
Real Estate Investment in Germany
Real estate is an important cornerstone in each robust and profitable investment strategy, as it comes with benefits no investor can afford to ignore – particularly in the current market environment.
With interest rates now getting constantly outstripped by inflation, classic safe investments like government bonds often produce negative yields. In contrast to this, investing in real estate – especially in countries like Germany – generally makes for both a secure and profitable investment:
- Inherent Value: Investing into real estate is investing into tangible assets. This provides much greater security compared to other investment types.
- Real estate is timeless: As the world population is projected to grow by 20-25% in the next 30 years alone1, the demand for residential property is likely to see a further increase in the foreseeable future.
- Double chance for profit: High demand in Germany is expected to result in continuous price increases for both residential property and rent levels – especially in urban areas where demand vastly outstrips supply.
- A potent inflation counter: Injecting capital into real estate projects comes with the potential of higher and growing yields as rents can be adjusted to offset inflation.
Germany: Stability meets prime market conditions
While there are many benefits to investing in real estate, one key question remains: where to invest? Some countries offer significantly better opportunities than others in terms of both profitability and investment security.
All eyes on Germany
Great Britain has been a prime location for real estate investment in the past. However, the prospect of the impending Brexit brings considerable political and economic insecurities into the equation, bringing the strengths of one particular European neighbor into focus:
Historically grown undersupply
Germany is the fourth strongest economy in the world with a stable political environment but despite these facts, demand for real estate that has been exceeding supply for nearly a decade: Within the last few years, considerably less property has been built than required. Between 2011 and 2015 alone, the shortfall accounted for 540,000 apartments – since then, the undersupply has only become more severe.


High demand for residential property
As a result, 3.2 million housing units need to be constructed until 2030. Based on an estimated average price per housing unit of € 325,000 this equals to a potential GDV of € 1 trillion on the German real estate market within the next 10 Years.
Real estate prices are on the rise
Not only are the average prices in Germany for residential property soaring – cities like Stuttgart, Frankfurt, Leipzig and Berlin have seen increases from 42% to 61% in the period between the first quarter of 2016 and fourth quarter of 2019.


Rents increase, but remain affordable
Additionally, the average rental price for housing in Germany has been continuously rising for over 20 years, which has provided a very stable environment for investing. At the same time, rent affordability still remains healthy, especially in comparison to other European countries.
Germany: Politics to support real estate investment
The urgent need for new residential property in Germany by now has become a matter of political concern: Angela Merkel, chancellor of Germany since 2005, established in 2018 the imperative that 1.5 million new apartments and private homes need to be built within the next 4 years2.
In 2019, she reaffirmed the importance of achieving this goal at the “Deutscher Mietertag”, and regarding the topic of affordable housing stressed3:
Still, one particular development is – at first glance – a cause for concern for potential investors: In the federal state of Berlin the governing parties have agreed on effectively freezing rents for five years, starting in the 1st quarter of 2020. Only a mild increase of 1.3% p.a. (linked to inflation) will be allowed from 2022 onwards. Additionally, tenants can apply for a rent decrease if the net rent exceeds 30% of the household income.
Also, it is likely that the German Federal Government will extend the rent limitation “Mietpreisbremse” until 2025 in select German areas. When re-letting real estate, rent is only allowed to exceed the local guidance rent (“Mietspiegel”) by 10%.
However, the aforementioned regulatory measures only apply to portfolio property. All buildings constructed after 2014 are exempt from the Berlin rent freeze; likewise, all newly constructed buildings are exempt from the “Mietpreisbremse”. Thus, investing in new buildings in Berlin will avoid these issues – a key additional support to Consus’ developments in this city.
Booming cities, profitable investment scenarios
In addition to the usual demographic demand for housing space, Germany’s strong economy provides for a constant influx of highly skilled workers from various branches like pharma, finance and automotive, which increases the need for real estate development in Germany even further.
This is one important factor for specific locations providing the best real estate investment opportunities in the whole country. Moreover, thanks to Germany’s inviting culture it is a particularly appealing destination for young people from across the globe for extended stays – be it for educational purposes or just to experience the European way of life.
Real estate: Germany’s most attractive cities
Living in Germany is without a doubt attractive to many people. One reason is the high living standard: According to the renowned Mercer Quality of Living City Ranking, five of the 20 best cities to live in are located in Germany4. We at Consus are developing residential property in each of these – as well as in other booming locales.
Germany’s top 9 cities
Learn more about Consus
Find out more about property investment opportunities in Germany, our company success story and our future plans.
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