2023-03-06 | German Real Estate Market Forecast 2023
German Real Estate Market Forecast 2023
Compared to international real estate markets the German real estate market has been performing well in recent years, especially in the current crisis! The reason? Very low supply of property in urban areas and high demand for rental properties. This is due to several factors, including a strong economy, moderate interest rates, and a growing population. Additionally, Germany has been attracting a large number of international investors who see the country as a stable and attractive investment opportunity.
One of the key drivers of the German real estate market is the demand for rental properties. The country has a large rental market, with approximately 55% of households living in rented accommodation. This has created a strong demand for rental properties, particularly in major cities such as Berlin. However, this demand has also led to high rental prices, making it difficult for many people to find affordable housing.
Another factor contributing to the growth of the German real estate market is the still moderate interest rates offered by the European Central Bank compared to other real estate markets. As a result, many people are choosing to invest in real estate, either as a way to secure their financial future or as a way to generate income through rental properties. Despite the ongoing war in Ukraine and the sharp rise of interest rates in 2022, the German real estate market is expected to continue to perform well in 2023.
Here are some key trends we can expect to see:
Stable property prices
Property prices in Germany are expected to stay stable in 2023, after a downward price correction in the second half of 2022 and first quarter of 2023. This is due to the ongoing demand for property, particularly in major cities, and the moderate interest rates offered by the European Central Bank.
Strong demand for rental properties
The demand for rental properties is expected to remain high in 2023, particularly in major cities. This is due to the large number of people who are unable to afford to buy property and the growing number of international students and workers who are looking for accommodation.
Increased investment from international buyers
Germany is likely to continue to attract a large number of international buyers in 2023. The country’s stable economy, strong legal system, and attractive investment opportunities make it an ideal destination for those looking to invest in real estate.
Shift towards sustainable and energy-efficient properties
As climate change continues to be a pressing issue, we can expect to see a shift towards sustainable and energy-efficient properties in 2023. This trend is already underway, with many developers and investors focusing on building properties that are environmentally friendly and energy-efficient.
Increasing demand in rural properties
The pandemic between 2020-2022 has accelerated the trend towards remote work, which has led many people to reconsider where they want to live. Some have left cities for more rural areas, while others have decided to move to smaller towns with lower costs of living.
Private individuals, investors or capital investors:
The German real estate market is expected to continue to perform well in 2023, with stable property prices and high demand for rental properties. Do you want to know more?
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What trends do we have in the German real estate market?
The German real estate market has been a popular investment destination for both local and foreign investors in recent years. Germany is the largest economy in Europe and has a stable political and economic environment, making it an attractive place for real estate investment.
In this video, we will discuss some of the trends we are currently seeing in the German real estate market.
The German real estate market is currently experiencing several trends that are driving up demand and stabilize prices. These include increasing demand for residential properties, a focus on sustainability and energy efficiency, the growth of co-living and co-working spaces, and moderate interest rates despite high inflation. While these trends are providing good opportunities for investors, it is important to approach the market with caution and consider the long-term sustainability of any investment.
Increasing demand for residential properties
The demand for residential properties in Germany has been steadily increasing, particularly in the major cities such as Berlin. The population in these cities is growing, and with it, the demand for housing. This has led to a shortage of affordable housing, which is driving up rents. As a result, investors are seeing good returns on their investments in rental properties.
Sustainability and energy efficiency
Sustainability and energy efficiency are becoming increasingly important in the German real estate market. The government has set targets for reducing greenhouse gas emissions, and this is leading to a greater focus on sustainable and energy-efficient buildings. Investors are increasingly looking for properties that meet these criteria, as they are likely to be more attractive to tenants and have higher resale value in the long run.
Co-living and co-working spaces
Co-living and co-working spaces are becoming more popular in Germany, particularly in the major cities. These spaces offer affordable accommodation and workspace for young professionals, freelancers, and startups. They are particularly popular with millennials, who value flexibility and social interaction. Investors are seeing good returns on these properties, as demand continues to grow.
Negative real interest rates
Moderate interest rates are making real estate investment very attractive in Germany. After the sharp rise of interest rate in 2022 from 1% to 4% the rates are predicted to stay below 5% in 2023. Taking the historic high inflation into account there is now a negative interest rate for investors. This is historically unique in a major economy such as Germany. Investors can still obtain financing at moderate rates, which will be driving up demand for properties.