Germany » Market Report

The German property market is being watched closely by savvy investors, as it is tipped for impressive gains as the economy strengthens. Germany is an attractive country with a welcoming and hospitable people.

As the German economy begins to emerge from its long-running recession, the domestic property market is likely to pick up, with the government encouraging citizens to become owners. This should push up prices and help the capital appreciation. Germany could develop into an "interesting" market for overseas property investors.

Most of us buy property abroad to let it out to other British holidaymakers or to live in communities of fellow expatriates. Germany is a good place to invest, you will be buying close to the bottom of a market which is expected to go up.

The German real estate market has practised a strong recovery in 2006, including the largest market in Europe, with an approximate total volume of EUR7.1 trillion. Construction investment has picked up since the slowdown in 2005. The market is mainly driven by investments of private equity and opportunity funds in residential as well as commercial property portfolios. Particular areas of investment involved hotel, logistics and large to medium-sized retail projects.

Lawyers are awaiting the introduction of legislation admitting real estate investment trusts (REITs) in 2007, and foresee a flurry of activity in this area once they are available as an investment vehicle. A much higher proportion of German companies own their real estate compared to those in the UK or US, and REITs are expected to open up this unutilized source of property for investors.

Our Forecast

International Property Brokers forecast that the property investment in Germany is taking a new twist as specialist firms are marking Berlin and Frankfurt as having a major potential. As a result of demand from both residents and investors the inactivity it property market of Germany is coming to its end. House rents are also increasing because government is selling off much of its property to UK and US based firms. These factors are expected to cause high rents in near future and tenants will prefer to purchase the property rather than taking it on rent.