Buy To Let Investment Property in Germany
Why Invest In The German Property Market?
Germany’s Property Market is currently undervalued in the region of 15% (The Economist, Jan 2010). There is great value to be had in the German real estate market at the moment.
With no deep set desire for property ownership, the German Population tend to rent their property. This leaves a gap for investors to step into. With most tenants staying many years in the same rented accommodation, the rental returns are uninterrupted.
With its central position in Europe, Germany is an important transportation hub. This is reflected in its dense and modern transportation networks. Since the age of industrialisation, the country has been a driver, innovator, and beneficiary of an ever more globalised economy. Of the world’s 500 largest stock market listed companies measured by revenue, the Fortune Global 500, 37 are headquartered in Germany.
The German Economy:
Germany is the largest European economy and the third largest in the world, placed behind the United States and Japan. According to the World Trade Organisation, Germany is also the world’s top exporter, ahead of the United States and number two in imports. Germany has annual exports of over €700bn.
In recent years the German government have been focusing on reform of the labour market. This has seen the unemployment level fall to 7.5% in 2008. Competiitiveness and productivity have benefited from the reforms. Great Internal infrastructure and transport links will allow Germany to weather the Global Recession better than most.
Although forecasts have been readjusted recently due to the current economic climate, Indicators still point to a pick up in the German economy and as this increases so will spending power and of course property prices.
German Property Outlook
German Property has shown itself to be a steady investment vehicle. Germany has not experienced the recent Property Booms we have seen here, and as a result Germany Properties has been spared the Property Price Crash which we are now experiencing.
Most of the Western European markets are experiencing the end of their property growth cycles; however Germany is at the beginning of theirs. After the years of reconstruction following re-unification Germany is now entering a new growth period. Comparing its yields to other European countries, Germany generates higher returns while at the same time giving justified reasons for continued growth. Large funds such as Goldman Sachs have invested hundreds of millions of Euros in German property.
The German property sector as a whole has seen an influx of foreign investment in the past few years. After a long period of economic stagnation, especially in the east, which kept house prices low, investors now see this as an opportunity. Overall prospects for the German market remain healthy for the foreseeable future, supported by rising demand for living space coupled with low building activity and a strong economy which has reclaimed its old strength.
