For investors wanting to find a relatively low-risk safe haven for buying property overseas, Germany remains an attractive nation. As the largest European economy, the country has continued to hold up its property prices since the global recession began in 2008. This not only reflects the financial strength achieved by Germany, but shows that there is a strong appetite for property investment too. There is also a strong sense that an increasing number of people are moving from rural locations to the city, requiring housing as a result. Combined with the influx of migrants during recent months, demand for property is expected to remain high.
Over the past few years, investors have taken advantage of the real estate situation in Germany and have bought many properties. According to Jones Lang LaSalle, the total transactional volume experienced during 2015 rose to almost €55bn. This level exceeded that from 2007’s historical high, a time just before the financial crisis hit the world. Some of the major players in achieving this volume were international investors, who played a key role and ended up with around 50 per cent of the market share, a figure which shows just how voracious the appetite for German real estate from foreign markets is.
Property investment in Germany mainly focuses on key commercial areas such as Munich, Frankfurt am Main, Berlin, Cologne, Hamburg, Stuttgart and Dusseldorf. These areas remain the focus of those wanting high value commercial spaces, and as a result, are popular for residential investment too. However, secondary cities are also noting increased interest. For example, the real estate boom is benefiting places like Hanover, Leipzig, Essen and Bremen. Overall, transactional volumes are on the rise. This is helped by the fact that both lenders and investors are spreading their initial interests into new areas, not only buying core properties, but also specific lots like manufacturing sites, logistic hubs and hotel and leisure complexes. As a result, sustainable growth is not only expected from investors, but is also exactly what they are getting.
There are many opportunities for keen investors to make money too by both repositioning and refurbishing properties. Germany has a sufficient number of locations to make this possible for a wide array of overseas investors, regardless of which target market they are interested in. For larger loans, investors can look to consortiums made of insurers and Germany lenders – companies able to break large loans into more manageable and digestible levels.
In terms of financing for smaller real estate properties, Germany has also become more varied in the number of options available. For example, in addition to the traditional mortgage loans, the market has developed to offer corporate bonds and IPOs.
For any foreign investor wanting to buy property that has a low risk, Germany should be high on the list for locations within Europe. Cities remain a popular location as individuals from rural retreats more to more urban areas and, as a result, require housing, whether they are buying or renting. As such, both the buy-to-let and resale markets remain strong in many German regions.