Property Investment In Germany Looks Positive
Research recently released by leading real estate services and money management firm, Jones Lang LaSalle, at this month’s Expo Real 2007 in Munich, suggests that significant worries over the state of Germany’s property market may have been premature, with significant action taking place in Germany’s secondary cities as well as in Berlin, which has seen a turnaround in its property market in the past few months.
The only member of the EU to see significant losses in property values over the past year, Germany has seen a widespread prices slump of 5%, a significant worry for equity holders and investors in the country, who have noted values in other territory member states rising by as much as 18% in the case of Belgium. The firm’s study indicates that Germans were busy selling property - an estimated €59billion worth - in 2006, and that their cross border purchases have increased by 96% since 2006. France was the most popular country for German buyers, followed by the USA, Luxembourg, the UK and the Netherlands, with Australia, Singapore and Latin America also figuring highly on the German acquisitions list.
And while Germans were only too happy to spend money outside the domestic market, it seems that investors’ love of the country has been reignited, if nothing else, by reports of fantastic bargains to be had in the sluggish market. As a result, certain groups of investors have been cashing in on the situation, with Nordic buyers in particular expected to spend around €4billion on German property in 2007, almost double the amount invested in 2006. Norwegians are said to be buying anything going, while the Danes prefer to focus on small-scale residential investments. Swedish investors are mainly interested in residential properties and nursing homes.
Trend trackers are noting that foreign investors are happily exploring the options available to them in cities other than the traditional investment homes of Frankfurt and Berlin, with Hamburg, Munich, Düsseldorf, Cologne and Stuttgart catching their eyes. That said, Berlin’s appeal remains undiminished and Jones Lang LaSalle keenly predicts rent hikes within the next 18 months and a clear increase in purchase prices.
Tracking lettings and purchase prices in Berlin’s twelve districts, the firm expects prices to rise for new lettings in six out of Berlin’s twelve districts, and a stable rent level in five districts. Ten districts have also seen their mean sales prices looking up, thanks to a significant drop in Berlin’s unemployment rate, which has resulted in a rise in the number of households as well as an increased demand for more and larger apartments, with an estimated 230,000 apartments needing to be built within the next seven years. And it is not just employee apartments that are needed: highest demand is for family homes on the southern perimeter of Berlin as well as in downtown areas. Price increases are expected in Charlottenburg-Wilmersdorf, Friedrichshain-Kreuzberg, with the biggest increase in purchase prices per square metre compared to last year in Pankow and Tempelhof-Schöneberg.
