Germany: a good time to buy - 24th November 2008

When it comes to seeking a property market in which to invest, many have overlooked Germany in recent years, thinking that it’s been a country with an underperforming economy, various post-reunification problems and little growth in its property market. Like several major economies, the country is now in recession, but it could still be an attractive place to invest in property.

Whilst home ownership is a mass activity in the UK, many people in continental countries tend to rent a lot more and this is particularly true of Germany, where only 42 per cent of residents are homeowners, whereas 70 per cent of Britons own their own homes. Recession or not, therefore, Germany has a very large rental market. 

Commenting on the opportunities this affords to investors, Paul Collins, property editor BuyAssociation.co.uk, says: “The market in the cities is particularly good, especially if you are looking to buy-to-let because there is a very high proportion of people who rent in Germany as opposed to buy domestically.” He suggests that Berlin is a particularly good market in this respect, since there are parts of the capital in which up to 85 per cent of people rent.

There are many good opportunities available from developers in Germany at present, meaning that now is a good time to invest if the means are available.

For those who do wish to invest in Germany, there are some positive indicators to show this may be a good move. For instance, the IPD German Property Index showed that last year, the average return for all property investment was 4.5 per cent, up from 1.3 per cent in 2006. Residential did better than average at six per cent, while the capital growth level was 2.5 per cent, higher than any other class of property.

Simon Conn, Sales and Marketing Director at Conti Financial Services, says:
“Germany is one of the countries we’ve had an increased number of enquiries about over the last year, whilst the other more established European destinations such as Cyprus, Portugal and Italy are seeing constant or slightly diminishing levels of interest.”

“Germany offers investors an ideal opportunity to benefit from low prices and intensive building projects in Berlin and other cities, following the reunification of east and west. Due to a low proportion of owner-occupiers, its property market also offers very attractive long-term rental streams from stable tenants with full-time employment.

“When it comes to Germany, we also receive more enquiries from people looking to acquire a block of flats or to re-finance a block of flats than any other location. It’s rarely just a holiday home they’re after.”