German property top investment location

I recently read a report on the German property market by Invista Real Estate Investment Management in which they rate Germany as the top real estate investment market in Europe (closely followed by France and Italy).

I have to say the report was a complete load of rubbish.

The German property market (and coincidently the French and Italian property markets) is the one of the last places i'd put my property investment cash!

There are a number of very good reasons for this ...

1. Economically Germany still has a lot of problems. Growth is very slow, unemployment very high and there is a complete lack of confidence.
2. Taxes and regulation are very high and burdensome.
3. Property prices have been in decline since the mid 90's and in the last 4 years have stablised but have shown very little growth at all (maximum 5% in the best regions). There is little sign that prices will increase much over the next few years either.
4. Mortgage finance is appalling, especially for foreign investors. German banks are very conservative. LTV's are only around 50%, have high fees and are inflexible. This significantly reduces investors returns.
5. Buying costs are extreme. Often buying costs add a huge 12-13% on top of the purchase price of a property. Sales costs aren't small either. This means your property has to grow at least 13% before you get your money back (then the German government will still take a large slice of the profit). This makes the German property market very illiquid - not good - and increases investors risk substantially.
6. Whilst the rental market is billed as very good yields are still only around 4% these days, and as a landlord the laws are very much in favour of the tenants (who know their rights!).

I could go on but I think you get the point.

No price growth, huge buying costs, no confidence, high tax, high regulation, poor finance - I couldn't think of a much worse market to invest in!

Unfortunately this report is typical of such funds who try to apply stock market investment theory in the real estate market.

My advice is don't buy property in Germany.

www.propertyinvestmentinternational.com