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12 February 2008

Tenants abound in Germany

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by Gill Montia

Tenants abound in Germany

Signs of a recovery in Germany’s residential property market began at the end of last year, with prices rising a cautious 1.8% in the last quarter.

This should be seen as an encouragement to those seeking an overseas buy-to-let investment as German demand for rental accommodation remains high.

The country has one of the lowest home ownership rates in the developed world, at around 44%, compared to a level of around 70% in the UK.

Issues surrounding the unification of Germany have meant that the country has not experienced the boom in property prices of the last decade as seen across large areas of Western Europe, including in the UK.

Germany’s landlords include corporations and regional and central government but these bodies have been reducing their holdings in recent years, to offset mounting costs.

Low inflation, a high standard of living and low prices in the former FDR also make Germany an attractive opportunity for the overseas investor.

According to Nick Barnes, international residential research partner at Knight Frank, “The best thing is that the majority of Germans rent rather than own residential accommodation.”

However, he points out that the country’s tenancy laws can make eviction and implementing rents increases more difficult than in other European countries, and also advises investors to be “very selective” when choosing a property.

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