Our specialtylies in finding pockets of value on a global scale. But in times of world-wide uncertainty, these are notably more challenging to source.
Europe’s strongest contender for crisis-resilience is, without a doubt, Germany. It has the largest economy in Europe at USD4 trillionand operates as a renownedsafe-haven for investment. IP Global has been active in this market since 2008 and it has proven to be a very fruitful venture for our investors, who’ve not only seenstrong capital appreciation but also achieved on average 112% of IPGlobal’s rental estimates upon development completion. It is with this experience that we are excited to announce our latest investment opportunity in the promising city of Leipzig.
Today, the booming economy and strong population growth underpin Leipzig’s housing market. The population has already increased by 24% since 2000 and is expected to rise by a further 25% to 750,000 residents by 2035, making it Germany’s fastest growing city. While demand for housing has expanded rapidly, housing supply has been slow to respond with a mere 13,510 units completed in the decade up to 2017. As demand soars and supply struggles to keep up, the vacancy rate in Leipzig has tumbled from as high as 12% in 2011 to as low as 2% today. This excess demand has put sustained upward pressure on house prices, with Leipzig being one of the few locations in Germany to experience double-digit growth in the year 2019.
As we gear up to take advantage of this unique German market, let’s explore Leipzig’s background to better understand how this unique opportunity materialised.
1. Leipzig has a pioneering heritage dating back to the 14th Century
Located 160km south of Berlin, the city of Leipzig is situated at the confluence of two great continental trade routes, the east-west Via Regia and the north-south Via Imperii. Leipzig therefore became a flourishing trade centre and economic hub in the 14th century, and during this time developed a rich culture and leading educational role within Germany. The University of Leipzig, founded in 1409, is the second oldest university in Germany and one of the oldest in Europe.
Leipzig quickly became a hub of innovation, giving rise to the world’s first daily newspaper published in 1650. The first high speed printing press in Germany was later invented here in 1829, along with the introduction of steam-powered production machines which revolutionised the textile industry. At the forefront of business and technological change, the first long distance railway line in Germany was completed between Leipzig and Dresden in 1838. This laid the foundations for Leipzig’s industrial development, and by 1915 Leipzig Central Station was the largest rail station in Europe.
Leipzig was one of Europe’s fastest growing cities at the end of the 19th century, and by 1933 was the fourth largest city in Germany. It was relatively unscathed by the Second World War compared to the neighbouring city of Dresden, and therefore became the industrial production centre of the communist-run German Democratic Republic’s (GDR) economy. In the 1980’s Leipzig became the centre of a peaceful protest movement against the GDR’s policies, such as the erection of the Berlin Wall in 1961. These peaceful protests culminated with the Monday Demonstrations in 1989 which are widely credited as accelerating the fall of the Berlin Wall and paving the way for German unity.
2. Leipzig is in the midst of a revival which began in the late 90’s
The 1990’s were a difficult period for Leipzig. After the fall of the Berlin Wall and German Reunification, many former communist-era East German industries collapsed. This resulted in severe job losses and depopulation in Leipzig as many people migrated to West Germany. The outlook appeared quite bleak, however with the newly elected Mayor Wolfgang Tiefensee in 1998 came renewed hope for the city. New strategies focusing on education, urban renewal, economic development, social integration and environmental reclamation were considered the key to renewed growth of private enterprise and investment.
Leipzig reinvented and refocused its economy on five key business clusters, selected as promising industries with future high-growth potential. These five key clusters which have experienced the highest levels of employment growth since 2005, form a robust platform for the diverse economy to innovate and grow sustainably.
3. Leipzig has attracted some prestigious names in business and is fostering a new start-up scene
The five key clusters have proven highly successful since their creation. Better infrastructure and vigorous support of the new industry focus has aided the city in attracting prestigious “lighthouse” firms such as Porsche, BMW, DHL and Amazon. These firms act as beacons for Leipzig’s economic revival and growing global status.
A start-up scene is materialising in the city too, attracting many founders with its high quality of life and relatively low costs compared to other cities. Numerous incubators, accelerators, and co-working spaces provide entrepreneurs with business premises, expertise, and high-quality talent creating the perfect environment in which start-ups can flourish. There are currently an estimated 250 start-ups operating in Leipzig focusing on a range of sectors such as e-commerce, big data, energy infrastructure and smart mobility. Leipzig currently ranks as the 5th strongest start-up hub in Germany, and 117th globally -having jumped 173 places in a single year.
4. Leipzig’s economy is already twice the size it was in 2000 and is forecast to continue rising at an explosive rate
As a result of Leipzig’s successful strategy, the economy has doubled in size since 2000, totalling EUR22 billion as of 2019. After a slight decline as a result of the coronavirus in 2020, the economy is expected to increase by further 75% and reach EUR37 billion by 2035. At the same time, average GDP per capita has risen 62% since 2000, reaching over EUR64,000 as of 2019. After a slight dip in 2020, GDP per capita is expected to increase to EUR108,800 by 2035, an increase of 75%.
As Leipzig’s economy continued to flourish, 64,000 extra people joined the workforce resulting in the unemployment rate falling from a high of almost 21% in 2005 to 5% 2019. The unemployment rate is forecast to rise slightly in 2020 to 6.2% due to the coronavirus before swiftly returning to its pre-crisis full-employment level in the following years. At the same time, disposable incomes have increased from EUR25,700 in 2000 to EUR36,600 in 2019 (+42%). While disposable income is also expected to drop slightly in 2020, it is expected to rebound swiftly and continue rising to hit EUR59,300 in 2035, an increase of 131% since 2000.
5. Leipzig, being in the geographical centre of Europe, continues to be a renowned hub of connectivity
Leipzig central station is in the middle of the Central German Railway Network and currently sees an average of 60,000 commuters per day. In January 2020, the German government announced a record breaking EUR86 billion investment programme for the national rail network.
The decision was based on Germany’s commitment to reduce transport sector CO2 emissions by up to 42% by 2030. The program aims to see regular high-speed connections operating between larger cities, with long-distance rail passengers increasing from 148 million in 2018 to 260 million (+76%) by 2030.
Leipzig Public Transport Network
With over 515 tram stops spread across the city, Leipzig boasts Germany’s second-largest tram network which services the city centre every 2-3 minutes. Alongside the bus network which encompasses 556 stops, the public transport network spans over 955 km across the city. In 2018, over 156 million passengers used tram and bus services in Leipzig, an increase of 400,000 on the previous year. The Leipzig Transport Authority continues to improve and expand its services, investing EUR30 million in 2018 alone.
6. Leipzig is home to the second oldest university in Germany and continues to champion a high calibre of educational offerings
Education has been a focal point in the city of Leipzig since the foundation of the University of Leipzig in 1409. As one of the oldest universities in Europe, former professors include the globally renowned physicist Werner Heisenberg and Nobel Prize winning chemist Wilhelm Ostwald. The university has also produced world-famous alumni such as writer Johann Wolfgang von Goethe, and philosopher Gottfried Wilhelm Leibniz.
Leipzig also has 6 universities of applied sciences, and approximately 150 research institutes and clinics including the specialist Heart Centre Leipzig, the IZI Fraunhofer Institute for Cell Research and Immunology, the Max Planck institute, the Media Campus, and BIO CITY LEIPZIG. Founded in 1764, the Academy of Fine Arts Leipzig is one of Germany’s oldest art schools specialising in fine arts, graphic design, photography and new media art. It is home to two world-renowned modern art movements, the ‘Leipziger Schule’ and the ‘Neue Leipziger Schule’. There are approximately 40,000 students living and learning in Leipzig today.
7. Leipzig has a rich cultural history, particularly in musical arts
Leipzig is one of the most vibrant and unique cites in Germany today. The musical heritage is truly extraordinary with an abundance of great composers such as Johann Sebastian Bach, Clara and Robert Schumann, and Richard Wagner. The city also has a tradition of hosting great musical performances, with the famous Gewandhaus Orchestra alone attracting over two hundred thousand people to its concerts each year. They also perform Bach cantatas with the world-renowned St. Thomas Boys Choir – Leipzig’s oldest cultural asset, founded in 1212 - in St. Thomas Church where Bach once worked and is now laid to rest.
8. Leipzig’s sporting success in recent years, embodies the revival of the city as a whole
RB Leipzig was founded in 2009 when the Red Bull company purchased the playing rights of the fifth-tier side SSV Markranstädt with the intent of advancing the new club to the top-flight Bundesliga. In May 2016 this became a reality with RB Leipzig securing their spot for the 2016-17 season.
One year later, their meteoric rise continued with the team capturing a place in the 2017-18 UEFA Champions League. Red Bull has invested over EUR100 million in the club thus far, while match attendance numbers have sky-rocketed from 2,000 per game in 2009 to over 43,000 today.
Annual turnover for the club jumped 82% to EUR218 million in 2017 due to the promotion to the Bundesliga. The club’s income has continued to grow thereafter to EUR268 million for the 2018/19 season, putting RB Leipzig in 4th position in income terms after Bayern Munich, Borussia Dortmund, and FC Schalke.
Over the past twenty-five years, Leipzig has undergone enormous social, economic and structural change.
With the fall of the Soviet Union, Leipzig was a town of empty buildings, air pollution, heavy industry and a population that shrunk by half. Today, it is Germany’s fastest-growing city with a much- talked about economic, artistic and cultural renaissance earning it the moniker of “Hypezig”.
And believe the hype you should. While traditionally overlooked for contemporaries like Munich and Berlin, today the city’s development is being compared to that of Berlin in the late 90’s and early 2000’s.
Offering a great quality of life, amenities for modern living, job opportunities and a growing economy, read on to find out why Germany’s 8th largest city is becoming one of Europe’s hottest investment locations.
Leipzig’s rapid economic development is underpinned by the government’s Leipzig 2030 initiative – a blueprint for transforming the city into a national and international business hub and leading European city of arts and sciences through ecological, social and economically-balanced growth.
Leipzig 2030 draws together a number of aspects relevant to the city’s development - focusing on 11 concept areas: housing; economy and employment; free spaces and environment; education; social topics; culture; centres; transport and technical facilities; preservation of ancient monuments; sports and universities and research establishments.
2. MIX OF INDUSTRIES
Leipzig is a growing city with a broad economic base that welcomes innovation. While traditionally a manufacturing hub, one of the main tenets of the 2030 plan is to diversify its industries ensuring balanced and sustainable growth of the city.
Industry giants from across a number of sectors continue to heavily invest and set up their headquarters in Leipzig. Automakers like Porsche and BMW, manufacturers including Siemens and DB Schenker to pioneering research institutes and creative and media companies – each are contributing to the city’s economic revival.
The 2030 plan also focuses on developing 5 high-growth industries – Healthcare and Biotech, Logistics, Media and Creative Industries, Automotive and Suppliers and Energy and Environment – positioning Leipzig as one of Europe’s most attractive and pioneering hubs.
3. A TRANSPORT AND INFRASTRUCTURE HUB
Benefiting from its central location in the network of trans-European transport corridors, Leipzig’s strong rail, road and air infrastructure make it a top destination for a wide range of businesses.
Due to its appeal as a European logistics hub, companies like DHL, Kühne & Nage, AeroLogic, Lufthansa Cargo and Future Electronics have each taken advantage of the 24/7 freight services at Leipzig/ Halle, Europe’s fifth-largest cargo airport.
The city is also at the centre of the German Railway Network and part of an international rail container route reaching all the way to China. Leipzig’s public transportation network received €30 million investment in 2018, while a well-connected Intercity-Express places the city just 1 hour from Berlin and 3 hours from Hamburg, Frankfurt or Munich.
As a result of this strong infrastructure network, a number of value-added services have arisen in and around Leipzig, including globally renowned trade fairs and conferences at the Leipziger Messe and the Congress Centre Leipzig.
4. HEALTHY POPULATION GROWTH
After the fall of the Berlin Wall in 1989, Leipzig’s population essentially halved by the mid-90s with major brain-drain as the younger population flocked to West Germany or abroad.
The last decade has seen Leipzig begin to regain popularity and emerge from a post-in
trial city to a modern, vibrant and knowledge-based economy with new generations of innovators, entrepreneurs and ambitious individuals transforming it into a dynamic and friendly hub.
At the same time, the Government is encouraging ‘natural’ population growth through strong social policies and increasing employment opportunities that result in the city having one of the highest fertility rates in Germany.
Today, Leipzig is Germany’s fastest-growing city, home to a young and educated population that is expected to grow by another 16% to 700,000 inhabitants by 2035.
5. SMART CITY INITIATIVES
Leipzig was chosen to be part of the European Union’s ‘Triangulum’ project, a five-year, €25 million Horizon 2020 initiative to demonstrate cutting-edge smart city technologies and roll them out across the region.
The Triangulum project helped to establish a Smart Infrastructure Hub in Leipzig, bringing together startups and upcoming technology companies in the field of energy and the Internet of Things to create visions on smart city topics such as smart grids, big data and intelligent mobility and renewable energy resources. The project has delivered a big boost to Leipzig’s smart development and is encouraging further advancements across all parts of the city.
6. VIBRANT STARTUP SCENE
A vibrant startup scene is driving Leipzig’s reputation as an up-and-coming hub for innovation and tech entrepreneurship. An estimated 200-250 startups are currently operating in the city in a wide range of industries, including e-commerce, big data, infrastructure, energy and mobility as well as sciences, healthcare, biomedical and engineering.
Founders, engineers, computer scientists and creatives are being drawn to the vibrant yet affordable city, while a number of incubators, accelerators and coworking spaces have sprung up to support Leipzig’s growing entrepreneurial ecosystem.
7. A BURGEONING REAL ESTATE MARKET
With a growing population and robust economy, Leipzig’s real estate is experiencing healthy growth. With prices at around 60% of Berlin’s property market, the city has become popular with renters and purchasers and remains an affordable location among the Big 8.
As vacancy rates remain low at just 2%, it is expected that both prices and rents will continue to rise due to the increased demand for housing across the city underpinned by its robust and growing economy.
The city has earmarked a number of regeneration areas to rejuvenate parts of the city, including ‘social aspects’ such as new schooling and improving transport facilities depending on the needs of the population in those areas.
Over the past twenty-five years, Leipzig has undergone enormous social, economic and structural change.
With the fall of the Soviet Union, Leipzig was a town of empty buildings, air pollution, heavy industry and a population that shrunk by half. Today, it is Germany’s fastest-growing city with a much- talked about economic, artistic and cultural renaissance earning it the moniker of “Hypezig”.
And believe the hype you should. While traditionally overlooked for contemporaries like Munich and Berlin, today the city’s development is being compared to that of Berlin in the late 90’s and early 2000’s.
Offering a great quality of life, amenities for modern living, job opportunities and a growing economy, read on to find out why Germany’s 8th largest city is becoming one of Europe’s hottest investment locations.
Leipzig’s rapid economic development is underpinned by the government’s Leipzig 2030 initiative – a blueprint for transforming the city into a national and international business hub and leading European city of arts and sciences through ecological, social and economically-balanced growth.
Leipzig 2030 draws together a number of aspects relevant to the city’s development - focusing on 11 concept areas: housing; economy and employment; free spaces and environment; education; social topics; culture; centres; transport and technical facilities; preservation of ancient monuments; sports and universities and research establishments.
2. Mix of Industries
Leipzig is a growing city with a broad economic base that welcomes innovation. While traditionally a manufacturing hub, one of the main tenets of the 2030 plan is to diversify its industries ensuring balanced and sustainable growth of the city.
Industry giants from across a number of sectors continue to heavily invest and set up their headquarters in Leipzig. Automakers like Porsche and BMW, manufacturers including Siemens and DB Schenker to pioneering research institutes and creative and media companies – each are contributing to the city’s economic revival.
The 2030 plan also focuses on developing 5 high-growth industries – Healthcare and Biotech, Logistics, Media and Creative Industries, Automotive and Suppliers and Energy and Environment – positioning Leipzig as one of Europe’s most attractive and pioneering hubs.
3. A Transport and Infrastructure Hub
Benefiting from its central location in the network of trans-European transport corridors, Leipzig’s strong rail, road and air infrastructure make it a top destination for a wide range of businesses.
Due to its appeal as a European logistics hub, companies like DHL, Kühne & Nage, AeroLogic, Lufthansa Cargo and Future Electronics have each taken advantage of the 24/7 freight services at Leipzig/ Halle, Europe’s fifth-largest cargo airport.
The city is also at the centre of the German Railway Network and part of an international rail container route reaching all the way to China. Leipzig’s public transportation network received €30 million investment in 2018, while a well-connected Intercity-Express places the city just 1 hour from Berlin and 3 hours from Hamburg, Frankfurt or Munich.
As a result of this strong infrastructure network, a number of value-added services have arisen in and around Leipzig, including globally renowned trade fairs and conferences at the Leipziger Messe and the Congress Centre Leipzig.
4. Healthy Population Growth
After the fall of the Berlin Wall in 1989, Leipzig’s population essentially halved by the mid-90s with major brain-drain as the younger population flocked to West Germany or abroad.
The last decade has seen Leipzig begin to regain popularity and emerge from a post-in
trial city to a modern, vibrant and knowledge-based economy with new generations of innovators, entrepreneurs and ambitious individuals transforming it into a dynamic and friendly hub.
At the same time, the Government is encouraging ‘natural’ population growth through strong social policies and increasing employment opportunities that result in the city having one of the highest fertility rates in Germany.
Today, Leipzig is Germany’s fastest-growing city, home to a young and educated population that is expected to grow by another 16% to 700,000 inhabitants by 2035.
5. Smart City Initiatives
Leipzig was chosen to be part of the European Union’s ‘Triangulum’ project, a five-year, €25 million Horizon 2020 initiative to demonstrate cutting-edge smart city technologies and roll them out across the region.
The Triangulum project helped to establish a Smart Infrastructure Hub in Leipzig, bringing together startups and upcoming technology companies in the field of energy and the Internet of Things to create visions on smart city topics such as smart grids, big data and intelligent mobility and renewable energy resources. The project has delivered a big boost to Leipzig’s smart development and is encouraging further advancements across all parts of the city.
6. Vibrant Startup Scene
A vibrant startup scene is driving Leipzig’s reputation as an up-and-coming hub for innovation and tech entrepreneurship. An estimated 200-250 startups are currently operating in the city in a wide range of industries, including e-commerce, big data, infrastructure, energy and mobility as well as sciences, healthcare, biomedical and engineering.
Founders, engineers, computer scientists and creatives are being drawn to the vibrant yet affordable city, while a number of incubators, accelerators and coworking spaces have sprung up to support Leipzig’s growing entrepreneurial ecosystem.
7. A burgeoning Real Estate Market
With a growing population and robust economy, Leipzig’s real estate is experiencing healthy growth. With prices at around 60% of Berlin’s property market, the city has become popular with renters and purchasers and remains an affordable location among the Big 8.
As vacancy rates remain low at just 2%, it is expected that both prices and rents will continue to rise due to the increased demand for housing across the city underpinned by its robust and growing economy.
The city has earmarked a number of regeneration areas to rejuvenate parts of the city, including ‘social aspects’ such as new schooling and improving transport facilities depending on the needs of the population in those areas.
RB Leipzig was founded in 2009 when the Red Bull company purchased the playing rights of the fifth-tier side SSV Markranstädt with the intent of advancing the new club to the top-flight Bundesliga. In May 2016 this became a reality with RB Leipzig securing their spot for the 2016-17 season. 
Benefiting from its central location in the network of trans-European transport corridors, Leipzig’s strong rail, road and air infrastructure make it a top destination for a wide range of businesses.
After the fall of the Berlin Wall in 1989, Leipzig’s population essentially halved by the mid-90s with major brain-drain as the younger population flocked to West Germany or abroad.
Leipzig was chosen to be part of the European Union’s ‘Triangulum’ project, a five-year, €25 million Horizon 2020 initiative to demonstrate cutting-edge smart city technologies and roll them out across the region.
With a growing population and robust economy, Leipzig’s real estate is experiencing healthy growth. With prices at around 60% of Berlin’s property market, the city has become popular with renters and purchasers and remains an affordable location among the Big 8.
