Selling an apartment building in Dresden

For apartment buildings, the price per square metre is not what counts. Buyers calculate in multiples and yields.

Income value method: the standard for apartment buildings. The decisive factors are the annual net cold rent, the operating costs (property management, maintenance, vacancy risk), the property interest rate and the remaining useful life. In Dresden the property interest rate for apartment buildings is 3.5–5.5 percent, depending on the location.

Comparative value method: a useful supplement when comparable transactions are available. The Dresden valuation committee supplies transaction data, but the comparability of apartment buildings is limited — every building is different.

Rule of thumb: annual net cold rent times the price multiple gives the sale price. A building with 60,000 euros in annual rental income and a multiple of 22 is worth around 1,320,000 euros. Sounds simple. It is not — because the multiple depends on dozens of variables.

For an initial assessment of the apartment-building value using the income value and comparative value methods: our free property value calculator for Dresden maps both methods — anonymously, without contact details.

The tenant schedule is the heart of every apartment-building valuation. Buyers check:

• Current rents vs. market level (rent-increase potential?)
• Tenancy-agreement terms (fixed? open-ended? notice periods?)
• Tenant structure (able to pay? long-term? problem tenants?)
• Vacancy (current and historical)

A case from my practice: an apartment building in Pieschen with 8 residential units, all let, but the rents were 20 percent below market level. For the buyer that was no problem — it was an opportunity. He bought at a multiple of 21, raised the rents to market level over two years and had effectively bought at a multiple of 17. Rent-increase potential is the silent value driver in apartment buildings.

A vacancy below 3 percent is normal in Dresden and no obstacle to a sale. Above 5 percent you have to be able to explain it.

Speculation tax (Section 23 EStG): if the holding period is under 10 years, the profit comes on top of your other income. What falls due is the difference between your income tax with and without the profit, not the profit times a flat rate. On a profit of 300,000 euros with 60,000 euros of other taxable income alongside, that is around 128,300 euros. Part of it already falls into the top tax rate of 45 percent, which starts at 277,826 euros of taxable income. Waiting pays off.

All tax amounts follow the basic income tax tariff (Grundtarif) for the 2026 assessment period, without the solidarity surcharge and church tax. Both may come on top: the solidarity surcharge at 5.5 percent of the income tax above the exemption threshold, and church tax in Saxony at 9 percent of the income tax. Tariff values change every year.

Depreciation for the buyer: a common misconception is that the remaining depreciation passes to the buyer with the building. I hear this misconception at almost every apartment-building appraisal, often from sellers who were told it by someone in the trade. On purchase the buyer starts a new depreciation on their own acquisition costs, depending on the year of construction 2 per cent for residential buildings from 1925, 2.5 per cent for older ones and 3 per cent for completion from 2023 (Section 7 (4) EStG). Only on inheritance or gift does the acquirer continue the previous owner's depreciation (Section 11d EStDV). For the exposé that means: do not advertise a remaining depreciation that supposedly transfers, but what the buyer can actually calculate, namely the purchase price split, the building share and the year of construction.

Section 6b reserve: it only comes into question if the building forms part of business assets, for instance in commercial property trading or an object held as business property. It does not apply to privately held apartment buildings, which is what this page is about; there Section 23 EStG applies. Whether your property is business or private assets is for your tax adviser to establish before the sale.

Holding structures: is the apartment building held in a GmbH or an asset-managing GbR? A share deal (selling the company shares instead of the property) can save the buyer real estate transfer tax — and thereby raise the achievable price. Tax advice is mandatory here.

Semi-professional private investors: the largest buyer group in Dresden. Doctors, lawyers, entrepreneurs, IT specialists — people with a high income and the wish to build wealth through property. Budget: 500,000 to 2,000,000 euros.

Institutional investors: family offices, property funds, insurers. Buy from 2,000,000 euros upwards. A professional due-diligence process, longer negotiations, but solid deals.

Local portfolio holders: Dresden families and companies expanding their portfolio. Often the best buyers — they know the market, decide quickly and finance soundly.

• Neustadt, Blasewitz, Striesen: multiple 20–25, top prices
• Pieschen, Plauen, Löbau: multiple 17–22, rising strongly
• Cotta, Mickten, Übigau: multiple 16–20, solid yield
• Gorbitz, Prohlis, Reick: multiple 13–17, high yield, higher risks