As well as having the largest residential buy-to-let investment market in Europe, Germany has one of the biggest and strongest economies in the world. The unemployment rate, for example, stood at just 4.2 percent in August 2016 – the lowest since February 1981.

Another factor that makes Germany stand out is its federal make-up. Unlike the UK and France which each have one major city – London and Paris – Germany has seven chief cities, bringing more opportunities for investors.

Of these seven cities, three made the top 10 list of leading European cities for investment prospects in 2016. The capital, Berlin, took the number one spot, followed by Hamburg in second place and Munich in 10th place.

Investors are backing Berlin to thrive well beyond 2016 based on its young population, growing reputation as a technology center and land available for development, according to PwC and the Urban Land Institute.

There are several residential projects in Berlin targeting the higher end of the real estate market, but Kortmann says these should be easily absorbed because of the rising number of international buyers in the capital.

Additionally, Berlin’s public housing companies aim to build around 54,000 new residential units by 2026 to alleviate the housing shortage in the city, partly created by a bottleneck in the processing of building permit applications.

“In addition to the construction of new condominiums, investors will turn their attention to less regulated housing forms such as student residences and serviced apartments,” says Kortmann.

A report by JLL shows asking prices for condominiums in Berlin have risen at an average of almost 6 percent per half-year since the start of an upswing in 2010. Rents, meanwhile, grew by 5.5 percent in the first half of 2016, although this was largely driven by new-build apartments.

In addition, many new German properties promote good sustainability standards, which keeps costs down for renters and investors alike. “Given the attractiveness of Berlin, also as a business location, demand will remain high. Furthermore, given that most new-building activity is in the high-priced residential segment, this situation is not expected to ease,” Kortmann states.

A bright country-wide outlook

Positive trends are also to be found in Hamburg, Germany’s second-largest city. Its population soared to 1.83 million in 2015 and this figure is expected to grow by more than 100,000 by 2030, requiring homes for an additional 70,000 households, according to the Federal Statistical Office.

Since 2004, Hamburg has experienced one of the sharpest rental increases of all the rental housing markets in Germany.


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