Securecdn.pymnts.com Wp Content Uploads 2019 05 Germany Cash Card Credit

What kind of real estate to buy in Germany (Europe)* if you have from €100K up to €100M? » FINCHANNEL

Germany has one of the most developed commercial real estate markets in Europe: a large number of properties in different price categories, suitable for those who plan to make their first investment transaction and explore the possibility of the market, as well as large funds. , multifamily offices and private buyers from the United States, MENA and Europe, interested in exclusive properties. Here we will cover the topic of what kind of property to buy in Germany for €100K-€100M+ when the goal is a conservative investment “for retirement” and “children”.

The real estate market in Germany is not about quick payback. This is a guarantee of high reliability of investments and growth in value. The yield depends significantly on the location of the object. For example, in Munich it can be 1-2 percent, but there is a high probability of increase in the cost of housing. In the former GDR, the yield may be 7%, but the growth in value is negative. Let’s look at the options for different price segments to make sure that the property is preserved (reliability of the land), increases in value (long term) and is liquid (Core / Core+).

Here is the real profitability, not from brochures:

Georgian News Banner10
  • Apartments: 1.5-2.5% in top 7 cities
  • Apartments: 2.5%-3.5% in top 7 cities
  • Commercial property: 3-4% in top-7 cities (centre: 1-2%, city: 2.5%-4%, suburbs: 4-5%, suburbs: 5-6%, small towns: 6-7 %)

Under €100K-€250K

It is not worth investing at all. Today, those who have limited funds are turning to this category of property. You will find absolutely illiquid real estate properties in small towns. The entire rental income will be eaten up by management costs, tax reporting, repairs, etc. Properties in this category are difficult to recommend, even for the first investment transaction.

€250K-€1M

Apartments or one-room apartments, if possible long-term rental. These will be small towns, but already quite fluid. Apartments or flats in the top 7 cities, mainly in Munich and Berlin. Option 1 is to rent it out long term. But there is a nuance to consider: if you rent it for a fixed period, you can avoid all the risks with tenants. Another option is to get student or business apartments from a management company that takes care of all the issues.

It can be recommended as a first investment to try out a strategy, learn how to work with contractors and Germany as a whole. If you need a quick turnaround or a refund, this is very convenient.

€1-2M

Apartments, practically a universal option because they grow in price, are easy to manage, and you can theoretically expand your portfolio incrementally from 1-100 units. Or a supermarket in a small town (definitely a chain). Hotels with this budget should not be taken: it will be a hotel in the middle of nowhere, and taking on a management company for a small hotel is pointless.

€2-5M

Professional investors in this price range make their first commercial real estate transactions in Germany. In addition, you can take a small office or part of a building, “special properties” (kindergartens, warehouses) or supermarkets in larger cities. A hotel is still not a good idea.

€5-10 million

Large supermarkets, also in the top 7 cities. A hotel in a small town, definitely a chain hotel. There are investors in this category, such as Multi-Family Offices, who diversify their investments.

€10-20 million

Apartment building, full-fledged shopping complex in a small town, separate office building, hotel in the top 7 cities (Berlin, Munich, etc.). Professional investors and funds work in this category. The funds go through clear purchase criteria. They just need to understand if the property suits their needs.

€20-50 million

4* hotel in the top 7 cities, shopping center. This niche is also of great interest to funds, professional investors and family offices. The difficulty is that they search quite widely in the market, and at the same time there is an objective problem with incomplete databases.

€50-100 million
5* hotel, large shopping center. Professional investors, funds and family offices do business in this category.

€100 million+
Significant 5* hotels and large shopping centers in the top 7 cities. Prestige, exclusivity and history are important to the buyer.

Boris Bronstein

Related Posts