Nery Alaev

The future for affordable housing in Germany

This week, affordable housing was identified as a potential boom sector by experts in real estate.

I have decided to examine this and the reasons why Germany is fast becoming a potential hotspot for real estate investment.

Attractive locations

The identification was made by a meeting of experts at PropertyEU’s Germany Investment Briefing

One contributing factor identified was the lack of one central city, such as Paris or London.

Germany, in comparison to France and the UK, doesn’t have a major population centre that attracts workers and students. Instead, cities such as Munich, Hamburg, Cologne and Berlin attract workers and students respectively as opposed to one city alone receiving the lion’s share of settlers.Berlin houses - Nery Alaev

Thomas Beyerle, managing director and group head of research at Catella, said “Office buildings will continue to be converted into resi, but instead of becoming luxury flats they will be converted into affordable housing.”

Mr. Beyerle also stated that the German government is keen to stimulate the market.

Consumer demand

Those in need of such housing differ. For example, Property Investor Europe identifies students as a large market and student housing as an area of potential growth. This growth has come from the shortening of time to reach high school qualification in Germany, which has led to more students entering university.

Investments in German student property increased by 40% in 2014, according to Property Investor Europe’s article.

As well as students, there is also the large recent influx of refugees to Europe that identify as a potential market for affordable real estate.

Thomas Beyerle said “Refugees are not a problem, as there are 800,000 people and there are 1.6 million vacant flats.” Many of the refugees in Germany or moving to Germany may choose to stay in the country permanently, which makes them active members of the property market.

In summary, the increasing demand from several different groups of people for affordable property in Germany means that the future for investing looks bright.

Nery Alaev

Nery Alaev is the current Director of ESN Investments GmbH, which engages in acquisition and development of commercial and residential property in Germany and Austria.