October 15, 2019

Real Estate Market in Germany

real estate market in germany

The real estate market in Germany used to have a reputation for being a little boring in the past as it has fewer participants who are buying. Germany real estate is also known for its secure financing, precise inspection, and steady growth.

Recently, cases of economic turmoil and political problems in various countries of Europe and across the globe and Germany’s transparency and stability have contributed to the increased belief in the real estate market in Germany. Today, Germany is viewed as the best place that offers real estate investors in Europe convenience and peace of mind. According to Timo Tschammler, Chief Executive Office of JLL, Germany, he said that the robust economy and a healthy political structure were the principal factors that made more individuals believe in the prospects of real estate and made them invest in the industry.

It is on record that Germany has been a beneficiary of the economic volatility and social inequality over the past few years. In recent times, Germany has witnessed an increased rise of populism in the mainstream politics and the incident of Brexit which is highly controversial.

INFLUX OF FUNDS INTO GERMANY

More individuals are having definite opinions about the real estate market in Germany, and this has significantly enhanced its fortune which has brought more funds into the economy. In the first quarter of 2017, the real estate market in Germany had transactions valued at 12.6 billion Euros which still maintain the record as the highest first quarter volume.

Blackstone, a private-equity group, bought OfficeFirst, an entity which retains the ownership of close to hundred properties in various German cities for 3.3 billion Euros at the end of the year 2016. Moreover, Rockspring Investments bought the Coca-Cola German headquarters in Berlin for a whopping sum valued to be a little above €59 million in March 2017.

It is not surprising that the real estate market is gaining momentum steadily. In 2017, it was observed that the office properties in Germany turned out to be more expensive than the high street retail real estate for the first time in the history of German’s real estate industry. The logistics real estate has improved significantly and offered around five percent ROI. Berlin is increasingly becoming a business hub for investors who want to buy residential homes.

NO CHANGE ON THE HORIZON

Tschammler stated that more investments are coming into the Germany’s real estate because of the stability of future prospects and not entirely based on the present conditions that Germany is safe for investments and this has given the Germany real estate market a competitive edge over other markets in Europe. For instance, investors lost their trust in the UK real estate market as a result of the Brexit vote. In 2015, the transaction volumes of the UK real estate was 80% higher than the amount done in the German’s real estate, but it has been reduced to just a meager five percent today.

It is also crucial to understand that there are factors that could have adverse effects on this boom. These factors are impacts of market ripples in countries like United Kingdom, France, and the United States, pronouncements of the European Central Bank on monetary policy and the forthcoming elections in Germany. Tschammler also stressed that increasing property prices in the residential markets remain a challenge in a central city like Munich. He maintained that investors should be hopeful as there are countless reasons to stay enthusiastic. He observed that the price spiral would continue to trend as long as we have investors who are interested in buying properties and competitive interest rates.

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