06/17/2008 - Positive outlook: The situation of the real estate market in Germany is promising
In 2007, more money was invested into real estate throughout Germany than ever before. In spite of the US real estate crisis, turnover was approximately 59.4 billion Euro and thus approximately 20% higher than in the year before, as can be seen from a survey from the economic research and forecast institute Feri Rating & Research AG. Commercial real estate has the major share: Alone two of three investors opted for office buildings. Experts see the reason for the record sales in the increasing activity of project developers. The volume for development properties more than doubled compared to 2006. As a result, Germany has a leading position compared to other European countries. In total Europe in return, investment decreased by six percent.
For investors, Germany continues to be very attractive as investment market for real estate. After the real estate depression determined by declining lease prices and high vacancies from 2001 to 2004 even at top locations, the German real estate market has been experiencing a boost since 2005, as says the survey’s result. One of the reasons is a lower activity in new buildings: The number of building permits for residential properties decreased by one fourth from 2006 to 2007. This causes a higher demand for residential space and interested parties are willing to pay higher prices. The situation at the office building real estate market is similar. According to experts, this market will only experience an increase in spaces within the next years. As a result, there are increasing lease turnovers in the economic centers that make an exposure interesting.
The outlook for investors in growth centers is particularly positive. Experts say, the development of purchase and lease prices for residential properties will be very favorable. Even the residential market in East Germany will become more profitable: In the new Länder, there are more and more “islands” coming up with population growth and increasing prosperity, beginning to catch up with the German trend. Even the real estate market for retail space benefits from the growth in the German economic centers.
