live outside of Luxembourg and commute from Germany or France (a common practice), employers should be sure to familiarize themselves with the tax and border-crossing policies that will impact commuters.
Berlin, Frankfurt, Munich, and Other German Cities: A Changing Economic Focus
While the German economy remains strong, it is also responding to new challenges, including new global markets and trade policies and the need for skilled immigrant labor. With expanded immigration, continued response to Ukrainian migration, and other population shifts, renter demand is outweighing supply here, as well. Vacancy rates remain near zero in Berlin, Munich, and Frankfurt, with limited new construction on the horizon due to the cost and low carbon emission requirements. For arrivals under the new immigration policy, the German government has extended work visas from a previous 3-6 month period to up to 12 months, recognizing that the visa application process takes about 3-plus months and cannot be expedited. Would-be renters are always advised to understand the expectations of German landlords, who do not bargain and seldom make would-be exceptions to terms. With so many interested tenants, there is little incentive to negotiate.
Outside the bigger cities, new construction projects are planned for electric battery factories and microchip plants in Magdeburg, Guben, and Wismar, but they won’t be fully operational for several years. We’re keeping an eye on developing market needs for short and long-term housing.
Paris: Rents Increase Along with Demand
With a vacancy rate of less than 3%, supply in Paris is not keeping up with demand. Those who want to buy and are well-qualified to are not taking the leap due to high mortgage interest rates. In the high-demand areas typically preferred by multinational expatriates, the rental amount is capped by law for individual leases but agents report the rules are enforced inconsistently. The general rule is that the capped rental amount differs from location to location and depends on whether the property is furnished or unfurnished.
France is also very committed to its lower carbon emission goals, and the costs of change are slowing down the number of apartments being built and retrofitted. Note also that the Paris Olympics are now less than one year away, with the opening ceremonies on 26 July 2024. To see how this will affect housing availability, read our guide here and expect more updates from Dwellworks as the games approach.
Zurich: Seeing a Surge in Expat Arrivals
Demand outweighs supply here due to little-to-no planned new, private multi-family construction and a booming economy. 800+ multinational companies have regional or global headquarters in Zurich, and expats make up more than 30% of the population. Many of these companies, especially those in high-end technology, are expanding their workforce with global talent hires.
Zurich is the most expensive city in Switzerland and landlords have their choice of prospective tenants, preferring in some instances local tenants with fewer requirements and longer leases than an expat on a limited-term assignment. This means companies should look into short-term corporate housing (like the offerings of Dwellworks Living) while employes look for a more permanent place and get familiar with their options in the various cities.
Vienna: Welcome to the World’s Most Livable City
Vienna gets this recognition thanks to its economic stability, prosperous and highly desirable global business location, cultural amenities, ease of transportation, excellent schools, and range of family-friendly housing options. Even here, supply does not outweigh demand with a 2% vacancy rate, and rental costs are increasing due to the higher inflation rate, up 7-9% versus last year.
The most popular neighborhoods near the city center include Districts 9 and 13 and Doebling, Hietzing, and Waehring. Suburban Klosterneuburg (30 minutes by train) is another preferred choice. Note that in Austria, real estate agents are ‘paid by those who hire them,’ which, since July 2023, could be either the tenant or the landlord. The commission is typically 2 months net rent plus 20% VAT if the contract is over 3+ years long and 1 month’s net rent if the rental contract is shorter. The assumption is that in instances where landlords pay the agent’s fees, the cost of the commission is added to the monthly rental charge.
Need Help Navigating These Challenging Markets?
At Dwellworks, the world’s largest provider of corporate Destination Services, market expertise and empathetic understanding are built into every service experience we deliver. Our 98% customer satisfaction rate proves we are the leading relocation support services provider in Europe and key markets across the world. Expect expert, in-market support in Europe through 300+ local Destination Consultants who contact agents, private landlords, property managers, community managers, and developers daily, and review online listings to create well-sourced, realistic property viewing agendas and plans of action for globally mobile professionals and their families. Destination Consultants also help expatriates and corporate travelers settle into their new environment through their extensive knowledge of area schools and local familiarity with everything from neighborhood coffee shops to the most efficient government offices for licenses and registration.
Dwellworks can provide the intelligence and support you need if you have talent moving to these gateway cities. For all other quarterly market updates, read our blog or subscribe to our newsletter.