Raiding the Pearls of the North Sea
When it comes to real-estate investment, hotdogs are more exclusive than oysters.
For property value on Sylt, there is only one direction: up. As a consequence, 38 % of those who work on the island have to live on the mainland. Few kilometers further north, countless Danish summer houses remain on the market for years. The Danish law prohibits foreign investment on the Danish part of the coastline, which is pushing investors on and residents off the island.
“They sneak around the houses. They peek into the windows. They have no shame” says Matthias Rommel. “The line has been crossed a long time ago.”
SYLT - It is a warm Sunday in the beginning of the summer. A mild breeze is swirling up the air, carrying the scent of salt sea from the nearby ocean. The sunshine dips the thatched roofs of the single houses of the East-tip of the island Sylt into a warm shade. Surrounded by neatly-groomed gardens with wild rose hedges, a senior couple is enjoying freshly brewed coffee on their large patio. This is their little private paradise. Some meters away, another couple, tourists from the mainland, explores the neighborhood. As many tourists do, they have rented bikes and rode them down to Morsum. While they bike around the village, they see a lovely single house with a thatched roof, a neatly-groomed garden surrounded by wild rose hedges and a senior couple enjoying coffee on a patio. They decide to approach the patio, put down their bikes and sit down next to the nice-looking senior couple and wait to be served by a waiter. The idea that their table partners could not be tourists enjoying a break from exploring, but actual residents enjoying their privacy doesn’t occur to them. Not until the blunt demand of the owners to get off their property.
“It happens all the time, all over the island”, says Matthias, who has moved on and off the island a couple of times for the last 25 years. His family is originally from Sylt, all were born and raised there. Now they live in Rodenäs, shortly behind the Hindenburgdamm, on the 35 mainland.
Does he sometimes wish he could still live on Sylt today? “No way” he shouts out, bursting into a cynical laugh, “I mean, the nature is beautiful. But being there in summer - how is that beautiful? How is that enjoyable? It's way too crowded. People talk about making changes. They still try to make the island livable again for residents. But I think it’s over. You can’t turn back time.”
From desertion and calmness to oysters and champagne
The latest real-estate analysis by luxury agency Engel & Völkers names Hobookenweg in Kampen on Sylt as the most expensive street in Germany. The small village outstrips metropolis like Hamburg and Munich. Oysters, champagne and caviar are in high demand in the once barren village, where the square meter price for summer houses now ranges from 11.000 – 14.000 €. Sylt is a sad, but excellent example for the so called gentrification of the countryside, as social structures and facilities are destroyed by the lack of affordable housing. With around 22.000 inhabitants, the island is facing around 600.000 tourists each year and the trend is upwards. Excessive investment in property on the island has transformed it into a money-making machine. Housing is prohibitively expensive for original residents. The calculation is simple: Tourists are willing to pay higher prices; residents are forced to move to the mainland. The island is dying out: overcrowded during high season, empty during the off-season and unenjoyable for the original residents. And the demand for real-estate investment in the North Sea region is rising – while investment options remain rare. To throw light on this issue, it is necessary to look at the gentrification of the island from a wider perspective and up to its Northern neighbor Denmark. Only two kilometers separate the northern tip of Sylt from the Danish island Rømø – it is not surprising that the coast of West-Jutland is equally popular with German tourists. And many return again and again to experience the rough beauty of the Northern coastlines.
Sylt was once an island known for just this rough beauty, with long beaches and extensive sand dunes and the calmness that comes with it. A piece of land, where people would go to escape the hectic reality of life, a place that was equally loved by its residents and visitors. Today, the tables have turned – and not in favor of those who don’t stay just temporarily. “There are employers offering their staff apartments that you would never rent if you have a choice, ever. Like attics that you can't even stand up straight in with just a mattress on the floor, or so called apartments that are obviously just garages. And then they take 600 € out of your paycheck for it. It's pure impudence!” says baker Patrick Passek, who works in the highclass café 'Kupferkanne' in Kampen. Being the father of four children, there is no way the baker could live in what is sometimes called the ‘Saint-Tropez of the North’ with his family. “Now, on the mainland, I pay around 800 € in rent for a six-room house. That would be impossible on the island”, says Patrick. A quick glance on online offers for rentals on Sylt confirms: In the same price category, one can get as much as a two-room apartment, far from the island's hotspots.
Luxury for the price of gentrification
Having a “Fischbrötchen” at the ‘most northern fish stand in Germany’, the infamous Gosch, is on every tourists To do-list for Sylt. But the craving for the delicious wheat buns filled with shrimps or salmon is at least lowered by the price tag: 6 Euro for just one shrimp sandwich is a stiff price for German standards. A simple sandwich becomes a luxury product, and the road to luxury was paved early by Sylters and tourists likewise.
Before tourism has become the most important branch of industry, the islanders had experienced a first taste of the money that would later dominate the island through whale hunting. With the decline of whale hunting, Sylt became less and less attractive as a stopover for fishermen. In the desperate need to find a lucrative industry to secure prosperity for the island, tourism appeared on the scene in the late 1800s. Slow tourism quickly 90 transformed into mass tourism, when as much as 1,500 workers moved over three million cubic meters of North Sea sand to build the Hindenburgdamm, which was opened in 1927. Ever since, tourism has paid for the shrimp sandwiches on the Islanders tables. Practically worthless properties had overnight turned into assets. Summer houses and apartment buildings popped up rapidly all over the island. And the hype is still unbroken.
The residents are by far outnumbered by the influential high society scene. There is no longer a voluntary fire brigade in List due to a lack of people. What sounds like a cynical joke is harsh reality: there are four golf courses on the 99 m2 -island, but not a single maternity ward. Born-and-raised-Sylters are part of the past now. Since 2014 children can no longer be born in a hospital on the island.
Interestingly, the phenomenon of gentrification in the countryside through second home ownership is not limited to Sylt. In Britain, the townies dream of a picturesque summer home in the countryside is creating tension in the real estate markets, too. Rich people are moving into the rural areas and poorer people are forced out. In Austrian and French Ski resorts, summer passes have been invented to lure tourists to the deserted villages with the prospect of mountain biking instead of skiing, trying and fill the villages’ streets and cashiers, which are catastrophically empty during the off-season.
Why the wheel keeps turning
The real-estate market in the North Sea region is not expected to go anywhere but up. Peter Peters, real estate-agent from Sylt: “In 2005, I would tell my clients any rate of return less than five percent would be out of question. Already in 2010, we didn't really look at that anymore, as long as we could secure capital. In 2015, we are looking at where the smallest losses are made. That's where we are today”. While traditional holiday destinations like Spain and Italy become less safe investments due to the uncertain economic and political situation, investing in the North Sea region is stable. And investing in Sylt is like buying gold bars. Property investment has spared many Germans the worst consequences of the financial crisis. On his website, Peters advertises investing here as “desirable, effective and safe”. He doesn’t see a gentrification problem on the island. “The residents are nagging. It’s a culture of jealousy!” he says, “A drug store cashier in Hamburg wouldn’t wonder why her apartment doesn’t face the Alster.” He is a Sylter himself, but he is standing on the up-facing side of the medal.
Buying summer houses is no longer about the own holiday preferences, but mainly about the prospects of renting it out profitably. At the end of a long day at work, the majority of Germans no longer dreams of the white sandy beaches of Egypt, Tunisia or Turkey. Due to the increasing number of terror attacks on tourism destinations, people are looking out for enjoyable, but also safe destinations. How relevant the safety aspect is becoming in the choice of the perfect holiday spot is underlined by the topic of the main panel discussion on Germany's largest tourism fair this year: terrorism and the consequences for tourism. Luckily for Germans, happiness is just a couple of hours by car away.
Every year, again and again: Denmark
The phenomenal landscape of the shores at the Northern Sea coast line of Germany and West-Jutland, where the sea has left the countryside with long beaches and sand dunes, is legendary. Artists like Emil Nolde are known for their paintings of the coastal landscapes; writer Thomas Mann resided in the area many times. Likewise, it is also the main driver why people travel there. But the real-estate market in Denmark is hardly accessible for foreign 140 buyers, which limits the desired investment options to the German part of the North Sea coast – and further fuels the real estate price spiral on Sylt.
In 2015, there have been 11 million overnight stays in Denmark by Germans. According to Lars Ramme Nielsen, the German country manager at Visit Denmark, as much as 80 % of all 145 summer houses become temporary holiday homes for Germans. This makes them the largest and most important nationality for tourism in the Scandinavia’s greatest smallest kingdom. Evidently, German tourists are drawn to the beaches and Danish culture like moths into the light. Investing into a summer house in Denmark as an asset would be a safe investment too – many German’s have preferred hotdogs over pricy shrimp sandwiches for 150 years.
A summer house in Denmark – The German dream
Yet, due to the Danish Summer House legislation, it is not possible for foreigners to buy property on Danish grounds. The summer house control law is strict: at least five years of residence in Denmark, being an EU national working in Denmark and for non-EU residence a valid residence in the country or a business permit. If these requirements aren't met, one can apply for an exception to the rule by proving a strong bond with the Danish culture. And the bond must be very strong.
Seeing a white cross on a red flag softly flying in the wind is not surprising within Danish borders. In Hamm, Germany, the Dannebrog is a rare sight at the end of a six meter flagpole. But for Katrin Schäfer, it symbolizes a life’s dream. In the average year, she spends around 10 weeks in her beloved holiday destination, despite the 700 km car-drive. As soon as she walks down to the beach and feels the warm sand on her bare feet with her husband, whom she married in Hvide Sande, and her daughter, who has the Danish name Margarete, she knows the time in the car was well invested. She runs an online-shop for Danish inspired kids clothing. On the bureaucratic form for the exception, which she has carefully filled in with her neat handwriting, the listings of her visits in Denmark fill an entire page. Her love for Denmark gets under the skin: she has the Danish flag tattooed on her calf.
Her case exemplifies how strong the bond between Denmark and the buyer must be. Katrin has been granted permission to buy in Denmark just last week. Her dream is coming true.
But she remains an exception to the exception. The lacks of investment options in the North Sea region are serious. In 2015, only 215 permissions to buy property were given to foreign investors. Most of them are Norwegians, only 26 were Germans.
Never ending agony?
These weeks, a possible relaxation of the summer house control is being discussed among Danish politicians. Opinions are divided, the topic polarizes among Danes. Some liberal-oriented representatives welcome a more open investment approach and underline this could not only support tourism, but also help re-build deserted structures in rural areas. Others, who are more conservative, fear that German investment would drive Danes out of the popular holiday regions and paint the future of Denmark’s holiday regions with more foreign investment in darker shades.
Sometimes, when Patrick Passek is on the train to work over the Hindenburgdamm, he lets his eyes wander over the mudflats. On a clear day, he can see the light house of Kampen in the distance, as the train makes a slight turn. Maybe Matthias Rummel is sitting not too far away from him on the train. The two commuters don’t know each other, but they share the same fate as so many other former residents of Sylt. Some sort of a love-hate relationship with the island.
In the meantime, Katrin Schäfer is looking at real estate objects in West-Jutland. Every day, her dream of a summer house becomes more of a reality. She plans on renting it out to summer guests, when she is not using it herself.
If people like Katrin don’t remain an exception, but buying summer houses on the northern parts of the coastline becomes easier for foreign investors, maybe Matthias and Patrick won’t share their morning commute with so many others.
Maybe, with a more relaxed situation on the real-estate market in the overall North Sea region, there actually is a chance that it is not too late for Sylt.
