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Property Investment in Germany 2008

The German property market has experienced an extremely successful year with significant growth throughout 2006.

Tourist numbers were strong during 2006 with the total number of overnight stays by international visitors up by 9.8% over the entire year compared with the previous year. Predictions of a full-year growth of 3.5% for the tourism market have been made by the German Tour Operator and Travel Agents Association (DRV), and the results of the agencies surveyed by the FVW support the bright outlook giving an expected average growth of 4.6% for the year. If these predictions are achieved, the German tour operating industry would finally return to pre 9/11 levels exceeding the record revenue figures seen in 2001 of €20.1 billion.

Equally positive reports are emerging regarding the strength of the German economy. According to The Times, the German economy is yet again the strongest out of three biggest Eurozone economies. The expectation that current economic growth is sustainable is supported by the International Monetary Fund (IMF), who stated that the government economic reforms are beginning to come to fruition with German companies more competitive, and renewed interest from foreign investment. Total FDI into Germany during 2006 reached $35.6 million, according to UNCTAD.

"The German property market has experienced an extremely successful year with significant growth throughout 2006."

There is a consensus that the property market in Germany holds significant potential and is on the verge of change. One area of interest is the potential rental yields that can be earned in certain areas; Berlin being a prime example, has seen rental yields from 4% to 6% for individual apartments and these climb to as high as 5% to 9% for entire apartment blocks.

Knight Frank Residential Research has offered some surprising advice on where to invest next in overseas property markets, suggesting it may be a rewarding strategy to look at countries other than those located at the top of the overseas property market table. Analysing those countries located at the bottom to see where the next upturn may be could provide some interesting opportunities, proposing investor attention to some of the German sub-markets.

The future for Germany's property market looks bright with a marked move away from the trend of the past 15 years. General market recovery looks set to continue and the liberalisation of mortgage institutions providing new products for clients, who would not have been able to borrow until now, strongly indicates a renewed stimulation in the property market is just around the corner.