Germany is facing a far-reaching demographic change which leads to a dwindling population and a change in the age structure. Several studies demonstrated that the demographic change will affect the demand for housing. However, the impact of this development on current prices has not been studied, yet. Since especially institutional investors prefer to invest in cities with a growing population the adjustment of prices to demographic forecasts is a very important and relevant question for portfolio choices. In order to address this question, we calculate the expected growth rate of rents based on a capital-asset pricing model for 125 German cities. If investors take into account the demographic change, the rental growth rate should depend on variables capturing a forecast for future space consumption. Other determinants for property prices (e.g. GDP, unemployment, previous growth, building activity) are also included in the analysis. As it turns, the future demand of living space has a significant impact on current real estate prices. Therefore, it is unlikely to gain extra yields just by investing in growing cities. Furthermore, the model allows for estimation of rental growth rates.