Real estate in large cities has yielded lower returns than real estate in smaller cities over the past 150 years. This is the finding of "ECONtribute Discussion Paper No. 31," published by a team led by economist Prof. Dr. Moritz Schularick, member of the Cluster of Excellence "ECONtribute: Markets & Public Policy" at the University of Bonn.
The team examined not only the returns in international metropolises such as London, New York or Tokyo, but also the development in German cities such as Berlin, Frankfurt or Hamburg. In doing so, they conclude that total returns in the major cities studied have averaged around one percent less than in the rest of the country over the past 150 years.
But what is the reason for this? The researchers argue, among other things, that rents - in relation to purchase prices - are higher outside the conurbations. Rental income and its constant development are crucial for high returns. The full paper is available free of charge at econtribute.de.
Source: econtribute.com
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