Who buys real estate in Germany?
According to Colliers, in 2017 the volume of investments in commercial real estate in Germany amounted to 57.3 billion euros. It not only became a record for the last 10 years, but also exceeded the corresponding average figure for the same period by 70%.
During the first half of 2018, the number of foreigners among investors increased to 45%. Their contribution to real estate in Germany exceeded 25 billion euros.
According to a report by Colliers, in 2017 among foreign investors, most of the funds in German real estate were invested by citizens of the United States (16%), Great Britain (11%), France and China (8%). At the same time, journalists from the German edition of Zeit.de, after analyzing data from various research companies, concluded that buyers from the USA (28.6%) of the United Kingdom (13.7%), France (8.6%), Switzerland prevail in the German real estate market. (6.9%), Canada (6.3%) and South Korea (8.9%).
Experts also noted the activity of investors from Asia, the Middle East and the countries of the former USSR.
As a rule, reports of large research companies reflect the situation only with the “tip of the iceberg”, taking into account mainly the transactions of large, institutional companies, purchases of tens and hundreds of millions of euros. A significant (in quantitative terms) market segment, including transactions of private investors, remains in the shadow. Tranio experts share their observations on it.
Top 3 categories of investors
According to Sophia Bulanova, Tranio real estate manager in Germany, American and European investors are conservative – liquidity of acquired properties is especially important for them, so they choose the cities of the G7 (Berlin, Frankfurt, Munich, etc.), as well as various locations Bavaria
Studies conducted by Colliers in 2017 showed that investors from the USA became the largest group of property buyers in Germany, investing 4.2 billion euros (16% of the total investment). In the first quarter of 2018, the amount of US investment amounted to 830 million euros (18%).
Previously, American investors preferred to acquire real estate in the UK, but with the beginning of Brexit, their interests began to shift towards Germany
Previously, American investors preferred to acquire real estate in the UK, but with the beginning of Brexit, their interests began to shift to Germany. AndreyPopov /
Statistics Tranio shows that the average budget of American buyers of all types of real estate in Germany is 648.5 thousand euros. “Our practice shows that, if we talk exclusively about objects that generate income, then investors from the United States are mainly interested in hotels worth up to 3 million euros. In general, the average budget for the purchase of profitable real estate is 3-5 million euros, ”says Yulia Morozova, senior investment consultant at Tranio. According to Sophia Bulanova, Americans are often interested in “objects with potential that can be somehow improved, repaired, for example, to finish the attic and then resell property with a profit.”
However, Germany does not meet all the expectations of buyers from the United States. “At home, American investors can get a leverage, the size of which is 80% of the value of the object, in Germany it usually does not exceed 60%,” explains Sofia Bulanova. – This situation can be negatively viewed by small investors making single purchases. However, Americans working in Germany can count on more leverage. So, our American clients who live and work in Berlin can get 70–75%. They are looking for profitable residential real estate, considering the purchase of micro-apartments or a package of apartments worth up to 1.5 million euros. ”
According to Colliers, in 2017, investors from the UK took second place after the Americans with an investment of 2.9 billion euros and a market share of 11%. In Q1 2018, they bypassed them, investing 1 billion euros (23%).
From the citizens of Great Britain, Tranio often receives applications for the purchase of real estate in Frankfurt, which is largely due to the relocation of a number of financial institutions from London to this city after the beginning of Brexit. According to JLL, in the first half of 2018, Frankfurt accounted for 24% of transactions in the top 7 locations in Germany – for the first time the city overtook Berlin and Munich in terms of investment. “Customers from the UK are looking for apartments for rent in Frankfurt. They assume that because of Brekzit, companies connected with the financial market will leave London and, according to analysts, they will leave for Frankfurt. Therefore, the British plan to sell their property in London to invest in this German city, ”says Sofia Bulanova.
The British began to move to Germany more often, acquiring real estate there
The British began to move to Germany more often, acquiring real estate there chrissi /
Related to Brexit is the fact that in 2017, immigration from Great Britain to Germany increased dramatically.