German industry orders rise at strongest pace in 2-1/2 years
Feb 6 Higher demand for capital goods at home and ... read more >
6 Feb 17
Germany ranked No.1 in the Best Countries report at the annual World Economic Forum in Davos, January, 2016
Residential property is the key growth area in Germany right now and there’s never been a better time to invest. Property prices are still relatively low but are rising steadily, rents are on the increase at predictable and realistic rates and bank finance conditions are at their best. These main factors combined with a strong rental culture averaging 54% across Germany, gives an opportunity for our overseas investors to take full advantage and create wealth from the residential property market in Germany
Strong rental culture with high demand for property. Rental yields from 7-9%.
One of the lowest in Europe but steadily rising. Tenanted multi-family homes from €800/sqm.
Interest rates are low and can be fixed for 10 years.
Prices of residential and commercial real estate in Germany increased ... read more >
Prices of residential and commercial real estate in Germany increased at the same rate last year. While the vdp Property Price Index for residential property rose by 6.6 ... read more >
Germans are known as nation of renters, with the highest proportion of rented property in Europe averaging 54%.
Over half the German population live in rented accommodation and in Berlin this leaps to an average of 84%. Europe’s biggest economy has the lowest rate of home ownership in the European Union, at just 46 percent. With generous social security policies, secure pensions and a propensity to save rather than speculate, many Germans are content to rent throughout their lives and typically stay in a rented property for a decade or longer. One of the advantages of the residential market that attracts investors is that tenants pay for all the running costs of a building such as insurance, snow clearance, and other service charges. The only costs sustained by the owner are building maintenance and a property management fee. Rents in Germany are widely expected to increase significantly over the next 10 years. The overall market trend shows a real buying opportunity with strong fundamentals supporting the rise in rental yields.
Compared with other European countries, purchase prices for residential property in Germany are still considerably low but rising at a stable rate which attracts a lot of interest from institutional & private investors. Affordable housing stock in Germany has been in short supply since a rash of privatisations in the early 2000s and local governments are under pressure to increase funding in order to help to cope with the growing need. Latest estimates shows the need for 350,000 apartments per year while only 245,000 were built in 2014. Tenants’ association DMB said Germany, which has roughly 40 million homes, currently lacks 800,000 flats. Latest studies show that there is no bubble in the market and the increase is a result of changing economic conditions which create growth in personal income, therefore attracting overseas workers and international companies to Germany. As a result, demand for property will remain higher than the available supply creating continuous stable growth in rental prices as well as properties and continuous interest from overseas investors.
Real estate in Germany still provides a “hard yield in a low-yielding world”
As with debt, investors are still seeking safety first and returns second, and low interest rates are helping to keep the all-in cost of borrowing at affordable levels. If we look at the details in the graph displayed, specifically about mortgage rates in Germany, it is remarkable to see how these interest rates slowly decreased during the last ten years. As the economy kept growing it became easier for developers to apply for mortgages for real estate projects from German banks than ever before. In 2015 Germany once again affirmed its AAA rating from Fitch Ratings giving a clear indication that its government had beaten its own budget targets and positioned Europe’s largest economy on the path to growth. All these aspects are providing a positive impact on the overall German economy during times when most other EU countries are struggling to get back on track after a global market downturn.
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– Investix Team