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Investment guide
With a population of over 82 million, Germany is the largest country in the European Union. A labour force of almost 39 million, including four million entrepreneurs, make the country the Continent’s largest economy, with a gross domestic product of around 2.2 trillion euros.
Berlin- A Population of Tenants
Unlike the British, the German population are not infatuated with home ownership; in fact Germany has the highest proportion of rented property in Europe averaging 57.4%, in Berlin this leaps to an average of 84%, nearly three times the average in the UK. Furthermore the German market is characterised by long rental terms of typically 10-15 years compared with less than 3 years in the UK.
Rental Yields Are Rising
Berlin is one of the fastest growing capital cities in Europe, however it still has one of the lowest prices for rental, averaging @5.71 per square metre. Already attracting substantial inward investment, the rents in Berlin are widely expected to increase significantly over the next 10 years. Bringing Berlin more in line with the rest of Germany, this alignment in the market signifies a real buying opportunity with strong fundamentals supporting the rise in rental yields.
Property ownership & valuation
Much of Germanyls rented property is owned in portfolios by large institutional investors and pension funds and as such it rarely comes onto the open market for sale. However, Propfund is able to acquire these off-market portfolios from these institutions at below market value through the long standing relationships they have established in this sector. The method of valuing a property in Germany is dictated by a multiple of the rental yield. This compares favourably to the British marketplace, where demand for a property very much dictates the valuation. By purchasing portfolios of properties, Propfund Germany are able to negotiate and acquire these properties at a much lower price than if they were buying individual properties, creating buying-power and value for its investors.
