• Germany's news in English
 

Foreign investors 'snap up prefab German flats'

Published: 04 Sep 2012 12:48 GMT+02:00

“German flats are being snapped up,” said Andre Adami, an analyst for BulwienGesa market research firm. “Any portfolio which comes onto the market meets high demand.”

Around half of prefabricated apartment blocks with more than ten flats sold have been snapped up by foreign buyers who see the market as a lucrative place to invest, spending €3.3 billion in the first half of 2012, said Tuesday’s Handelsblatt business newspaper.

This is the highest level of overseas investment in German property since 2008 and a considerable increase on 2011 when the figure was €2.4 billion for the entire year, figures from real estate company Jones Lang LaSalle showed.

German residential property was one of the best places in Europe to invest, Roger Orf, manager of European property at Apollo Global Management, told the Handelsblatt. The company has a 15 percent share in Germany's biggest letting company, Deutsche Annington Immobilien AG.

Those looking for large property portfolios have a wide selection to choose from, the paper said, as private equity firms and other investors needing to repay debts they incurred before the market peaked in 2008, are set to put around 100,000 flats onto the market.

Examples include Blackstone private equity firm buying up 8,000 flats from bankrupt investor Level One in March, while in May Cerberus bought 22,000 flats from bankrupt Speymill Deutsche Immobilien Co.

Many of the flats concerned are the prefab buildings which characterised many east German cities, but were also found in the west.

Despite their unappealing appearance, the benefits of the prefabs are clear for a property company, Christian Schulz-Wulkow of Ernst & Young Real Estate told the paper.

“They are very efficient, you can buy a lot of them in the same place and then have a thousand flats that are all very similar and can be handled in same way,” he said.

American investment firm Fortress, is preparing to sell 38,000 Dresden flats – many of which are pre-reunification, Soviet-style, said the Handelsblatt. Such a sale is expected to attract further foreign investors desperate for a safe and even profitable place to put money.

This influx of foreign investment into companies that own property that is causing the German property market to boom.

The market value of the country's five biggest real estate companies has this year alone gone up by 55 percent, which when compared with the German Dax index, which monitors the top 30 companies, rising by 19 percent, shows how popular property investment is.

Yet some experts remain wary. “Foreign investors are regarding Germany as a safe bet,” said Steffen Sebastian, head of the institute of real estate management at Regensberg University.

“But even the German property market isn't independent from the rest of Europe,” he told the Handelsblatt, warning of the potential start of a bubble.

“Investments in the German apartment market have a very speculative character, and that makes them very risky,” he said. Cheap financing, fear of inflation and a lack of other investments have pushed prices in comes parts of the country to ridiculous levels, he said.

The Local/jcw

The Local (news@thelocal.de)

Your comments about this article

14:56 September 4, 2012 by Berlin fuer alles
Somewhere safe to put capital in these unsecure financial times. Swiss franc is overvalued for now so this is a good alternative.
15:24 September 4, 2012 by The-ex-pat
I would hazard a guess that these flats do not really interest any investor, how the land that they stand on is another matter...................
18:07 September 4, 2012 by DOZ
If they are such a great deal, then why doesn't the Gov buy them up for affordable Housing
19:14 September 4, 2012 by franconia
Good Luck, I say ! Its only a matter of time before German authority decides that the buildings are an eyesore and have to come down. Hundreds, perhaps thousands of West buildings from the 50s have been torn down in the West, because they looked atrocius. Case in point: Nuremberg. I hope they dynamite all of them some day.
23:36 September 4, 2012 by Karl_Berlin
Doesn't matter what they look like. If you have, say, 10 apartments in one building and you are getting an above-market yield, then you're a happy bunny. Even though prices have gone up in Berlin, if you buy at a fair price, you're not gonna lose.

On an semi-related note: Don't believe everything that is reported about property prices and races to "snap up" properties. These are mostly just industry spin to get people to think they have to buy now or miss out. Worked for years in Ireland and I saw they are recently even starting up again...
08:07 September 5, 2012 by Englishted
"This influx of foreign investment into companies that own property that is causing the German property market to boom. "

Wasn't this a major cause of the crisis we are in ?,many European banks "invested " in the U.S. property markets at a terrible cost to investors.

Also if it is sooo good why can they buy from " bankrupt investor Level One in March, while in May Cerberus bought 22,000 flats from bankrupt Speymill Deutsche Immobilien Co. "

Why did they go bankrupt?
08:44 September 5, 2012 by strahlungsamt
Oh, this sounds like a great idea. I understand why people bought up Prenzlauer Berg and Friedrichshain for the yuppies/hipsters to move in and overprice. But nobody's going to move to the DDR blocks anytime soon. Most people in those areas live on social welfare and have their rent paid by the state. If Germany cuts back social welfare, where will the rents come from? There's sweet f-all jobs in the East anyway so basically, anyone who buys these flats is a sucker.

Another Celtic Tiger anyone? Or Helmut Kohl's "Bluehende Landschaften" (Flowering Landscapes)?
Today's headlines
Spectator killed in Nürburgring crash
A section of the Nürburgring's north circuit

Spectator killed in Nürburgring crash

A man has been killed and several others injured in an accident at Germany's Nürburgring racetrack. READ  

Alps Plane Crash
Germany to hold April service for crash victims
Photo: DPA

Germany to hold April service for crash victims

Germany will hold a national memorial ceremony and service on April 17 for victims of the Germanwings flight that crashed in the French Alps, killing all 150 aboard, regional authorities said on Saturday. READ  

Scientists aiming to redefine the kilogram
The world's roundest sphere. Photo: DPA

Scientists aiming to redefine the kilogram

The German Nation Metrology Institute (PTB) in Braunschweig has set itself the enormous task of finding a new formula for measuring a kilogram. READ  

Alps Plane Crash
Germanwings co-pilot 'hid illness' on crash day
Photo: DPA

Germanwings co-pilot 'hid illness' on crash day

Germanwings said on Friday that it had no knowledge of a doctor-signed sick note found by investigators at flight 4U9525 co-pilot Andreas Lubitz's flat. READ  

Varoufakis quells rumours of resignation
Yanis Varoufakis. Photo: DPA

Varoufakis quells rumours of resignation

Update: After German tabloid Bild reported that Germany's least-favourite Greek minister Yanis Varoufakis was considering resigning, the minister rejected the story on Twitter. READ  

Germany to expand disability rights
Photo: DPA

Germany to expand disability rights

A representative of the German Labour Ministry went before a UN Committee on Friday to discuss the government's plan for improved rights for disabled people. READ  

Alps Plane Crash
Germanwings captain's compassion goes viral
Photo: DPA

Germanwings captain's compassion goes viral

A Facebook post describing how a Germanwings pilot personally reassured his passengers of their safety on a flight on Wednesday has received over quarter of a million likes. READ  

Bundestag passes 'foreigner toll' for roads
Photo: DPA

Bundestag passes 'foreigner toll' for roads

The Bundestag (German parliament) passed a hugely controversial law on Friday which will charge foreigners for the use of German roads. READ  

Alps Plane Crash
Airlines agree two-person cockpit rule
Photo: DPA

Airlines agree two-person cockpit rule

The Federation of the German Air Travel Industry (BDL) confirmed on Friday afternoon that from now on two people must be in the cockpit at all times, in a bid to avoid a repeat of the Germanwings disaster. READ  

Germany urgently needs immigrants: study
Spanish immigrants in Germany. Photo: DPA

Germany urgently needs immigrants: study

A study by the Bertelsmann Institute found on Friday that Germany will need around half a million new immigrants every year until 2050 to maintain its work force. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Can the 'nightmare' of a pilot downing a plane be prevented?
National
LIVE: Co-pilot suspected of crashing plane
Pupils mourn lost classmates
National
Freed after 25 years on death row
National
Cologne Cathedral returns from space
Sponsored Article
What expat parents should ask before choosing a school
Features
Paddy's Day, Berlin style
Is your workload 'out of control'? You're not alone...
National
Why east Germans are happy to get it on on camera
National
What would you do with a 250-year-old pretzel?
Features
Just why is the German flag Schwarz, Rot, Gold?
Business & Money
Getting German workers and bosses thinking positive
National
Uplifting thoughts to get you through the last week of winter
National
Who wants the Olympics more - Hamburg or Berlin?
National
Last-minute drama of Germany's Eurovision 2015 entry
National
German photographer takes world's top prize
Features
Meet the woman getting Germans to drink more – and better – beer
Gallery
Get inspired for International Women's Day with German heroes
Sponsored Article
Expert US tax preparation for Americans in Germany
Green party proposes first-ever cannabis legalization plan
Gallery
In pictures: Germany's seven most livable cities
National
Singapore canes Germans for train graffiti
Politics
Surprise! Germans love feeling like they run the EU
Politics
Anger over plan to show women what men earn
Travel
Munich tram fans bicker over new bell
Features
Kafka: puzzling translators 100 years on
Business & Money
France or Germany: Which country really is the best country to work in?
Photo: Police
Rhineland
Student driver crashes tank into family garden.
Photo: DPA
Politics
There was a notable absence at the Anti-Semitism Commission
National
How Dresden bombing still divides Germany, 70 years on
Photo: DPA
Gallery
Take a cute break with this gallery of baby animals
International
What's keeping UK expats from voting?
Photo: DPA
National
Terror alert at a new high. Should you be worried?
Gallery
The best regional foods TTIP opponents want to protect
Photo: DPA
Features
All you ever needed to know about Pegida
Photo: Shutterstock
Culture
This cosplayer did not think his plan through
National
Europe in statistics - from Spain to Sweden
Gallery
Top 12 German idioms
Culture
10 top tips for partying in Germany
Photo: DPA
Technology
What does the Chancellor see as the future of the internet?
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

7,141
jobs available
Toytown Germany
Germany's English-speaking crowd