After the fall of the Berlin Wall, the German real estate market faced an obvious problem. The government decided to stimulate construction in East Germany and provided impressive tax incentives for investors who invested in construction and renovation. In fact, the government has been writing off all investors' expenses from their tax accounts for 10 years. As a result, a lot of housing was built, including for rent, the demand for secondary housing increased significantly, prices for 1990-1998 soared by 70%.
However, a significant part of the objects remained unclaimed. One of the reasons was that the residents of East Germany preferred to move to a more prosperous western part of the country, where there was work and more comfortable living conditions.
But the main thing is that by the end of the “grace period” so many houses were built that there was no one to buy it. Over the next five to six years, prices for real estate in Germany fell, eventually returning to the original values.
Since about 2004, foreign investors began to show interest in German residential real estate, not only individuals, but also large companies: houses in the center of Europe at unprecedented low prices seemed to be an excellent opportunity to earn. Nevertheless, the average value of German real estate did not soar, but grew very cautiously.
The oversupply affects the dynamics of prices in Germany (especially in the East) so far, although the volume of new residential construction is very small.
Having survived the internal crisis, the German real estate market, however, has practically avoided the impact of the global crisis. In 2009, the national average housing prices decreased by 2-3%, and in 2010 they increased by about the same amount. However, if we take into account inflation, it turns out that German real estate has been getting cheaper all the 2000s by 1-4% per year.
Statistics by city
Individual cities and regions of Germany have much more impressive indicators.
At the beginning of 2011, the Immoscout24 portal provided such IMX price index data. If in the whole country in 2010, apartments on the secondary market rose by 2.7%, on the primary market - by 5.8%, and houses - by 1.9%, then housing in Munich increased in price by as much as 12.2%, and in Berlin - by 10.5%.
In recent years, the constant leaders in the growth of prices for residential and commercial real estate in Germany are Munich, Hamburg, Frankfurt, Berlin, Dusseldorf, Stuttgart. According to Empirica, 2010 the average price of 1 sq. m. The cost of housing in Munich was about 3,700 euros, in Hamburg - 2,900, in Frankfurt - 2,700, in Cologne - 2,400, in Berlin - 2,300.
These cities also have the highest rental rates.
Rental market
Rent plays a significant role in Germany. More than half of the country's residents and more than 80% of Berliners do not own housing, but rent it. Therefore, one of the most common ways to invest in German real estate is to buy apartment houses and apartments for rent.
The rates largely depend on the number of jobs and business activity of the city.
According to Ernst & Young, the average rental rate in 2010 in Munich was 14.25 euros per 1 sq. m, in Hamburg - 12.5, in Frankfurt - 11.5, in Heidelberg - 11.25, in Dusseldorf and Stuttgart - 10.75, Berlin is on the eighth line with an average rate of 9.5 euros per 1 sq. m.
However, if we compare the price and the rate and calculate the level of rental income, then quite other, less well-known cities in Germany are in the lead. These are Duisburg and Wuppertal (North Rhine- Westphalia), where rent will bring 9.25% of the cost of the object per year, Braunschweig (Lower Saxony) - 8.75% of the cost per year, Ludenscheid (North Rhine- Westphalia) - 8.5%. In this ranking, Frankfurt ranks only 14th with 7% of the cost of the object per year, and Munich, Hamburg, Dusseldorf, Berlin are not included in the top twenty.
There are also several resort areas in Germany - these are the Baltic Sea coast, thermal resorts (Baden-Baden, Bad Kissingen), ski resorts of the Bavarian Alps, on the border with Austria (primarily Garmisch-Partenkirchen), and lakes in the same area. The interest of Russian buyers, like most foreigners, in German resort real estate is small, the greatest demand in this segment is in Baden-Baden and the surrounding area, where average housing prices are about the same as in Frankfurt.
Germany is open to buyers
Foreigners are attracted to Germany primarily by investment prospects in the real estate market, and since 2009 - the economic stability of the country. At the same time, studies say that in 2010-2011, confidence in the German real estate market only increased due to a decrease in the unemployment rate and GDP growth.
There are no restrictions on the purchase of real estate in Germany by foreigners. Non-residents can purchase residential and commercial real estate here for an individual.