Investing in real estate in Germany

Investing in real estate in Germany can be a promising venture. Here are some key points to consider:

1. Market Overview: Germany is the most populated country in Europe, making it one of the largest players in the real estate market¹. Investments in the residential real estate market alone were close to 25 billion euros between September 2020 and September 2021¹. However, there has been a fundamental reluctance among investors to buy and sell real estate in the second quarter of 2023².
2. Home Ownership: Germany’s home ownership rate is a little over 50 percent, which is one of the lowest in Europe¹. As a result, renting is very common and more than half of Germans live in rental apartments¹.
3. Investment Trends: The €14.9 billion currently in the statistics for the first half of the year roughly corresponds to the 2012 result². Nonetheless, it is 53 percent below the long-term average and 59 percent lower compared to the same period last year².
4. Future Outlook: The rapid rise in interest rates and banks’ reluctance to lend have barely narrowed the general ask-bid gap so far². However, capital pressure on sellers is steadily increasing due to high operating and refinancing costs².
5. REITs: Real Estate Investment Trusts (REITs) are another way to invest in real estate in Germany³.

Before making any investment decisions, it’s important to do thorough research and consider getting advice from a financial advisor or real estate expert.

Advantages

• Stable market: The German real estate market is one of the most stable in Europe. Prices have been rising steadily for many years, and there is no sign of this trend slowing down anytime soon.
• High demand: There is a high demand for housing in Germany, due to the country’s growing population and strong economy. This means that it is relatively easy to find tenants for your properties, and you can expect to earn a good rental yield.
• Favorable tax regime: Germany has a relatively favorable tax regime for real estate investors. For example, there is no capital gains tax on the sale of real estate that has been held for more than ten years.
• Government support: The German government is supportive of the real estate sector and offers a number of financial incentives to investors. For example, there are subsidies available for energy-efficient renovations and new construction.

Challenges

• High prices: Property prices in Germany are relatively high, especially in major cities like Berlin, Munich, and Frankfurt. This can make it difficult to get started in the market.
• Complex legal system: The German legal system can be complex and time-consuming to navigate. It is important to hire a qualified lawyer to help you with the purchase and sale of property.
• Language barrier: German is the official language of Germany, so it is important to have a good understanding of the language before investing in real estate.