Study: Investing in German Real Estate

The appeal of the German real estate market to international investors.

Germany's real estate market - growing interest among international investors

While domestic investors are becoming more and more cautious, Germany's real estate market is proving increasingly attractive to international investors. The market stability prized by investors should, however, by no means be equated with stagnation: Low interest rates and an increasing number of transactions with falling returns have been providing the market with additional, sustained momentum for three years. The new PwC study "Investing in German Real Estate" provides background information for a better understanding of the German property market.

Download study: "Investing in German Real Estate"

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"The narrower the returns, the more important it is for the acquired properties to be managed professionally"

Susanne Eickermann-Riepe, Real Estate Leader at PwC Germany

Falling vacancy rates in major German cities

In addition to generally strong economic performance, numerous indicators specific to Germany's real estate market are pointing in a positive direction: As of 2017 the vacancy rate for offices in the five most important cities had sunk to its lowest level in more than ten years. While the figure for Munich was only 2.5 percent, the level in Berlin dropped to 2.7 percent. Even in the banking metropolis of Frankfurt am Main, which had to grapple with vacancy rates of almost 18 percent during the financial crisis, less than 11 percent of office space went unoccupied in 2017. This trend is set to continue on the heels of Brexit.

Vacancy rates in major German cities over the past 10 years

Positive prospects for investors: ongoing surplus demand despite demographic change

The underlying data for the German property market reveals positive prospects for the future. Despite declining population figures due to demographic change, an increase in the overall number of households can be expected: The reason for this is the continuing trend towards fewer residents per household. As a result, Germany's Federal Statistical Office assumes that the number of households will increase from 41.6 million today to 43.2 million by 2035. The first decade of the millennium, when construction of new residential space was low, has also had a lasting impact on the German real estate market. Despite the ongoing construction boom, excess demand continues to make itself felt, especially in larger cities.

Development of the number of private households until 2035

Increasing trend towards C locations and niche segments - expertise and optimal management as success factors

Despite the increasing volume of transactions on the German real estate market, a lack of lucrative objects on offer means that many investors are now falling back not only on B locations, but on C locations as well. Niche segments such as hotels, medical facilities or computing centers, which were the preserve of specialists just a few years ago, are also being increasingly tapped by investors. According to PwC Expert Susanne Eickermann-Riepe, what is important is not simply seeking out a larger volume of objects, but also finding the right management for them.

Contact us

Susanne Eickermann-Riepe

German Real Estate Leader, PwC Germany

Tel: +49 69 9585-5909

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