New Apartment Tower Set to Alter Munich’s Housing Market

Munich’s city council has formally signed off on the construction of Altstadthöfe, a 23-storey apartment tower slated for the edge of Sendlinger Tor. The approval came late Thursday, clearing the path for developer UrbanHaus GmbH to break ground in September. When finished in late 2028, the tower will add 280 rental units just south of the Altstadt, Munich’s densely populated core.

This project arrives at a tense moment for renters. Rents have soared to record highs across central Munich, compounded by a wave of tech-firm relocations and chronic short supply. The Stadt München’s own quarterly housing update, released in May, charted an average rent of €23.10 per square metre in the Altstadt-Lehel district—up nearly 5% from last year. Policymakers are under mounting pressure to address the squeeze as Munich’s population grinds past 1.6 million, boosted in part by immigration from other German cities and abroad.

Changing Skyline, Changing Market

The Altstadthöfe site has been controversial for months. Wedged between Lindwurmstraße and Pestalozzistraße, the tower replaces an aging office block that housed part of Ludwig-Maximilians-Universität’s admin staff. Conservationists from Initiative Historisches München objected to the building’s height, worried it will overshadow the Dreifaltigkeitskirche and disrupt the look of Sendlinger Tor Platz. But local housing advocates see things differently. “We can’t pretend that Munich’s housing need will disappear with incremental projects,” said Anna Klocke, coordinator at Wohnraum für Alle, a tenants’ advocacy group, in an email response. The project’s mix—units range from €900/month one-bedrooms to modest four-bedroom family flats capped at €2,450—has been pitched as a compromise, aiming to lure both young professionals and longer-term households to the area.

The developer says at least 20% of apartments will fall under the income-based Förderprogramm Mietwohnungsbau administered by GWG München, the city’s main social housing agency. UrbanHaus GmbH’s submission documents spell out that these subsidised units will be allocated by lottery in partnership with the Sozialreferat, the city’s social services branch. The rest will rent at market rates, comparable to new builds in Werksviertel-Mitte or Schwabing.

Supply Still Lags Behind

Even with Altstadthöfe’s 280 units, Munich faces a daunting gap. The city’s official housing target for 2026-2030 remains 8,500 new units annually—figures published by Planungsreferat München in their last urban development report—with the current pipeline lagging by about 2,000 apartments per year. Across Ludwigsvorstadt and Isarvorstadt, estate agents report vacancy rates of just 0.5%, far below what’s needed to stabilise prices. Asking rents for new apartments within the Mittlerer Ring routinely exceed €26/sqm, according to ImmobilienScout24’s June market analysis.

For those hoping that Altstadthöfe will trigger a cascade of lower rents citywide, experts urge caution. "It’s a positive step, but it won’t move the market on its own," said a local property analyst at the Institut für Stadtentwicklung. Both city planners and tenant networks agree: boosting supply is essential, but only part of the equation in a city with robust demand and limited buildable land.

Construction on Altstadthöfe will start in September, with the first apartments marketed from early 2028. Households interested in income-capped units should register with GWG München’s public housing waitlist later next year, once eligibility guidelines are finalised. Meanwhile, UrbanHaus GmbH is already pitching its premium upper-floor units to professionals in the media and biotech sectors, signalling that the competition for central Munich addresses is likely to remain intense for years to come.