Property investment experts are predicting another strong year for German property investment this year, as it continues to be perceived as a safe-harbour in the Euro-sovereign debt storm.
The average prediction is for investment volumes of around 20 billion Euros this year, but DTZ has said it could be as high as 25 billion Euros. According to Jones Lang La Salle investment volumes finished 2011 at 23.5 billion Euros, marking a 22% increase on the 2010 figure. So if the higher end of the DTZ range is correct that would mean another 8% growth racked up for the Deutschland safe-haven.
JLLS also believes investment volumes will carry about the same this year as last.
"This transaction volume could also be maintained in 2012. At present, we are in no way expecting an investment 'ice age'," said Helge Scheunemann, head of research at JLL Germany.
According to JLLS safe-haven investors, those from outside Germany were responsible for one third of all investment, which is way less than the 53% foreign investment recorded in the UK in December and January according to Property EU. That is because, according to JLLS Germany is remaining largely immune from the mass-hysteria being seen in some Eurozone countries about just how badly things could all go. In fact, according to the recent leading Ifo-index, German businesses are generally confident about the future, and German consumers are still spending.
As with most other European markets, reports indicate that investors are heavily focussed on core assets, which carry the lowest perceived risk. This gives the German investment front another aspect of safe-havenism according to DTZ. The firm believes that, despite several open ended funds emptying their stock onto the market, that the supply of core assets will remain limited, while banks offloading financially troubled properties will increase the supply of "different quality assets".
But not everyone believes that Germany is all the safe-haven it is cracked up to be. In fact, PropertyEU is to hold an investment briefing event on whether Germany is really a safe-haven or a new bubble being formed. It's funny how no one ever worried about bubbles while the world was inflating into a giant one; we are all wise after the fact. But Germany, a bubble? Investment volumes are growing, but there are no reports of excessive price growth, and the economy remains buoyant enough to support strong rental growth across all sectors.
- Friday 17 February 2012