Property Investment in Germany | Overseas Investments - IP Global Ltd (2024)

With more than 4.5 million newcomers migrating to Germany in the last decade alone, the construction sector has been incapable of keeping up with the demand for housing. Persistent supply and demand imbalances have created a 1 million housing unit deficit in Germany. Berlin is again ranked among the top cities in PwC’s Emerging Trends in Real Estate: Europe 2024 report as the fourth city for overall real estate prospects, with Munich and Frankfurt also included in the top 10. Germany’s real estate markets have continued to benefit from the country’s economic strength and effective navigation through the pandemic, with average prices continuing to increase by 7.3% on average over the past 5 years.

As Germany’s economy grew substantially over the past 2 decades, the incomes earned by its residents increased in a similar fashion. The number of households with an annual income of USD35,000 or below is expected to have fallen by 89% by 2040, while the middle- and higher- income bands are expected to grow exponentially over the same period. The number of HNWIs (USD1m+) and UHNWIs (USD30m+) in Germany has increased by 36% and 29% respectively between 2017 - 2022, significantly higher than the European average. Germany is expected to have over 3.4 million residents in this category by 2027, the 6th highest amount of any country after US, China, Japan, UK and France. This demographic will prop up the housing market and continue to drive value to German real estate.

The German housing market is an excellent opportunity for investors. Historically a robust economy in the face of global economic headwinds, the housing market remains a strong long term investment choice for international investors. The market value of the German housing stock is forecast to reach EUR20.3 trillion by 2040, with house prices increasing by an average of 48% over the period. Consumer spending on housing rent is also expected to follow a similar trajectory, growing by an average of 51% to 2040. Property in Germany therefore promises a strong return-on-investment especially with the tax advantages of no Capital Gains Tax after a 10-year hold and low 10-year fixed rate mortgages available for international investors.

To find out more and request the 2024 Germany Investment Case here.

The top three cities to invest in Germany are Berlin, Leipzig and Munich. PwC named Berlin as the #4 city in Europe for real estate investment and development prospects in 2022. Berlin’s position as an international hub for business, innovation and politics attracts residents to the city, whilst regeneration and development projects only continue to provide more opportunities for investors.

Leipzig is the fastest growing city in Germany. The population is expected to grow by 16% from now to 2035, outpacing all other cities in the country. Meanwhile, the city is known for its rich culture, historic architecture, extensive parks and green spaces offering a wide variety of cultural and sporting activities. This has led to an extremely high level of resident satisfaction.

And Munich is Munich is the capital and largest city of the German state of Bavaria. With its iconic beer gardens, historic architecture, and thriving arts scene, Munich provides a lively and diverse experience for its residents.