Prime location

Prime Location - The term “prime location” (also known as an “A-location” or “premium location”) refers to real estate locations that rank among the very best in a market in terms of infrastructure, neighborhood, image, demand, and value stability. Top locations are characterized by the highest purchase and rental prices, the lowest vacancy rates, the most stable value appreciation, and the strongest demand. They represent the segment with the lowest investment risk, but in return also offer the lowest rental yields-a classic trade-off between security and return.

Criteria for a Top Location

A top location meets several criteria simultaneously and outperforms good locations in every respect:

• Excellent infrastructure: Direct public transportation access (subway, commuter rail), shopping within walking distance, high-quality schools, and local doctors and pharmacies
• High quality of life: Green spaces, parks, or recreational areas in the immediate vicinity, quiet streets (low traffic volume), well-maintained streetscape with few vacant properties and high building maintenance standards
• Positive image: Established, prestigious neighborhood with stable or rising social demand - no image issues due to crime, neglect, or noise
• Strong demand: Consistently significantly more prospective buyers and rental applicants than available properties - properties are often sold off-market before they are advertised
• Low turnover: Residents stay long-term, which strengthens the community fabric and stabilizes the quality of the living environment
• Stable to rising prices: Even during market downturns, only moderate price declines; rapid recovery after crises

For commercial real estate, the following also apply: High foot traffic, maximum visibility, excellent accessibility via public transportation, prestige of the address, and a concentration of well-known brand names as neighbors.

Prime Location as a Value Factor in Appraisal

Location is the most important value factor in real estate-and a prime location is the strongest expression of this. The principle of “location, location, location” applies in no segment as strongly as in prime locations, where even properties in need of renovation command high prices because the fundamentals are right.

Studies show that real estate in prime locations experiences price declines that are 50-70% lower during times of crisis than in average or poor locations. While prices in B and C locations can fall by 15-25% during downturns, prime locations typically lose only 5-10%. At the same time, prime locations recover more quickly: Following the price decline in 2022/2023, prices in Nuremberg’s prime locations were the first to rise again-even before prices in outlying areas.

The downside: Rental yields in prime locations are typically 1-2 percentage points lower than in average locations because purchase prices are disproportionately high. Someone buying a condominium in Erlenstegen today might achieve a gross rental yield of 2-3%-in Langwasser or Schniegling, however, 4-5%. For security-oriented investors with a long investment horizon, prime locations are still the first choice; for yield-oriented investors, B-locations with appreciation potential are often more attractive.

Nuremberg’s Prime Locations at a Glance

We recommend that buyers and investors in the Nuremberg metropolitan area familiarize themselves with the established prime locations in the urban region:

Residential Real Estate (Nuremberg):

• Erlenstegen: Villa district, high proportion of green space, exclusive single-family homes, prices ranging from €6,000-10,000/m²
• Am Tiergarten and Schmausenbuck: Hillside locations with city views, natural surroundings, sought-after single-family homes
• Johannis (Hallerwiese area): Close to the city with Wilhelminian-era charm, high quality of life, coveted condominiums
• Maxfeld/Rennweg: Close to downtown, well-connected, stable demand from professionals and families

Residential Real Estate (Region):

• Erlangen-Büchenbach and downtown: Benefits from Siemens and the university, strong demand, stable prices
• Fürth downtown (Wilhelminian-era district): Increasingly sought after as an alternative to Nuremberg

Practical Tip for Property Owners in Nuremberg

Those who buy in a prime location pay a premium of 20-40% compared to good average locations-but in return receive maximum value stability, the best rentability (virtually no vacancy risk), and the easiest resale. Properties in prime locations often attract more interested buyers than can be publicly advertised-many transactions take place off-market through personal networks.

If you have a limited budget, a property in an up-and-coming location (e.g., Gostenhof, Eberhardshof, Doos) can be an attractive alternative-with the risk that the gentrification process may take longer than expected or stall temporarily, but with significantly higher returns and appreciation potential once development takes hold.

We analyze for you whether the specific property you have in mind actually corresponds to a prime location or just a good location-a distinction that has significant relevance for the purchase price and value appreciation.

Frequently Asked Questions

How do I distinguish a prime location from a good location?

The difference is evident in the price range and the depth of demand. In a good location, prices fall within the top third of the local market; in a prime location, they fall within the top decile (10%). In Nuremberg, prices per square meter for condominiums in good locations (Maxfeld, Rennweg, Thon) range from approximately 4,000-5,000 euros/m², while in prime locations (Erlenstegen, Tiergarten, Johannis-Hallerwiese) they range from 6,000-8,000 euros/m² or higher. Further indicators of a prime location: virtually no visible vacancies, many properties are traded off-market, and nearly all listings sell for the asking price or higher.

Is the premium for a prime location worth it?

For owner-occupiers with a long-term horizon, almost always: the highest quality of life, the best value stability, and easy resale at attractive prices. For investors, the answer is more nuanced: The lower rental yield (approx. 2-3% gross instead of 4-5% in B-locations) must be offset by higher value stability, lower risk of rental loss, and better long-term value appreciation. Those seeking maximum current returns are more likely to find them in B-locations with catch-up potential. Those seeking maximum security and value retention invest in prime locations-and accept the lower cash flow yield in return.

Can prime locations deteriorate?

Yes, but rarely and usually slowly. Negative changes can occur due to: a significant increase in traffic (new urban highway, increased aircraft noise), redensification with high-rises in the immediate vicinity, social change over several decades, or permanent loss of infrastructure (closure of key schools, subway extension bypassing the location). In Nuremberg, the established prime locations (Erlenstegen, Johannis) have remained stable for decades. Conversely, secondary locations can rise to become prime locations-Gostenhof has clearly demonstrated this process over the past 15 years, with price increases of over 100% in some cases between 2010 and 2023.

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