GERMANY - The outward spread of Germany's property market will halt at Leipzig, the outpost of international investibility, according to Sascha Hettrich, managing partner of King Sturge's German office.
In an interview with IPE Real Estate, Hettrich said the dominance of markets such as Hamburg, Berlin and Frankfurt had expanded in recent years to include Cologne and Stuttgart.
"Ten years ago they were closed markets, locally driven," he said.
"Now they're more important than they were in the past."
Leipzig, which straddles the former GDR and West Germany, is one of the few secondary cities left that combines populations of 100,000-150,000, solid economies, internationalism and stability.
"It's a lively city. It has a high vacancy rate but it's active," said Hettrich.
"Secondary cities are largely driven by office markets. These are all office towns, with retail destinations. They're also hotel markets with logistics in surrounding areas."
Yet he emphasised prime assets were the target for international investors - even in secondary cities.
"They're looking at retail - including department stores - office and mixed use because these are stable assets and all prime. Industrial and business parks could also be of interest," said Hettrich.
In Frankfurt you have a volatile leasing market. In Münster rents are lower and it matters less what the economy is doing.Even with the economy moving downwards, you still have stability in those cities. Even in a recession, people buy bread. Lower incomes will affect retail but the effect will be stable. There isn't so much movement."
He continued: "Dresden will never be a big office market because it's local. There's no need for an international law firm to be so near the Polish and Czech markets, or in Kiel, or Frankfurt-an-der-Oder.
"The new eight major cities will remain for the next decade. Leipzig has a question mark over it," he added.