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Strong, Stable and Secure – why Germany is Leading the Field for European Property Investment
July 26, 2013Article by Ray Withers
With a stable economy, strong growth and low unemployment rate, Germany’s attractions to investors are clear for all to see. The result is the increasing development of both the residential and commercial property markets, as foreign investors look to turn the most powerful economy in Europe to their advantage.
World’s second largest exporter
The industrial powerhouse that is modern-day Germany continues to go from strength to strength. As the world’s second largest exporter, with low levels of private debt and a stable employment rate, Germany has weathered the global recession admirably. Chancellor Merkel’s strict austerity measures have ensured its continuing prosperity while all around it countries have sunk deeper and deeper into recession.
Property market leading the way
With foreign investors recognising Germany as a safe and dependable investment destination, the residential and commercial property markets are booming. The overall house price index has risen 3.1% (1.94% in real terms) in the year to April 2013 according to figures from Europace, while investment in residential property rose by an impressive 84% in 2012, to €11.25bn, according to a CBRE report which compared the market with the previous year’s data.
Commercial property’s turn to shine
While residential property investment is booming, commercial property is fast catching up. Based on CBRE figures, transaction volumes rose to €6.7bn in the first quarter (a year on year increase of 32%). Yields of between 4.38% and 6.5%, along with Germany’s strong levels of wealth and its protection from global economic woes, were key reasons behind the increase. Foreign investment in German real estate has risen in tandem, with Savills Germany reporting that international investors accounted for fully half of its transaction volume in 2012.
Particularly popular with foreign investors is the blossoming hotel and lodgings sector. Savills Germany reported a massive 155% increase in German hotel investment in quarter one 2013, compared with the same period in 2012.
Property Frontiers have noted a similar trend, with CEO Ray Withers stating: “German hotel investments are such an exciting market for investors right now. The stability of the German economy, combined with low entry points and attractive yields, make this one of Europe’s most enticing and reliable sectors in which to invest.”
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