Capital inflows into the real-estate market have increased by 60 per cent so far this year amid signs that the economy is recovering
International real-estate investors are pouring money into the German market with the country beginning to shed its image as the 'sick man of Europe'. In the second quarter, gross domestic product grew 0.9 per cent, the largest increase since 2000.
With the German economy evolving as one of the biggest winners of globalisation, fixed-asset investment in the federal republic is growing faster than at any time since the early 1970s. According to a recent study by Cushman & Wakefield, capital inflows into the German real-estate market have increased by 60 per cent so far this year.
Most of it went into retail properties which are profiting from a rebound in consumer spending. The stubbornly high German unemployment numbers were stuck at more than 10 per cent since 2003 but have been declining for the past couple of months. No wonder 60 per cent of the Euro18.1 billion (HK$179 billion) that were invested in commercial property in the first half of the year went into retail projects.
'The performance of German assets has been driven by increasing interest from foreign investors,' said David Skinner, head of European research at Pramerica Financial, the property investment arm of Prudential, the US insurance group.
Of the Euro95billion that flowed into European markets during the first six months of the year, about 20 per cent was committed to Germany, according to Jones Lang LaSalle.
A survey by Ernst & Young among more than 1,000 international investors in the summer revealed that 18 per cent of all participants rated Germany as 'extremely positive', with Germany taking third place worldwide behind the US and China.
