Germany Property Investment News

Confidence in German economy remains high

Despite the worldwide economic slowdown, Germany’s economy this year has shown solid growth comfortably above the EU average, and experts predict that this is likely to continue. Investors in Germany property will note that prices have stayed generally stable, with some rise in Berlin, and an improvement in initial net yield rates in small- and medium-sized cities.

During the first quarter of 2008, gross domestic product (GDP) in Germany rose by 1.5% on the same period of the last year according to figures from the statistics office – this represents the largest rise in 12 years. The Ifo economic institute also announced earlier this month that in its monthly business climate index, confidence in German business was found to have risen from 102.4 points in April to 103.5 in May, when analysts had expected a drop.

While some markets are seeing a drop in property prices, in German residential and commercial markets prices are generally stable. Some increases have been seen in the popular investment destination of Berlin, according to the Real Estate Price Indicator from Estavis. From an investment perspective there are also opportunities to be had in some of the other cities. Chairman of the board of Estavis AG, Rainer Schorr, said: “Particularly in smaller and medium-sized cities, initial net yield rates for residential and commercial buildings have perked up. This has made investments in these locations even more attractive than they already are.”

Growth in Germany’s domestic markets is thought to be driving the country’s economic growth. Personal consumption in Germany rose during the first quarter of 2008 after several poor years, and unemployment dropped by a significant 1.8% from the previous year. This, paired with the rising salaries in some industries, will increase the buying power of the domestic population which in turn will fuel consumption further.