MUNICH—When it comes to fears of financial instability, most wealthy Germans are eager to put away their money safely to avoid losses.
One of the most popular investment possibilities is the nation’s hot real estate market.
“German brick is the new dollar” is how the experts describe the onslaught of investors on the German property market.
The vacancy rate for offices in Germany has been decreasing, rent prices are rising, and interest rates for top-priced properties are high compared to 10-year government bonds.
“I’m sure that in Germany the next two or three good years will be good for the real estate industry,” saidThomas Beyerle, property analyst working at IVG Bonner. “Even if the euro crisis escalates further, it would hardly shake the value of German property. It’s already been priced and will not likely be weakened. German property remains an attractive investment.”
“With real estate you have more security than government bonds.” Experience plays a big role, especially when dealing with long-term decisions. “The decision makers in the families are often 70 and 80 years old who have experienced the currency reform after the second world war and the inflation of 1923 known from stories,” commented Beyerle.
“One problem, could be, however, if too many people jump on the train,” said Beyerle. “But even in that case, there is too little evidence of such [a] trend happening.”
“Core properties are still not too expensive,” confirms Michael Ruhl, the CEO of Deutsche Fonds Holding DFH in a report. “It would take us some time before we reach the price level of 2006.”
In the past 12 months, prices have remained stable. There were only some exaggerations in residential real estate, and most experts wouldn’t call the current boom a bubble yet.
“This product has been shunned by investors for a long time. But now suddenly people start purchasing residential real estate due to fear of economic instability and of a possible devaluation. All you need to do is hang a construction sign and you already see the buyer.”
Not only are the wealthy buying properties, but also lots of non-German investors have invested heavily in the German property market. For example, many Italians and Greeks are purchasing South German properties, as they are eager to escape their almost bankrupt economies and put money in the German market, which is considered a safe haven in Europe.