The top six locations in eastern Germany show the same dynamic rental growth for residential property as their six counterparts in the west of the country, according to listed German property company Patrizia Immobilien.

In a new report, Patrizia said that even though rents in top locations in western Germany are higher than in the east, eastern cities offer investment potential because western German markets only have a limited supply.

The report indicates that the demand for new accommodation in the east will be high through to 2025. Demographic growth in select eastern German cities only differs from that in western German cities by around one percentage point. According to forecasts, Potsdam, Jena, Erfurt, Dresden, Weimar and Leipzig will record weighted average population growth of around 4.5% through to 2025.

'If we look at the indexed rent increases, the potential for higher rent in Potsdam, Jena, Erfurt, Dresden, Weimar and Leipzig has been at a high level that is comparable with Western German cities over the past two years,' said Marcus Cieleback, head of research at Patrizia Immobilien.