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Germany Leads Eurozone Out of Recession with €30billion Commercial Property Market

August 19, 2013Article by Ray Withers

We’re feeling pretty happy about the breaking news that Germany and France are leading the eurozone out of recession. Particularly Germany, which has seen its economy grow at its fastest pace for more than a year.

We’ve had our eyes on the German market for a few months now. It has a stable economy, strong growth and a low unemployment rate. It ranked as the most popular country in the world in a BBC World Service poll; and as the most attractive destination for foreign investors in a 2013 Ernst & Young report. While Savills reports a 155% increase in German hotel investment alone.

Popping the corks for Germany’s impressive comeback

Just-released figures (14th August 2013) show the German economy has expanded a further 0.7% in Q2 2013. France followed with 0.5%, beating economists’ expectations.

Carl Brzeski at multinational finance giant ING, tells us: “Popping the corks. The German economy has staged an impressive comeback. The whole eurozone is expected to emerge from an 18-month double dip recession.”

One reason for this is said to be a catch-up effort in construction, which contributed 0.3 percentage points to the growth. Another is export trade, which has always been one of Germany’s strong points.

Commercial property to hit €30billion

It’s easy to see what makes German investment so attractive right now. Savills forecasts total turnover in the German commercial property market to hit the €30billion (EURO) mark in 2013, up from €25.3billion (EURO) the year before.

Savills says there is ongoing demand from risk-averse investors who are looking to buy assets which retain their value in economically challenging times. Around €12.5billion (EURO) was invested into commercial property during the first half of this year, making a 36% year-on-year rise.

Private investors and listed property companies each accounted for €1.3billion (EURO). Developers are also an active party, selling property worth over €2.3billion (EURO). This is three times the total of the first six months of 2012, highlighting such strong demand.

An exceptional economic position

Marcus Lemli, head of both Savills Germany and European investment, explains: “Germany’s exceptional economic position is increasingly reflected on the local investment market and real estate as an asset class is becoming increasingly attractive.”

Matthias Pink, associate director of research at Savills Germany, adds: “Currently the German property market, with its manageable risk, is extremely liquid and never before has such a large amount of equity been available for investments into core product.”

Germany market the strongest performer on the continent

The recent RICS Global Commercial Property Survey also shows Germany and Belgium as the only European markets to record a positive increase in both occupier and investment commercial property during Q2 2013. As Europe’s largest economy, Germany continues to shine in terms of growth and sentiment within real estate, with the Royal Institute of Chartered Surveyors (RICS) Investment Sentiment Index (ISI) also showing a growth from 18 to 22.

Simon Rubinsohn, chief economist for RICS, says: “The results of the survey show that the weak economic picture across much of Europe is continuing to be reflected in the lack of demand to occupy property space … [but] the German market continues to be the strongest performer on the continent.”

Join the party in Europe’s most enticing and reliable sector today

We at Property Frontiers have been backing Germany as an investment location for a while and our top tip is currently hotel room investment. We particularly like the four star Alpen Club in Bavaria, the most popular tourism destination in Germany. Rooms start from £47,198 and it comes with a 10 year fixed return leaseback and assured net yield averaging at 10.33%

Get in touch with us on +44 1865 202 700 to find out more about how you can join the party in Europe’s most enticing and reliable investment sector today.

Read more about the German market in our previous articles. Strong, Stable and Secure – why Germany is Leading the Field for European Property Investment and 155% increase in hotel development in the most popular country in the world – Germany

Author

Ray Withers

Ray has over 17 years’ experience in the international property market and bought his own first international property investment back in 2002. Aside from running Property Frontiers, Ray has been involved in residential, hotel, student and commercial property investment and development in both the UK and overseas and co-wrote "Where to Buy Property Abroad - An Investor's Guide". As Founder and Trustee of the Frontiers Foundation, Ray is directly involved with many of its projects to ensure they have a direct and tangible impact in individual communities across the globe. He is passionate about property, travelling, scouting out new opportunities and finding time to spend with his young family.
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