If you have overseas properties to sell in Germany, you are probably aware of the peculiarities of the German real estate market. For instance, one of the biggest ironies in the real estate business is that while Germans are among the richest people on the planet, most of them cannot be bothered to buy a house of their own.
The homeownership rate in Germany is among the lowest in the developed world, at just 43%. If you want a quick comparison, the homeownership rate in Spain is 80%, but unemployment hovers around 27%. In Germany, unemployment is just 5%.
So who buys properties in Germany? Rich, high net worth investors from abroad, especially from non-European Union nations, such as China, Russia, United States and the Middle Eastern region. The UK has been the top dog in Europe when it comes to major real estate deals, but Germany is catching up and fast at that.
In fact, what is clear about Europe is that some countries are doing well and others, not so well. As Liam Bailey, Global Head of Residential Research at Knight Frank says, “Europe is the most mixed of all the world regions in terms of [real estate] performance. Some areas are doing really well while others are much slower.”
Germany, as Mr. Bailey says is one of the better performing nations in Europe: “European investors, particularly those from Southern Europe, are still drawn to London, but are also turning to Germany: if you are looking for a safe haven in the event of a Eurozone dissolution, London and Germany play a similar role. A lot of money is flowing into the German market and we had not seen this historically.”
But why this great rush to Germany all of a sudden? It has been clear to any observer of global economics and politics, that while countries like Greece have landed themselves in a mess, and as other countries such as Portugal and Spain struggle to get going, Germany powers on, as one of the best performing economies in the world. Germany has only got stronger over the last couple of years as the rest of Europe has diminished in capacity and economic productivity.
And this is something sophisticated investors really appreciate. Buying property is a major decision and it is clear that Germany is one of the safest countries in the world to make an investment – the others being, the United States, the UK and quite possibly, France and Australia. Germany is looking very attractive indeed to foreign investors.
What’s also important is that as many major companies have their European headquarters in Berlin or in other German cities, most rich overseas buyers either work in Germany already or are considering moving to the country in the near future.
This is especially true when it comes to Russian entrepreneurs. As Liam Bailey of Knight Frank says, “A lot of Russian buyers are actually affluent entrepreneurs, rather than super-rich oligarchs. They feel that they can’t really grow their business in Russia any further so are looking at London or Berlin as a possible base, and weighing it against maybe New York or Los Angeles.”
It’s no surprise then that luxury real estate prices in Germany have grown by 9% over the last year. Residential property has grown I value as well. There has been a 9% increase in property prices in Munich and 8% in Frankfurt. In fact, today, German cities compete head on against London for foreign investment.
German cities are doing way better than Paris, for example, and compete directly with other places that are doing well in Europe such as like Dublin, Madrid and Barcelona.
If you are looking to sell property in Germany this year, be sure to hire the top UK estate agents to do the marketing for you. This is important as your UK estate agents need to have extensive experience of selling overseas properties to rich overseas investors.