Germany managed to overtake the UK as the most active commercial property market in 2016 with transactions totalling €59 billion, research has revealed.
Global real estate advisor, Knight Frank, explained that since last year, Germany has slowly been established as Europe’s safe haven. This is mainly due to its robust economy, relative political stability and diverse property markets.
More than half (55%) of all transactions were spread across the country’s seven key cities: Berlin, Frankfurt, Hamburg, Munich, Cologne, Dusseldorf and Stuttgart.
Over 60% of investment transactions of the last year happen between German buyers as the competitiveness of the country’s pricing has started to price out overseas investors.
A big part of Berlin’s success is its emergence as one of Europe’s creative hubs, which led to a lot of office space being taken up over the last three years. This trend made a compelling case for for investors and led to a total on transaction of €5.7 billion in 2016.
Furthermore, Knight Frank highlight Frankfurt has Europe’s leading financial centre and home to 230 national and international banking institutions. Last year, the city also saw its highest level of leasing activity since the global financial crisis in 2007.
Munich, another one of the big seven, is Germany’s second largest employment hub with around 30,000 jobs created every year. This underpins a very strong demand for office space.
James Roberts, chief economist at Knight Frank, explained:
“Germany is one of the premier advanced economies in which to invest, and it emerged as the leading destination for real estate capital in Europe in 2016.”
“The economic outlook remains strong, as it continues to lead the recovery in mainland Europe, although with a national election in September some investors may adopt a more cautious stance in the short term.”