Small flats, big opportunities: why the new space trend is shaking up the market
Compact floor plans, cleverly planned: Small flats - from micro-apartments to 2-room city flats - are moving into the focus of owner-occupiers and investors. Rising construction and energy costs, changing lifestyles and a growing number of small households are driving the trend. This opens up tangible opportunities for owners and investors: higher rent per square metre, lower vacancy risks and a broader range of potential tenants.
Important: The space trend is not synonymous with „small“. The decisive factors are intelligent floor plans, flexible utilisation and a strong micro-location fit - then small flats become scalable, liquid investment products and sought-after city flats for singles, couples, commuters and senior citizens.
What is behind the surface trend?
Several forces are working together: In urban areas, the demand for affordable, centrally located living space is increasing. At the same time, higher interest rates and construction costs are forcing developers and buyers to find more efficient spaces. In addition, there are new residential biographies: temporary stays, hybrid work, longer periods of training and starting a family later in life. Small, well-connected units offer maximum flexibility with calculable overall costs.
- Broad demand base: Students, young professionals, commuters, expats and senior citizens who want to downsize.
- Above-average €/m² rents: Users pay for location, quality and smart space - not for unused squares.
- Lower absolute rent: The monthly rent remains affordable, although the price per square metre is higher.
- Efficient management: Less space often means lower maintenance and operating costs per unit.
Returns in practice: a brief reality check
Acceptance: 35 m² city flat in a good public transport location, purchase price €180,000, standard market rent €17-19/m², house rent €180/month incl. reserve (of which €120 is apportionable). Financing depends on the individual interest profile.
At €18/m², this results in a basic rent of €630/month or €7,560/year. After deducting non-recoverable costs (approx. €60/month), this leaves €6,840/year. This corresponds to Gross rental yield of approx. 4.2 % and - depending on the ancillary cost structure - a simplified net rental yield of approx. 3.5-3.8 %. Optimisation of equipment, furnishings (with the appropriate target group) and professional letting management are possible.
Quick check yield
1) Is the target rent realistic? → Check 3 comparative offers within a 500-m radius.
2) Current costs clear? → Isolate non-apportionable components from the property management statement.
3) Vacancy factored in? → 2-4 weeks per change as a conservative assumption.
Floor plan and location: the levers for value and lettability
Floor plan beats space. A 33 m² flat with a clear two-zone layout (living/sleeping + cooking/dining), well thought-out storage space (built-in units up to the ceiling, niche shelving), sufficient natural light and a separate sleeping alcove often rents out faster than a 40 m² unit without structure. A balcony or French window acts as a „room extension“ - a strong argument in exposés.
Micro location decides. Within 500-800 m walking distance: public transport hub, local amenities, leisure facilities. For commuters: railway station or airport connections. For students: Close to campus, safe cycle paths. For senior citizens: doctors, pharmacy, barrier-free entrances.
Community solves space problems. Shared amenities (bike room, parcel station, laundry lounge) are real added value. A cellar compartment or storage room replaces „too much“ living space - and pays off in terms of willingness to rent.
Typical errors & solutions
- Error: Dark, cluttered rooms. Solution: Light, neutral colour palette, continuous flooring, slimline fixtures.
- Error: Suboptimal kitchenette. Solution: 2-line layout or L-shape, full wall unit height, induction hob + combi oven.
- Error: Unclear target group in the exposé. Solution: Tailor the text, photos and floor plan to commuters/students/couples.
- Error: Service charges too high. Solution: Re-optimise energy efficiency (LED, hydraulic balancing, appliance class), check maintenance contracts.
For whom is it worth starting now?
Owner-occupier secure a central location with calculable total costs and manageable maintenance costs. Capital investor benefit from a high level of market depth and letting that remains robust even during economic fluctuations. Project developer realise fast-turning products - provided that the surfaces are efficient and the operating costs are plausible.
In existing buildings, compact units are often undervalued if the floor plan offers potential for optimisation (moving partition walls, creating storage space, improving lighting). In new builds, modular systems and serial construction can be used to develop economical, ESG-capable small spaces - including renewable heating solutions and smart building technology.
Check market opportunities - brief & well-founded
We analyse the micro-location, rental bands, vacancy risks and optimisation potential of your small flat.
Practical tips for owners and investors
- Market analysis: Rental supply in the neighbourhood, target groups (commuters/students/singles), minimum rents per m².
- Floor plan upgrade: Zoning, fixtures, light. Small interventions, big effect.
- Furnishing strategy: Offer furnished for business target groups; neutral and robust for long-term rentals.
- Cost control: Check the structure of house charges, renegotiate maintenance contracts, utilise energy advice.
- Exposé excellence: Professional photography, clear floor plan, reliable floor area information, transparent energy parameters.
- Letting process: Credit check, clear house rules, handover protocol and maintenance plan.
Outlook: Why small flats are here to stay
There are also many arguments in favour of compact units in the long term: Urbanisation, flexible working models and the desire for a good location with predictable overall costs. At the same time, regulation and energy prices are incentivising space-efficient living. Those who harmonise floor plan quality, micro-location and operating costs will be rewarded with stable demand, solid returns and high liquidity in resale.
Would you like to know what your small flat is fetching on the market today - as a rental or for sale? We provide a precise, data-based assessment and show specific levers for value enhancement.
