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Micro-apartments as tangible assets for security-oriented savers

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The most important thing in brief:

 

  • Micro-apartments are in demand in urban areas for temporary accommodation by individuals.

  • As a real estate investment, micro-apartments require a manageable capital investment.

  • The return and rental income for these properties are significantly higher than those of conventional apartments.

  • Investing in micro-apartments is worthwhile for investors with a long time horizon and a strong need for security.

Whether students, commuters or singles: they are all looking for small, centrally located and affordable living space with above-average amenities. The supply is limited and growing only slowly. So-called micro-apartments are therefore an interesting option for investors. Micro-apartments are compact, fully equipped rooms with living space usually up to around 30 m², which are rented out for a specific period of time. The achievable returns are usually higher than classic new build or existing properties with lower acquisition costs.

What are micro-apartments?

 

Micro-properties represent modern architecture and living comfort, with functional room concepts in small rooms. These are furnished or partially furnished apartments. These are usually less than 30 square meters and are located in larger complexes with 100 or more apartments. Each apartment usually has its own bathroom and kitchenette. The apartments are stylish and modern in design, equipped with durable materials and modern communication technology.

 

A micro-apartment serves as a temporary home for one or a maximum of two people for a few months or a few years. Students, young professionals or commuters represent the target group of tenants for this flexible form of living.

What are the special features that distinguish micro-apartments from other apartments?

 

Micro-apartments are often furnished. The furnishings are standardized and consist of space-saving and multifunctional furniture. In many cases, the rental agreement includes additional services, such as cleaning service or security. Many micro-apartment complexes offer their residents various communal facilities, such as terraces, lounges or sports facilities.

Advantages of micro-apartments at a glance

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  • relatively low entry prices or investment due to small units

  • usually higher returns compared to traditional properties

  • all-round service package from provider/developer (rental, management, operation)

  • rental pool concept offers protection against loss of rent

  • partial personal use and suggestion of a tenant possible

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Precisely because demand far exceeds supply, you as a landlord have a high degree of rental security. On average, the returns achieved per square meter can even exceed those of multi-room apartments.

 

The administration and management of the micro-properties should be in the hands of experienced operators. This means that as an investor you do not have to worry about tenant changes, renovations, etc. yourself.

How do investors benefit from investing in a micro-apartment?

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The need for small, affordable and high-quality furnished housing units is constantly growing. The reasons for this are the increasing number of students, the trend towards urbanization and the growing number of single households. The demand for living space for 1-2 people exceeds the supply. This imbalance offers investors a great opportunity to invest their money sustainably and with a view to the future. Micro-properties are highly profitable investments because higher rents per square meter can be charged than for traditional condominiums. Investors therefore benefit from significantly higher returns.

Like all real estate, micro-apartments are considered tangible assets. As an investment, they offer protection against inflation because they retain their value regardless of general price developments.

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You have the opportunity to achieve a high return by investing in these apartments for the following reasons:

 

  • The average achievable rent is higher than that for larger apartments in a comparable location.

  • The frequent change of tenants creates the opportunity to implement rent increases at short intervals .

  • The rental risk is low because micro-apartments are in high demand.

  • Due to the tenant structure, rental defaults and damage to the apartment rarely occur.

  • For micro-apartments rented only for a specific period of time or furnished, neither the rent index nor the rent brake apply .

  • Favorable financing through KfW subsidized loans from the state development bank and currently low interest rates

For whom does micro/student real estate make sense as an investment?

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Due to the current low interest rates and the low investment amounts, micro/student properties are particularly suitable for young investors who are interested in building wealth quickly and safely. But also for experienced investors who should think about this real estate trend for reasons of diversification. Since a professional administrator takes care of the building and rental management, the administrative effort for investors is largely eliminated.

What criteria are important for selecting micro-apartments?

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When evaluating a micro-apartment, the following aspects play a decisive role:

 

  • Position

  • Furnishing of the apartment and communal facilities

  • Amount of monthly maintenance fee

  • Internet supply

  • Condition of the building (for existing property)

Are you interested in purchasing a micro-apartment?

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Our MLP consultants are happy to provide you with further information about investing in these properties. The experts will also support you in integrating them into your long-term investment planning and any necessary financing .

Comprehensive advice and support from MLP

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In addition to detailed advice on selecting the property and incorporating the property investment into your personal asset structure, we are also happy to take care of financing and security. Simply arrange an appointment with your MLP advisor.

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