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Germany – A Time to Invest?

August 11, 2008Article by Ray Withers

Various markets in Germany such as Berlin, Hamburg and Leipzig are being assessed by Property Frontiers’ Sourcing & Legal Diligence departments. We have found that Germany actually proves to be one of the most challenging countries for the real estate investor. With low ownership rates (only 15% own property in Berlin and around 40% nationally), low yields compressed to as little as 2.5% in some regions, and mortgage acquisition extremely difficult for non-resident foreign investors, the investment justification is not quite as transparent as one would hope.

Although the economy is now going through some extraordinary alterations due to the latest government, national confidence in acquiring mortgages and in owning real estate is very low and therefore produces an “exit strategy concern”.

With the general economy growing relatively slowly and low levels of foreign direct investment, wages are not increasing rapidly and therefore the ability for German nationals to pay higher rents or to take on mortgages in the future is also very questionable. With average tenancy contracts around 7 years, and rent rises capped at 20% every 3 years, yield compression is a further worry for the investor market.

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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