Residential Property Investment in Germany Tipped to Grow

The residential market in Germany is predicted to go from strength to strength this year. In a new report, investment giant Savills predict that investment in residential property in Germany will grow from the 4.8 billion Euros...

The residential market in Germany is predicted to go from strength to strength this year. In a new report, investment giant Savills predict that investment in residential property in Germany will grow from the 4.8 billion Euros invested last year, to over 6 billion this year.

According to the report almost 3 billion Euros were invested in residential property in Germany in the first quarter, which is about 60% of the 2011 total. Some 56,000 units were bought in Q1 across 35 deals, including the sale of the DKB Immobilien package to TAG for EUR 960 mln and LBBW's portfolio of 21,000 units for EUR 1.4 bn.

'For the first time since 2007 residential packages of 10,000 units and more are being sold again to a significant extent. 2012 is set to be the year for big deals,' said Karsten Nemecek, Savills' managing director of Corporate Finance.

Perhaps the most surprising thing about the report is its showing that 78% of the packages were bought by Germans, whereas the last time such big deals were common foreigners were the primary buyers of big packages.

It is ironic that Germany should be experiencing such demand during a global downturn, as during the boom it was a market overlooked in favour of bigger yields. Now that investors have realised 8% of nothing is still nothing destinations like Germany, where yields are much lower (2% - 4%) but much safer, are becoming much more popular.

- Wednesday 18 April 2012

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