The rising prices for residential real estate in Germany reflect the return of foreign investors to the German real estate market. After a phase of cautious activity, many international investors see Germany as an attractive location again, which is evidenced by increasing dynamics in residential real estate transactions.
Current Developments and Trends
The Germany CEO of JLL confirms this trend and provides insights that, despite the rarity of large transactions, it could be a favorable time for real estate purchases. Demand is particularly rising in the seven largest cities in Germany (Berlin, Hamburg, Düsseldorf, Cologne, Frankfurt, Stuttgart, and Munich) and increasingly also in secondary cities. This is supported by a survey from the consulting firm Cushman & Wakefield: 86 percent of the surveyed investors expect more transactions in the top cities and 72 percent also in smaller cities.
Reasons for the Comeback
The reasons for the comeback of foreign investors include the fact that the market situation has relaxed after years of geopolitical uncertainties as well as rising mortgage rates and construction costs. Although the homeownership rate continues to stagnate at a low level – Germany is building less new construction compared to other European countries – the increasing demand is driving prices up.
In summary, it can be said:
- Foreign investors are increasingly returning to the German real estate market.
- The rising prices are a reflection of this increased demand.
- While large transactions remain rare, the overall volume of purchases is increasing.
- Purchases currently seem particularly worthwhile in major metropolises as well as selected trendy neighborhoods.
- The environment is characterized by a slowly relaxing market with growing dynamics after difficult years.
Therefore, one can certainly say that it is a good time to think about purchasing real estate – especially if one is planning in the long term and focusing on locations with high demand.