Concerning the rate of return smaller cities have much more to offer than a big metropolis.

Contributers of capital who invest their money in living estates are often smiled at. Why not buying federal securities, as their yield with currently 4,3 % is higher than the rental yield in requested locations such as Munich (3,8 %) or Frankfurt/Main (4 %)? Besides this, government bonds are gilt-edged and have almost no obsolescence.

But critics often forget about the devaluation of money. Inflation-adjusted federal securities only bring in 2,2 % p.a. (concerning an annual price inflation of 2,1 % throughout the last 20 years).  Furthermore there are locations in germany where the rental yield is higher than in big cities. These are the so-called B-locations, cities with about 100.000 inhabitants. The problem with the A-locations is the higher base price: it is so high, that the yield is debased despite the good rental income: e.g. in Cologne the average price per sqm. is about 2.400,-€ in good locations. Even with an average rental income of 9,11€ per sqm. the rental rate of return is just about 3,79 %.

Investors searching for a higher interest rate should look around in smaller cities.