Alexanderplatz, Berlin, Germany

 

 

On every investor’s short-list of the globe’s safest harbors for capital is Germany, renowned for its steady local and national governance, strong property rights, low national debt, trading surpluses and solid economy. In prudently diversifying an investment portfolio, exposure to Germany is always a front-running option.

 

Of course, even buying German property involves some measure of risk, and challenges on the path the profitability.

Moreover, due to German capital gains taxes that expire after a 10-year hold after purchase, a long-term investment is advised.  And the “low-hanging” fruit days are over in Germany—housing prices in many German cities are up 80% from the Global Financial Crisis of 2008. Germans and the world have recognized the strengths of Teutonic property.

That said, housing has been and promises to be among the most-secure and profitable pathways to profit for offshore investors in Germany, most notably in Berlin and Frankfurt.

 

Tight Housing

 

Despite the rising prices, the housing supply in Germany remains constrained by regulations and local property rules, as is common in developed nations. 

Indeed, German Chancellor Angela Merkel, facing reelection, recently said that the nation urgently needs 1.5 million additional units, but redress is hardly certain.

Homeownership rates in Germany are below European averages, a legacy of Germany’s past, and the history of East Germany.  In general, Germans may migrate into higher homeownership rates in the years ahead, another positive for housing markets.

Berlin, the nation’s capital and largest city, is at the epicenter of the new Germany, attracting professionals, tech-businesses and start-ups, and favored by a growing population—a far different picture than one of an “aging Europe.” 

Through 2030, Berlin population is projected to grow at 3% annually, outstripping new housing supply—indeed, in the last year 50,000 people moved into Berlin, but only 9,046 housing units were built.

Wages are rising. With scant vacant housing, average apartments in Berlin sell for about S$3060 per square meter, and are rising annually.

 

 

Foreign Investors

 

For investors moving to Germany for work or to live, the German financial system is remarkable in that lenders will finance up to 100% of house or condo purchase price.

But for investors who stay offshore, lenders will finance only up 60%, thus requiring a 40% down-payment from foreigners. That results in a long-term tie-up of a substantial chunk of capital.

Also, one of the challenges in Germany is that income made from letting any German property is subject to 14% to 45% income tax. However, mortgage interest, management fees and any value depreciation are all tax-deductible.

Also, German banks are known for thoroughness in documenting income and to whom they are lending.

 

Still a Buyer’s Market?

 

Despite recent appreciation, Berlin remains one of the world’s more-affordable global business centers. The total costs of renting office and living space in Berlin posted at $31,100 per employee per year, against $111,900 in New York, $108,200 in Hong Kong and $95,900 in London, according to a recent survey by a major property-brokerage. For a multi-national corporation seeking a European regional operation headquarters, Berlin is a natural choice, and will remain so for the foreseeable future.

 

 

Frankfurt is Germany’s financial center, home to the nation’s stock and bond exchanges, and its growing financial technology, or “fintech” sector.

Some investors speculate that Frankfurt, home to the European Central Bank and such commercial bank giants as Deutsche Bank, will attract new professional migrants if London recedes as a global financial capital, due to the “Brexit, or Great Britain’s departure from the European Union.

With about 736,000 residents, Frankfurt has a housing shortage of about 50,000 units, and a very tight residential vacancy rate of 1.5%. Apartments in Frankfurt sell for about S$2,700 per square meter, and prices rise annually. Like Berlin, Frankfurt is much less expensive than most other global cities.

Berlin and Frankfurt, with relatively inexpensive housing and business rental costs, yet with First World amenities, and growing economies and populations, present peerless opportunities for security and appreciation to global investors.

 

Buying an apartment in Germany

 

1. You decide to buy a property in Berlin with a price tag of €1 million.

- You will need to pay €60,000 in real estate transfer tax and a Notary and registration fee of about €15,000.  Thereafter you can expect to pay a small amount in property tax.

- Buyers brokerage commission anywhere from 3-7%

- Legal fees of 1%

 

2. If you remain offshore from Germany, you will have to put a 40% down-payment, or in the case of the €1 million property, €400,000 down.

 

3. In general, letting fees include a one-off payment of 1.5 times a property’s monthly rent to find a tenant and a monthly management fee of around €20.

 

4. Income made from letting German property is subject to 14% to 45% income tax, but mortgage interest, management fees and any value depreciation are tax deductible.

 

5. Importantly, no capital gains tax is payable if you hold a German property for more than 10 years. Thus, buying for the long-term becomes the desirable option for German real estate—and a prudent course, as the prospects are so favorable for Berlin and Frankfurt residential properties.

 

For further information contact JLL International Residential directly at +65 6220 3888 or internationalresi@ap.jll.com 

 

 

Why Germany? The destination of choice for Singaporean investors

 

 

21 May 2019

The Steglitzer Kreisel, 120 metres high, is being brought into a new era with state-of-the-art architecture and technology. Glass, steel, aluminium and a lean silhouette make it the tallest already build residential tower in the city – and the most elegant.

It offers 29 floors of what can only be described as a living experience with breath taking views stretching far across the city. ÜBERLIN.

 

 

For further information contact JLL International Residential directly at +65 6220 3888 or internationalresi@ap.jll.com 

 

Why Germany? The destination of choice for Singaporean investors       

 

Residential City Profile Berlin - 2nd half-year 2017

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06 Dec 2018

Financial Times reported that Germany had overtaken the UK as Europe's favorite destination for overseas real estate investment since Brexit. A data from Real Capital Analytics shows that some €13.6 billion was committed to the German property market compared to €10 billion for the U.K.

 

For years, the U.K. Australia and New Zealand, have been the go-to destinations of foreign investors. However, current issues over these traditional markets made buyers look elsewhere.

In the U.K., for instance, uncertainties over Brexit leave investors in a "wait and see" mode.  In New Zealand, the government passed legislation banning foreigners from buying homes. Then there's the Australian property market which is suffering from its worst performance since 2012. 

It's no wonder, countries like Germany is becoming a much safer haven to overseas property investors.

In 2017 alone, the residential transaction in Germany totaled €17 billion (SGD 27 billion) or 25% higher than last year, according to Jones Lang LaSalle (JLL).

Financial Times reported that Germany had overtaken the UK as Europe's favorite destination for overseas real estate investment since Brexit. A data from Real Capital Analytics shows that some €13.6 billion was committed to the German property market compared to €10 billion for the U.K.

 

Lisette Van Doorn, Europe's chief executive of Urban Land Institute, explains:

"With considerable political and economic uncertainty in Europe, many real estate investors are willing to sacrifice some yield in return for lower risk. In this risk-off environment, the stability of German cities becomes even more attractive.” (Source: Financial Times)

While Berlin and Munich might be the safest bet for most overseas buyers, another city promises a better investment opportunity due to its superior location, an excellent workforce, booming population, and impressive architecture.

 

Welcome To the “Ten Minute City”  

Düsseldorf, Germany’s 7th largest city, is the center of direct foreign investment in the country with more than 9,540 foreign firms led by the Netherlands (581), U.S.A. (431), the U.K. (405), China (385), and Switzerland (268). (Source: FDI Intelligence).

This outpour of foreign investment has translated to 60,800 jobs in 11 years. Düsseldorf is home to more than 45,000 foreign workers, making it one of the largest employer of overseas professionals in the country.

The expat community loves this city. A survey from expat network InterNations reveals that Düsseldorf ranks 4th worldwide as to the quality of life and career opportunities.

Population growth is also on the horizon as the city expects 40,000 new households by 2040 (Source: IP Global)

As this uptrend continues, demand for rental properties will also increase. As of 2017, the vacancy rate is only 1.5% which is very low compared abroad.

 

Another reason why Dusseldorf is a smart investment option for overseas property buyers is its location.

Situated in the heart of continental Europe, Düsseldorf features a vast network of highways allowing travelers to reach Brussels or Amsterdam in only 2 hours and Paris by 4 hours. Also, with an average of 189 minutes, Düsseldorf has one of the shortest average travel time to major cities in Europe.

 

 

The Düsseldorf Airport, Germany’s 3rd largest airport, is so close to the city, it only takes 10 minutes to reach top tourist attractions like Königsallee and the Old Town district.

Residents even marvel at how convenient it is to travel from one place to another.

“Düsseldorf is often referred to as ‘the city of small distances.’ One of the real advantages for frequent travelers like me is that it’s easy to access the airport by car and public transport” says Michael Reinartz, director of Innovation at Vodafone, in an interview for FDI Intelligence.

Considered as Germany’s fashion capital, the city features high-end retail centers like the Kö, the Kö-Bogen, Schadowstraße and Flinger Street. It is also home to a growing start-up sector like travel company Trivago.

 

Where to Invest In Düsseldorf?

Few places in Düsseldorf can offer luxurious living and first-class investment opportunity than WinWin - a residential building located in the city’s Medienhafen or Media Harbor.

 

 

This building is composed of two, 60-meter towers and 400 apartments.

Architects Kister-Scheithauer-Gross designed the building which features floor-to-ceiling windows, smart ventilation technology, a roof garden, underground parking garage, a 24-hour concierge, in-house restaurants, and a fitness studio.

 

 

Thanks to the area’s tram and road links, WinWin residents are only minutes away from shopping districts, bars, and international offices.

Among the well-known companies which reside around WinWin are Accenture, Ogilvy & Mather Advertising, Trivago, and Uniper SE.

 

Due to its strategic location and high-end amenities, property investors can expect a high rental yield for years to come.

For instance, a 76 sqm. unit has a monthly rental income of €2,292.61 (SGD 3,659) or a 3% initial gross yield. Meanwhile, a 34 sqm. studio unit has a monthly rental income of €776 (SGD 1,237) or a 2.83% initial total yield. Take note that the average return in Düsseldorf is roughly 2.6%.  

 

 

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For further information please contact JLL International Residential directly at +65 6220 3888 or internationalresi@ap.jll.com 

 

 

13 Feb 2019

Traditionally, Germany has not been a priority market for Singaporean overseas property investors. Most Singaporeans usually look at the UK, Australia and the US when it comes to purchasing a second home or an investment property overseas.

However, in the space of the last few years, more and more discerning investors have been increasingly looking at other countries such as Germany, as they look to diversify their property portfolios and mitigate risk.

 

With the current uncertainties in the world, such as the sentiments around Brexit and the ongoing trade issues between the US and China, many investors in Asia are naturally looking towards less volatile, safe haven markets to invest in.

 

  • ✔ Germany has the largest and most stable economy in Europe accounting for 20% GDP of the EU, and fundamentally provides an exciting backdrop for real estate investment.

 

  • ✔ Germany is one of most politically stable countries in the world, with a strong government that aims to promote continuity, stability and sustained growth in the country.

 

  • ✔ Germany has a well-established housing market which offers attractive returns with lower risks. A PricewaterhouseCoopers (PwC) survey titled ‘Emerging Trends in Real Estate Europe 2018’ named the German capital, Berlin, as ‘the most desirable city by investors’ for the fourth consecutive year.

 

  • ✔ Along with Berlin, three other German cities - Frankfurt, Hamburg and Munich - were ranked within the top ten most desirable cities in the world to live in.

 

So let's have a closer look at why Germany is probably one of the most attractive places in Europe to consider investing in right now!

 

Is it a safe investment?

With the highest GDP and the largest population in Europe, Germany boasts a well-established market with a diverse, highly developed economic, cultural and social framework.

The ‘Made in Germany’ label is well-known for the highest quality. Together with the US and China, Germany is one of the world’s top three exporting countries, making it a favourite destination for international investors. And, because of its progressive educational, work and social policies, Germany has one of the lowest unemployment rates in the world.

Property values in Berlin have increased over the past 18 months, generating €9 billion in property deals in the first three quarters of 2017 alone, making this country Europe’s second most active market after London.

Why has there been a recent increase in interest in properties in Germany? There are many reasons, including the current political and social changes that are now sweeping across Europe.

 

Is the growth sustainable?

There is usually a shortage of suitable properties in Germany. Germany’s strict housing policies only allow a limited number of new-build constructions each year, contributing to the restriction of the housing supply. This prevents speculative developments, like in many other areas around the world, which tend to drive prices downward.

Although there has been a dramatic increase in property purchase prices and rental rates, especially in cities like Berlin, industry watchers believe that this growth is sustainable due to good management practices in place, as well as a strong focus on the renovation of existing properties.

 

What about urban infrastructure?

With a high number of established, historic cities and urban areas - more than 70 German cities have more than 100,000 inhabitants each - the country has a great infrastructure, an important consideration when it comes to the attractiveness of a location.

German cities offer a holistic mix of residential and commercial areas, pleasant public spaces and highly efficient transport, resulting in a quality of life that is one of the best and safest in the world.

The search for a good work-play balance is shaping many cities and urban areas in Europe. The boundaries between work and lifestyle are increasingly overlapping, but German cities are well-poised to embrace these changes for future generations.

 

 

Can my kids study in German universities for free?

Buying an overseas property is both a great investment and a way to provide the comforts of home to children studying in university. German people believe education should be free. Therefore, many public universities in Germany offer tuition-free university education for both domestic and international students. More and more Singaporean parents are choosing to send their children to study in German universities, which are ranked as some of the best and most prestigious in the world.

For example, Munich’s Ludwig Maximilian University, founded in 1472, is one of Europe’s best research universities, with 34 Nobel laureates associated with it. In Heidelberg, the University of Heidelberg has been associated with at least 33 Nobel prize winners, and is one of the most popular universities in Germany for foreign students. It has a student population from at least 130 countries worldwide.

Its progressive educational policies and quality vocational training has resulted in Germany having one of the lowest unemployment rates in Europe and the world, as well as having a highly skilled workforce that will continue to drive its vibrant economy.

 

How about long term visas for non-EU nationals?

To further drive the German economy, the German Residence Act allows qualified foreign investors and entrepreneurs to obtain long-term ‘D’ visas and temporary two- or three-year visas, which can be prolonged into permanent residence status with a minimum investment of €200,000 to 250,000 (2017) in the country.

Family members of visa holders also get residency status in Germany, and can also qualify for German citizenship after eight years’ residency in the country.  Germany is also a member of the EU, which allows its citizens and residents free trade and passport-free movement between its 28 member states.

Thus, buying in a property in Germany is not only one of the best investment decisions a Singaporean investor can make in terms of long-term returns, but it also opens up the doors  for you and your children to be able to live and work freely in any country in Europe as well!

So as you can see, there are many reasons to invest in German properties right now. Where do you start? As with any investment, the best approach is to do your research, and get as much relevant information as possible before you make any decisions. Read our Investment Guide or talk to a real estate professional who specialises in overseas property investments, and they can guide you in making the best decisions for yourself and your family.

 

View investment properties in Germany

Schedule a meeting with our real estate agent here

 

 

For further information please contact JLL International Residential directly at +65 6220 3888 or internationalresi@ap.jll.com 

13 Feb 2019

The half-yearly publication provides a detailed market analyses of the residential property market in Düsseldorf. All relevant parameters for the market analysis are presented in detail and are broken down into the individual districts. Supported by charts and tables, the series provides a unique overview of the most important residential markets in Germany.

Tables and charts: Economic, demographic and jobs-related indices; number of private households and residential buildings per district; residential property stocks and vacancy rates; stocks, completions, average building sizes and vacancies per district; residential property clock and rental price bands per district; rental prices for building periods and unit sizes per district; purchase prices and purchase price bands per district; selected transactions; rental price maps of the districts.

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05 Dec 2018

The European residential investment market continues to grow at an impressive rate and this year the market has seen significant growth in demand from a wider range of global investors. Investors are attracted to the stable income profile, improved diversification and possibilities of building scale in the long term.

Our market report highlights current trends at a national and international level, anticipating a number of key developments in the year ahead.

 

Key highlights include:

• Investment in European residential totalled €43 billion in 2017, a rise of 13% YOY. This includes: stabilised assets, development deals as well as corporate transactions.

• The market has continued to experience a growth in demand from a wider range of global investors attracted to the stable income profile, improved diversification and possibility of building a residential platform. This appetite is expected to grow unabated for the foreseeable future.

• Peripheral markets such as Denmark, Spain and Ireland saw significant growth in investment volumes as investors targeted opportunities in emerging markets.

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05 Dec 2018

The half-yearly publication provides a detailed market analyses of the residential property market in Berlin. All relevant parameters for the market analysis are presented in detail and are broken down into the individual districts. Supported by charts and tables, the series provides a unique overview of the most important residential markets in Germany.

Here is a sneak peek of what you will find inside.

Tables and charts including: 

✔   Rental prices for building periods and unit sizes per district

✔   Purchase prices and purchase price bands per district

✔   Selected transactions

✔   Rental price maps of the districts

✔   Residential property clock and rental price bands per district

✔   Economic, demographic and jobs-related indices

✔   Number of private households and residential buildings per district

✔   Residential property stocks and vacancy rates

✔   Stocks, completions, average building sizes and vacancies per district 

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13 Dec 2018

For investors looking to find new homes in other countries or grow their money in the long term, investing in international properties is an excellent bet. As local real estate markets display sluggish performance and modest opportunities at best, looking beyond your borders can present bountiful prospects for capital appreciation. Popular investment regions include the UK, Japan, Germany and USA. Here’s an in-depth look at why investing in overseas properties is a wise move.

 

1. Derive sizeable passive income

Renting out your property is a sure way to generate a passive income. Having these proceeds can mean different things for different people. Depending on the amount and regularity of this income, it can help finance a mortgage, be used for future investments, or even be a key source of earnings for someone to live on. The relatively stable nature of real estate (as opposed to stock markets, for example) makes it a safe asset to have even in the face of property price swings and market volatility.

 

2. Diversify your portfolio with a global edge

Real estate is a valuable addition to your current investment portfolio. Just as diversifying your portfolio can provide security and greater potential for returns in different sectors, so does investing in property globally, which lets you enjoy the economy of more than one country by generating cash flow in different currencies. This means that you are not restricted by the economy in which you’re based, as the future of your investments is not wholly determined by your country’s economic performance.

Additional benefits include (a) ensuring that you pay close attention to markets across different regions which can also boost opportunities for your other investments, and (b) expanding your real estate know-how as you mingle with international networks and discover the limitless potential you have for investing.

 

3. Leverage robust growth rates internationally

Investment benefits abound overseas, and these same advantages may not always be available in the country you now live in. Economies that are opening to free market policies as well as emerging markets across Asia have higher growth rates, which are impacted by factors such as corporate revenue, regeneration, migration and fertility rates.

Examples of international property investment benefits include:

-  Protection against inflation, as real estate is a tangible asset with an inherent value separate from paper currency and its constant fluctuations

-   Multiple uses to generate further income by renting out your property, converting it from a permanent residence to cater to the tourism industry, or using it for other commercial purposes

-   Appreciation in value leading to a significant rise in income, as rapid development and regeneration around major property sites worldwide enhance the value of your property

 

4. High rental yield and worthwhile returns

Expect to score high rent income from properties in regions with rapid growth in terms of economy and human capital, where public transport connectivity brings different parts of community together and where cosmopolitan culture thrives.

Consider also the stability of your returns by studying historical trends and up-to-date forecasts. The UK, for example, offers a 17.6% average return on investment (for rental) from 2017 to 2021. As one of the leading real estate markets worldwide, London has a lot to offer for potential investors.

Japan has seen a 7% rental growth between 2012 and 2016, and will likely see a greater increase in coming years as Tokyo gets ready for the 2020 Olympic Games.

Long-term investors might also want to set their sights on Germany, where the 4.2% - 12.3% increase in rental reflects the flourishing world-class financial hub in Berlin, which is also positioned for growth with its currently emerging tech scene. Demand exceeds supply in most of Germany’s major cities, with vacancy rates below 1.5%.

 

5. Retirement home or holiday getaway

Besides the abundant perks of exchange rate benefits, owning hard assets to insulate your investments from market crashes, generating a side income, and building a diverse portfolio for optimal growth, having several properties overseas also gives you the freedom to make it your retirement or holiday home.

As markets are always unpredictable and it’s hard to tell what things will be like in several decades, you could either relocate to a chosen property for lifestyle reasons during retirement or even sell it in the future and make a huge profit. Either way, having international real estate is a sure win for the long term.

While investing in property around the world may not always be easy as it requires a thorough understanding of different markets, loan procedures, local regulations and various costs around acquisition and letting, it is worth your while to dedicate some time and learn about this in greater depth to expand your investment potential. Reputable consultants are always available to provide advice and insights on financing and legal-related questions.

 

6. Double your investment returns by investing in both education and real estate

One of the greatest gifts you can bestow on your children is to invest in their education. With the UK being home to some of the finest universities in the world, it is no surprise that many Singaporeans jump at the chance to study in the prestigious Oxbridge or London colleges. By investing in a residential property at the same time, you can divert rental costs into a property for your children to live in for the duration of the studies, and to reap rental yields after their graduation. What better way to invest than to provide both an education and a home for them at the same time.

 

For further information please contact JLL International Residential directly at +65 6220 3888 or internationalresi@ap.jll.com 

13 Feb 2019

Update of Social Economic Trends & Housing Market for Berlin, H22016, Published March 2017

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02 May 2018

The recent growth of all German cities presents municipalities with ever greater challenges. Alongside the creation of supply and transport infrastructure, the provision of housing is one of the main tasks facing towns today.
The significant lack of housing is made clear by the rapidly declining vacancy figures. In almost all major cities with more than 500,000 inhabitants, there is now virtually no vacant space in residential properties. Against this background and the resulting rising rents and purchase prices, municipalities, developers and investors are focussing their attention ever more closely on the construction of residential buildings.
The image of residential high-rises is traditionally characterised by industrial housing constructed in the 1960s to 1980s in districts featuring little social mixing and integration. The experiences of more recent decades - especially in Asia and America - and the technological changes in architecture and building technology mean that today’s towers are state-of-the-art. They appeal to a variety of target groups, from low to very high income classes, aim to offer a high level of integration into urban areas by means of modern mobility systems and increase the value of previously commercially-
used areas within cities, without initiating crowding-out processes.
On the basis of more than 20 European, and over 60 German projects, in the area of high-rise residential developments, this report offers a comparative, if not complete, overview of location criteria, equipment features and target groups in relation to users and investors.

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20 Apr 2018