In fact, business in the German real estate markets is buzzing. That being said, this market dynamic and prices are having a negative impact on expected yields. Particularly, in the TOP 7 cities investors need to up their offers and accept lower yields. It comes to no suprise, that not many investors are selling, asset management has shifted further into the focus and owners ask their business partners to save money! The motto is: downsize the costs in construction and maintenance.
So called „B- and C- cities“, that are home to universities and thus students and young professionals, offer a vibrant environment and have strong growth potential. These cities have obviously attracted the attention of investors. Their prime locations offer better yields and stable income. Germany is a polycentric state with many urban city hubs which strengthens this trend even further.
Plenty of opportunities but also a higher risk. Who really knows what makes an attractive city? It is a risky business to simply rely on anyone's understanding of what makes cities investment worthy. If the attractivity of some of the smaller cities should be overestimated in combination with rising prices the next bubble could just be around the next corner in the local markets, particularly in the context of residential real estate investments.
In the past, investments abroad had one task, and one task only: diversifying the portfolio for German investors. Now, with the hype going on everywhere, international investments have become a safety standard.
Yes, German private and institutional real estate investors are and will be „Germany Fans“ 2020! They remain advocates of their home market but they are increasingly looking at European urban city hubs in order to find new value for their portfolios! As more and more deals are being closed, the question arises: Which cities are actually hidden champions and have strong expected growth rates in particular asset classes?
While real estate remains a local business, you do not need to restrict your reach and miss out on new investment opportunities. Just make sure, you know where the hidden champions are and also who your local partners need to be. Save your seat at the 2. Expert-Talk: European Real Estate Markets on May 14th, 2019 at the Squaire, Frankfurt Airport.