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The German prospect

13th October 2008 | back to article listings BACK    print this article PRINT

Those looking at investing in property around Europe may have been doing a lot of revising recently. The appeal of many new markets in eastern Europe has waned. Portugal has seen better times and Spain is in a deep trough. Alternatives are sought, with stability in these turbulent times being an appealing aspect.

For this reason, many look to France, which can offer not just stability but easy access, varied scenery and property types and lifestyle attractions that may particularly appeal to investors who will want to live there for part of the year. These factors may offset the absence of soaring values.

The same may be true of Germany, historically a place where house prices have stagnated in recent years, something that is far less of an issue than in countries like Britain due to lower levels of home ownership but also a location where some might enjoy the appeal of the scenery or cultural events such as the Oktoberfest.

But what of Germany as an investment location? In the first instance, of course, the country needs to have a secure economy and today it has copied Britain with a banking rescue package, reportedly worth anything between €480 billion and €500 billion (£390 billion). Like Britain, the hope is this will save the banks from possible collapse, ensure there is enough capital and ease liquidity problems.

The property market itself is a good long-term prospect, according to Invista Real Estate Investment Management, the Move Channel reports. This firm has backed the country precisely because, like France, it is a slow-burner where the gradual accumulation of value over the medium term is possible, in contrast to the greater volatility seen elsewhere.

Head of continental European research at Invista Tim Francis commented: "The global economic events of the last 12 months have forced investors to reassess their attitudes towards property risk and pricing.

"Despite recent weak economic data, we believe the German property market should consolidate its position as a key investment target for diversified investors."

This view is held by others thinking in a similar way. Last week the Guardian reported that many people are seeing the safe but calm waters of the German property market as a better alternative than riding the waves of the choppy property sea elsewhere.

Iryna Pylypchuk, an analyst at property consultancy CB Richard Ellis, said there are also some property bargains to be had, commenting: "I think there will be more deals where owner-occupier retailers are pushing the margins and keen to sell their real estate."

So while Germany might not be the most exciting investment market at present, it may be that in the midst of the current storm a safe haven is just what some are looking for.

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