German Real Estate Investment Booms

With BREXIT creating uncertainty in the UK, investors are looking elsewhere and Germany is reaping the benefits. The top 4 European cities in the ranking for their overall investment and development prospects for 2018 are all in Germany! Berlin holds the top spot, followed by Frankfurt and Copenhagen in joint second and Munich in third place.

Savills has reported that the transaction volume in the German commercial investment market totalled almost €57.1bn last year. This was an increase of around 4% compared with 2016, and this is expected to exceed €50bn once again this year!

The surge into the German real estate market is being partly driven by their increasingly strengthening economy – a big attraction to overseas investors. Germany’s unemployment has reached a fresh record low, with the workforce growth last year reaching a record 44.4m! This growth in employment is having a big impact on the office market. Last year, office space take-up across Germany’s big 7 cities reached around 4.2million sqm, a 7% increase on 2016. This increase in demand is creating a lack of supply, resulting in higher rental rates and if it wasn’t for the shortage of land – plenty of development opportunities.

JLL has reported that around 62% of the 1.3million sqm of developments to be completed this year is already pre-let – demonstrating how the demand is showing no signs of slowing!

At Foundation Recruitment, we have seen a real jump in the German market. Our clients are growing their teams across all commercial real estate sectors across the country – not surprising with the current market strength! It truly is an exciting time to be in the market.

With the continued demand and strong economic forecast, the country is set for another strong year ahead. There is concern over the limited supply of office space and meeting the current demand; however, this may lead existing investors to look at other sectors in their hunt for yield!