German Boom

Real Estate's Growing Pains and Gains

mediaspree berlin friedrichshain Andreas muhs ostkreuz
It's not for everyone anymore: places at Berlin's "Mediaspree" area cost up to €15,000 per square meter.
  • Why it matters

    Why it matters

    Unlike other real estate booms, the German growth story looks healthy. But investors should still be aware of the risks.

  • Facts


    • German real estate was long considered an unattractive investment, because there was so little growth in values.
    • Germany has seen net immigration of 1.5 million people since 2009, and most new immigrants look for housing in cities.
    • Investing in real estate can help to reduce the overall investment risk in a mixed portfolio, the author argues.
  • Audio


  • Pdf

From the standpoint of investors, German real estate markets were completely unattractive for many years. In fact, they were treated as “no-go areas.”

Prices hardly went up for more than 10 years, even in metropolitan regions. At the same time, annual returns on rental properties were generally below interest rates even on safe government bonds, sometimes falling below 3 percent. In addition, German laws were clearly pro-tenant, at least from the standpoint of investors.

While most European real estate markets experienced a historic boom in the decade before the start of the financial crisis, which eventually led to a bubble, the property market in the continent’s largest economy was downright dreary. Many investors felt that Germany was “fully developed.”

Want to keep reading?

Subscribe now or log in to read our coverage of Europe’s leading economy.