Do you own a plot of land in the city and wonder what its true value is? The price range is enormous, with differences of over €1,000 per square metre between city and countryside. This article shows you how to determine the true value based on data and strategically utilise development options.
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The topic briefly and concisely
The prices for building plots in major German cities are often more than ten times higher, at over €1,000/m², than in rural communities (approximately €92/m²).
The standard land value is the most important indicator for property valuation, but it only represents an average; individual characteristics of the plot are crucial.
Inner-city potentials like gap sites and densification could create up to 2 million new homes in Germany and offer enormous opportunities for value appreciation.
A building plot in the city is far more than just a vacant space – it is an investment with significant potential. While prices in metropolises like Munich reach record highs of €2,900 per square metre, the nationwide average is around €226. This huge disparity highlights the complexity and opportunities in urban areas. For owners, heirs, and investors, it is therefore crucial to understand the underlying value drivers. From location and land standard value to legal development opportunities – a thorough analysis is key to success. We guide you through the critical factors so you can make informed decisions.
Market Analysis: Price Dynamics in Urban Land
The cost of a building plot in the city shows extreme differences compared to rural areas. In major German cities with over 500,000 inhabitants, the average price per square metre is €1,029. In contrast, in small communities with fewer than 2,000 inhabitants, the cost is only about €92 per square metre. This price difference of over 1,000% highlights the enormous demand and value of urban building land. The leader is Munich, with plot prices averaging €2,900 per square metre. However, prices are also high in other Western German economic centres, while in Eastern German cities like Dresden or Leipzig, they can be up to 10 times lower. The price increase over the last ten years has been immense; nationwide, the cost of building land has risen by almost 90%. A detailed analysis of land prices is therefore the first step for any strategic decision. This price dynamics are driven significantly by local economic strength and population growth.
The standard land value as a decisive value driver
To determine the value of a property objectively, the land reference value is a central indicator. This average value is determined by local expert committees at least every two years based on actual purchase prices. It refers to one square metre of an undeveloped, hypothetical plot with representative characteristics for a specific zone. The land value of your specific property is then calculated by multiplying the area by the adjusted land reference value. For example, a plot with 500 square metres at a land reference value of 800 €/m² would have a land value of 400,000 €. However, the land reference value is only a guideline and not legally binding. Individual features such as the exact layout, planting, or a special location can lead to deviations. Therefore, a professional valuation report is essential for an accurate valuation. Knowing this key figure is the basis for the further steps of potential analysis.
Identifying Potential: Vacant Lots and Infill Development
Especially in densely populated cities, the greatest potential does not lie in designating new building zones, but in activating urban areas. A nationwide study estimates the potentially developable areas at at least 99,000 hectares. On these sites, between 900,000 and 2 million new housing units could be created, which would cover around 60% of nationwide demand. The key term here is densification. This includes:
Closing of building gaps: The development of vacant lots between existing buildings.
Vertical expansion: Adding additional floors to existing properties.
Repurposing: Converting formerly commercially used spaces (brownfields) into residential areas.
Backland development: Using second-row spaces that have often been used as gardens.
This inner development shortens construction times and conserves resources. An assessment of building land potential helps you to identify unused opportunities on your property. Such measures not only increase the value of your land but also create urgently needed living space.
Legal frameworks and their impacts
The development potential of a property is significantly determined by public building law. The local development plan dictates what and how building can take place. An important innovation to promote residential construction is § 13b of the Building Code (BauGB). It allows municipalities to establish development plans for residential use on areas up to one hectare through an accelerated process. This significantly reduces bureaucratic effort. Additionally, the category 'Urban Area' has been introduced, allowing for denser construction. Here, the floor space index (FSI) can be 0.8, meaning that 80% of the plot can be built on. For owners, it is crucial to know the applicable building law for their area in detail. Sometimes, a proactive inquiry with the municipality or professional advice can open up new development opportunities. The legal requirements are thus not an obstacle, but a framework for your value creation.
Strategic Assessment: More than just the price per square metre
The final value of your building plot in the city depends on further factors beyond location and building regulations. A strategic evaluation must necessarily take these aspects into account. A soil analysis for €500 to €800 can, for example, protect against unexpected costs due to difficult soil conditions. The following points are crucial:
Level of development: Is the plot already connected to water, electricity, and sewerage? Missing connections can cause costs of over €15,000.
Plot layout: A rectangular, highly usable layout is more valuable than a long, narrow, or convoluted plot.
Soil condition: Rocky or contaminated soil can increase construction costs by over 20%.
Orientation: South-facing orientation is particularly in demand for residential properties and can increase the value by up to 5%.
A data-driven analysis, such as that provided by Auctoa ImmoGPT, can objectively weigh these factors and provide you with a reliable basis for decision-making. In this way, you can turn intuition into a well-founded land development strategy.
Conclusion: Your path to the optimal real estate deal
The value of a plot of land in the city is a complex interplay of market dynamics, legal frameworks, and individual characteristics. Prices have risen by almost 90% in recent years, and demand in urban centres remains high. A purely superficial assessment based on general square metre prices falls short. The key to success lies in an in-depth, data-driven analysis of land value guidelines, development potential, and specific plot features. Only in this way can you, as an owner or investor, unlock the full potential of your land and minimise risks. An objective assessment protects you from making poor decisions and maximises your returns. Your plot is more than just land – it's an opportunity you should strategically exploit.
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Additional useful links
Wikipedia provides a comprehensive overview of land-use planning in Germany.
The Federal Statistical Office (Destatis) offers detailed tables on residential property price indices in Germany.
Additionally, the Federal Statistical Office (Destatis) publishes reports on the purchase values of building land in Germany.
The Federal Institute for Research on Building, Urban Affairs and Spatial Development (BBSR) provides relevant publications on construction research and urban development.
The Deutsche Bundesbank presents a comprehensive indicator system for the residential property market.
The Berlin Committee of Valuation Experts provides information on current land values in the capital.
The German Property Federation (ZIA) publishes its annual spring report on the current state of the real estate industry.
The Federal Agency for Cartography and Geodesy (BKG) provides information on land parcels in Germany.
The German Association of Cities presents its positions on sustainable land mobilization and land policy.
FAQ
Is the standard land value identical to the sale price?
No. The standard land value is an average value for an entire zone and serves only as a guideline. The actual sale price (market value) of your property may be higher or lower depending on factors such as layout, orientation, buildability, and current market demand.
What additional costs are incurred when purchasing a building plot?
In addition to the purchase price, you should expect ancillary costs of about 10-15%. These include the property transfer tax (3.5% to 6.5% depending on the federal state), notary and land registry fees (approximately 1.5-2.0%), and potentially a broker's commission.
How can I find out what I'm allowed to build on my property?
The buildability is regulated in the development plan of the responsible municipality or city. A preliminary building inquiry with the building authority can provide clarity on what type and size of building is permitted on your property.
Is a soil survey worth it?
Yes, in most cases it is worth it. A soil survey costs between €500 and €1,000, but it can save you from unforeseen expenses in the five to six-figure range if the soil is contaminated or requires an elaborate foundation construction.
How can Auctoa help me with my building plot?
Auctoa offers you a fast, data-driven, and objective assessment of your plot of land. Our ImmoGPT analyses all relevant factors – from market data to development potentials – and provides you with a solid basis for sales or development decisions.
