German Investment Growth

As an investor it is important to consider the growth potential of your chosen property in Germany and understand exactly what drives this growth.

German Economy

The German economy is the biggest, strongest and most stable economy in Europe, not because the rest of Europe is falling apart, but because of years of low spending and strong exports. In fact, while Germany is the 4th largest economy in the world (by nominal GDP) it is the third largest export nation in the world according to the CIA – arguably the second given that the EU is currently holding that spot and isn't a country, not to mention the fact that without German exports the EU would be nowhere near that high.

The German economy has proven extremely resilient to the financial crisis. After only a short recession that cost it 5.1% of its GDP the economy has grown by over 7% since, including full year growth of 4.2% in 2010 and 3% in 2011. Growth is thought to have slowed last year to just under 1%, but if one knows Germany this will mark a return to the slow steady, but ever-continuous growth.

Solid Economic Growth Base

As was mentioned above Germany is one of the biggest exporters in the world with exports totalling $1.408 trillion in 2011 up from $1.303 trillion in 2010, according to the CIA World Factbook. At this level you would expect exports and industry to be a main driver of the economy, but this is not the case. In fact the Industrial and Construction sector accounts for only 29% of German GDP, while the Services sector makes up 69% of GDP. Such vastness in its economic infrastructure gives Germany an incredible solid base for growth, which is probably why it has grown continuously if not excitingly for decades.

Undervalued Property = Capital Appreciation

Despite growth in the last couple of years, German property is still among the cheapest in Europe, especially compared to other countries of similar size and stature. This gives German property strong capital growth potential.

Reasons Why Germany is an Intelligent Property Investment Location:

  • Foreigners can invest in property without restriction
  • Economy recovering strongly, after 5.1% contraction in 2009 growth returned at 4.2% in 2010 and 3% in 2011.
  • Prevalence of renting (up to 60% of residents in some cities rent their home)
  • Government rental controls regulated property prices and prevented a bubble during the boom
  • Low property prices
  • Economic growth has slackened rental controls increasing yields and bringing price growth
  • Safe haven status has given a massive boost to the property market
  • Weak construction for decades means low stock levels in the property market
  • 5th largest economy in the world by purchasing power parity, 3rd largest exporter – 2nd not counting EU

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