Real Estate Investments: Germany Stays Attractive

According to a recent report, the German real estate market is dynamic and lucrative. Investors aren’t perfectly happy though.

Despite various restrictions, Germany's real estate market rejoices in high popularity. (Source: pexels.com)

Germany still is a worthwhile location for profitable real estate investments in 2018: That’s what 94 percent of all respondents say in the annual EY-Report „Trendbarometer Immobilien-Investmentmarkt“. Although this share declined slightly (2017: 96 percent), a majority of all respondents stick to the assessment: 42 percent consider the location attractive, 52 percent even say it is “very attractive”. A good starting position for this impression was the development of Germany’s volume of transactions: In 2017, it rose by 10.8 percent up to 72.8 billion euro.

While doing so, the “unaltered, good side conditions for investments”, “political stability” and “special economic status” are being praised – all while the location “moved into the focus of investors from Asia”. But also comparing within Europa, the country reaches high popularity: 56 percent consider Germany in this context a “very attractive”, 37 percent still an “attractive” place for investments. Highlights are the “strong position within the EU” as well as the outlook of not having radical changes in interest rates.

Immediate political developments seem to have no notable impact on the German real estate market. The amount of people that consider instability a cause of uncertainty raised from 35 percent in the previous year to 47 percent; domestic events like the previous German parliamentary elections however are not seen as influential by 86 percent. Though this is not to say there’s no wishes for the new government.

89 percent hope for stronger housing promotions, 83 percent for a deregulation of building regulations. Repealing constraints in real estate construction and trade is without a doubt the central point for investors. 79 percent wish for a cancellation of the “rent brake”, which was introduced in 2015. Almost two thirds consider the European Mortgage Credit Directive (MCD) and the Energy Saving Ordinance (EnEV) too strict (76 percent or 74 percent respectively). More ambiguous were the opinions on inhibiting share deal advantages. Just a small majority of 55 percent – probably consisting of smaller and private investors – agree on this.

The Trendbarometer Immobilien-Investmentmarkt is being released annually for eleven years now by the Ernst & Young network. The essence of this year’s study is an interview with 220 investors, that have been active on the German real estate market in recent years. Through a diverse array of interviewed companies, a representative section is being displayed: Among them are banks, real estate funds, investment companies, project developers, housing associations and private individuals.

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