Germany has been marked as the most popular destination in Europe for overseas property investors, with Berlin, Hamburg, Frankfurt and Munich commanding four of the top five spots for 2017 investment and development prospects in the Emerging Trends in Real Estate Europe 2017 report.
Based on the opinions of almost 800 real estate professionals in Europe, the report emphasized Germany’s current status as a ‘safe haven’ for investors. Berlin held its place in the top spot for the second consecutive year, with Hamburg also maintaining its position in second as an increasingly popular solid investment spot.
Munich also held steady, occupying the fifth spot, whilst Frankfurt has seen marked improvement, rocketing 11 places to occupy the third spot, pushing Dublin down into fourth place.
Berlin scored the the highest of the five cities on all four survey categories: investment, development, prospects for rental growth, as well as prospects for capital growth. €3.9 billion has been invested in the city in the first six months of 2016, proving that despite high prices in the capital, the housing market still has strong potential for growth.
Hamburg remaining steadfast in second place is largely due to investment in transport and the development of new, high-quality waterfront urban districts, whilst Frankfurt’s extreme climb comes as part of the changing political climate in Europe. Investors are optimistic about the city’s status as a stable market, and the city has been tipped as an alternative to London amidst Brexit uncertainty.
Munich rounds off the top five, perceived as a safe bet in a risky climate. Respondents to a survey included in the report posited that purchasing property in such a city allows an investor to take on more risk without worrying about the ‘basic security of their investment.’ Although Munich is an expensive option, vacancy rates are currently just 4.8 per cent, a 14 year low, marking it out as a solid source of income.
Its success is likely fueled by Germany’s status as a stable investment opportunity following the Brexit vote which has left many investors concerned about the UK’s future, although despite this short-term uncertainty, the report found that the majority of interviewees have faith in its medium-to-long-term future as a key global city, the report says.
ULI Europe CEO Lisette van Doorn commented: ‘The fallout from the Brexit vote gives an extra boost to the already strong German real estate market. With considerable political and economic uncertainty in Europe, many real estate investors are willing to sacrifice some yield in return for lower risk. In this risk-off environment, the stability of German cities becomes even more attractive.’