German Real Estate Market

The Knight Frank Global Residential Cities Index (July 2018 report) claims that residential property price in European cities continues to increase. A double digital growth has been reported in European residential home prices, and the highest was in Berlin (i.e. 14.9 per cent).

In 2017, the commercial property yields were up to 3.86 per cent, with the highest movement registered in cities - Lisbon, Amsterdam, Helsinki, Frankfurt and Berlin. Budapest is one of the growing cities, where growth was more than 15 per cent (as per the National Bank of Hungary and RICS data). 

The housing markets were slow in China, Australia and New Zealand; in contrast, Hong Kong was one of the cities that reported the highest growth in Asia. At least 10 Canadian cities registered two figured growth, and Seattle was the fastest expanding in the US market. However, on the Residential Prices Index of Global Cities, London was ranked 124th (107th in 2017). The y-o-y change for London was 3 per cent. 

In Europe, investors seek places where major technological advancement and infrastructure-building trends are planned. Employment, quality of life and education are other priorities. Based on hundred-and-thirty European cities, Savills’ Most Dynamic City index 2018 placed London, Cambridge and Oxford in the top places, and at least 6 UK cities have been named in the top forty list.

Germany and Switzerland are placed at no. 2 position. Dublin’s development in dockland, the presence of technology companies and the country’s economic stability boosted investors’ confidence in the city. 

Germany vs the UK

The UK offer many favoured places to foreign investors in real estate, but prices are high, and growth is flattening. Additionally, the investors are waiting for the economy and political situation to stabilise. However, some experts believe the property has been valued low by some companies, though there is much more scope for growth in the UK business properties. 

Alternatively, real estate markets are booming in Germany and France; consequently, some of the leading cities in these countries accounted for up to 63 per cent of the property transactions in 2017. On the other hand, one of the major changes in 2017 was the fall in the property market in the Netherlands, Czech Republic, and Romania. 

The property investment value in top EU cities was US$60.2 billion in 2017. It was the sixth year when property rates rose in Germany. The German economy appears sustainable and bolstered in the European Union, and some believe the Brexit negotiation and the policies implemented by the European Central Bank will be favourable for Germany.

There has been an inflow of Asian money into the German property market, and Asian investors funded up to US$6.6 billion in acquiring real estate properties in Germany in 2017.

Most of the acquisitions were made by South Korean, Singaporean and Chinese buyers. As a result, Germany’s land prices are increasing and appear attractive from a long-term perspective, even though the growth rate in Germany’s residential and commercial property market is stagnating.  

For the latest information on property investment in the EU, London and Berlin, click Hamilton International Estates (www.hamiltoninternationalestates.com).