Germany leads eurozone out of recession

Photo credit: Eisenrah

The country may not be winning many favours politically as it helps to hand out the austerity measures to some of the worst-hit eurozone members, but the property market has found lots of friends among investors thanks to its low unemployment rates and stable finances.

Indeed, it was ranked as the most attractive destination for foreign investors in an Ernst & Young report this year.

Carl Brzeski at multinational finance giant ING, comments: "Popping the corks. The German economy has staged an impressive comeback. The whole eurozone is expected to emerge from an 18-month double dip recession."

One reason for this is said to be a catch-up effort in construction, which contributed 0.3% to the growth. Another is export trade, which has always been one of Germany's strong points.

But commercial property appears to be king of Germany’s investment, with Savills reporting a 155% increase in German hotel investment alone. Indeed, Savills now predicts that total turnover in the commercial property market will hit €30 billion this year, up from €25.3 billion in 2012.

Savills says there is ongoing demand from risk-averse investors who are looking to buy assets which retain their value in economically challenging times. Around €12.5 billion was invested into commercial property during the first half of this year, a 36% rise year-on-year.

Private investors and listed property companies each accounted for €1.3 billion. Developers are also an active party, selling property worth over €2.3 billion - triple the total of the first half of 2012.

Marcus Lemli, head of both Savills Germany and European investment, explains: "Germany's exceptional economic position is increasingly reflected on the local investment market and real estate as an asset class is becoming increasingly attractive."

Matthias Pink, associate director of research at Savills Germany, adds: "Currently the German property market, with its manageable risk, is extremely liquid and never before has such a large amount of equity been available for investments into core product."

The recent RICS Global Commercial Property Survey also shows Germany and Belgium as the only European markets to record a positive increase in both occupier and investment commercial property during Q2 2013.

“The German market continues to be the strongest performer on the continent,” said Simon Rubinsohn, chief economist for RICS.

Ray Withers, Chief Executive at investment experts Property Frontiers comments: “We have been backing Germany as an investment location for some time now and our top tip is currently hotel room investment. We particularly like the 4* Alpen Club in Bavaria, the most popular tourism destination in Germany. Rooms start from £47,198 and it comes with a 10 year fixed return leaseback and assured net yield averaging at 10.33%"