May 22, 2019

German property market overtakes UK as most active European commercial property market

German property market

Property News: The German property market is booming after overtaking the UK as the most active commercial property market in Europe in 2016. The sum total of transactions was €59 billion!

Just over 60% of investment transactions in 2016 involved German buyers, which highlights the huge attraction coming from Germany. Competitive pricing started to price out overseas investors but occupier demand has been characterised as strong. Berlin and Munich have positive rental growth and rents in Frankfurt are also at a high level, which means in general, the investment outlook and forecast have been and will continue to prosper.

Despite investment amounts declining by 14% every year, Knight Frank says that Germany was established as Europe’s “safe haven”. They have a powerful economy that is robust in many different ways: their political stance is strong and they demonstrate degrees of stability amongst investors. Their culture is diverse and this is evident especially amid the property markets.

Approximately 55% of the total transaction volume was spread over seven prominent cities in 2016: Berlin, Frankfurt, Hamburg, Munich, Cologne, Dusseldorf and Stuttgart. These unprecedented levels of investment positive affirm an optimistic future for the German property market.

Berlin is profoundly known as a creative hub for Germany and this has led to the widespread interest among property investors. Their compelling strategies to attract tourism are undoubtedly working.

Equally, Frankfurt is the host to over 230 national and international banking institutions. During 2016, the city saw the highest level of leasing activity since the global financial crisis in 2007. Around €4.7 billion was invested in Frankfurt’s commercial property market last year and the office sector enticed €3.3 billion in capital. Again, these figures are very strong and promising for the German property market.

Munich stands as Germany’s second largest employment hub and is the second most popular German destinations for investors. Overspills of 30,000 jobs are established every year, which leads to an increasing demand for more office space. In 2016, 780,000 square meters of office space was let making this figure one of the highest totals ever recorded.

A spokesperson from Knight Frank said: “Germany is one of the premier advanced economies in which to invest, and it emerged as the leading destination for real estate capital in Europe in 2016.

“The economic outlook remains strong, as it continues to lead the recovery in mainland Europe, although with a national election in September some investors may adopt a more cautious stance in the short term.”

All cities in Germany have distinct characteristics that make them stand out in their very own unique way. This is a reason why so many property investors are attracted to the country’s variety of properties, as many places offer something different. Having this quality means that investors have an opportunity to be selective and content by the broad diversity of the German property market.

Written by Gemma Smith

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