Investing Successfully

Professional Investors Opt Increasingly for Residential Real Estate

29.

October 2020

The transaction volume on Germany’s residential investment market increased significantly during the first three quarters of 2020 compared to the prior-year period. According to real estate service provider CBRE, the nine-month period saw 15.1 billion euros in residential real estate sales – which is 25 percent more than the same period last year did. The figures include only residential property sales involving at least 50 units (source: ews.cbre.de).

Considering the fact that the transactions market was practically shock-frozen during certain periods of time in the spring, these are remarkable figures. The latest market report by JLL actually quotes a transaction volume of 16.6 billion euros – up from 14.5 billion euros during the reference period (source: www.jll.de).  

Long-Term Growth Potential Attracts Investors

Both CBRE and JLL emphasise the exceptional resilience that the housing sector has displayed this year. JLL reports that, above all else, “the stable earnings and the long-term growth potential” are decisive for the attractiveness of residential real estate for professional investors. CBRE analogously observed that residential real estate is highly favoured by investors as a “safe investment.”

The most important investment location is Berlin. According to JLL, revenues on the residential real estate market of the German capital added up to 1.51 billion euros – and this despite the housing policy jitters that would normally tend to scare professional investors off. But Berlin’s long-term potential, as the survey authors noted, outweighs any drawbacks.  

International Investors Attracted to Germany

It should be emphasised moreover that investors also show keen interest in German cities other than the metropolises. CBRE noted that peripheral areas and Class B cities are developing a “growing dynamic.” This is true in particular for cities with universities and convenient transport links to metropolises. Prices are expected to increase here.

Also striking is the growing share of foreign investors on Germany’s residential real estate market. According to JLL, more than half (55 percent) of the capital spent on the German residential investment market during the first nine months of this year originated abroad. This compares to a five-year average foreign capital share of 21 percent only. It is a clear sign for the enormous appeal of Germany’s residential investment market – appeal that evidently keeps growing due to the resilience this market has manifested during the coronavirus crisis.

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