Property in Germany
Over the next 5-10 years German residential property
will, due to a combination of internal and external factors,
see significant price appreciation, thereby catching up with
other European markets.
With rental yields significantly above the current cost
of borrowing, and the German economy already recovering,
there is a limited window of opportunity to take advantage
of these beneficial market conditions:
- Current property prices in some cities are among the
lowest in Europe, yet Germany is still one of the
wealthiest economies per capita basis
- The cost of a typical apartment in an average city
centre location in Berlin is around €60,000,
significantly lower that the €70-100,000 being asked for
similar off-plan apartments in Eastern Europe cities
such as Warsaw and Budapest
- New build is constrained. Residential prices are
currently around £800 per sqm, approximately half of the
current cost of construction, and the existing housing
stock is shrinking as residential blocks in old East
German sectors of the city are demolished.
- The relative affordability of German residential
property when compared to the rest of Europe, means that
the economy has the scope to support significant price
appreciation
- Germany is the only Western market which has seen
yields increase, rising by 60% since 1980. More
significantly, this has occurred despite mortgage
interest rates halving during this period
- Supply and demand will return the market back to
equilibrium, and with construction rates currently
running well below the replacement rate, further
declines in property prices and rent levels are unlikely
- The biggest impact on prices in the next one to two
years will be as a result of increasing interest from
overseas buyers
- Over the last two years there has been a significant
increase in the purchase of residential portfolios by
international funds. Major transactions by international
know funds include Fortress, Morgan Stanley and Goldman
Sachs
Click here for
specific information regarding property, real estate and developments in Germany
|
