Published:
Tuesday, 14 Aug 2012 | 5:43 AM ET
CNBC.com Deputy News Editor
Despite yielding extremely low or even negative returns, German Bunds have not lost their safe haven appeal, underscoring the huge appetite among investors for low risk assets as the euro zone debt crisis drags on. But a new asset class is on the rise – and many believe it has a lot more to offer.
 |
Ruth Eastham &Amp; Max Paoli / Getty Images/Lonely Planet Image
Reichsstrasse houses in historic center.
|
Investors are flocking to the German real estate market, lured by steadily rising house prices, low mortgage rates and a stable macroeconomic outlook.
"'Safe
haven' is on everyone’s lips. And if investors ask themselves in which
regions and with which investment vehicles it is still possible to
invest, they will not be able to avoid property,” Dr.Frank Pörschke, CEO
of real estate services group Jones Lang LaSalle Germany said in the
group’s latest German property market report.
Figures released on Tuesday showed the German economy grew modestly in
the second quarter, just beating forecasts and staying ahead of other
euro zone countries facing stagnation or a contraction in growth.
Helge
Scheunemann, head of research at Jones Lang LaSalle Germany told
CNBC.com that insurance groups, pension funds and open-ended funds were
the main buyers, and that investors were mainly German. They are
interested primarily in existing properties, rather than new
developments, in the western cities of Hamburg, Munich, Frankfurt and
Duesseldorf.
“The
rise in prices we currently see is mainly due to the stable economic
situation we have in Germany and a decreasing unemployment rate, as well
as a lack of supply of good property,” Scheunemann said. “The higher
demand is related to the overall economic situation. We have low
interest rates and fewer alternatives for institutional investors.”
Nominal
house prices in Germany declined by around 10 percent between 2000 and
2005 and then stagnated until 2009, before rising at 2 to 3 percent per
year in the last couple of years, according to Deutsche Bank research.
Prices
are higher in the country’s biggest cities, but a discrepancy between
the east and west of the country persists as people flee eastern
Germany, including Berlin, in search of jobs in the more prosperous
West.
Scheunemann
added that unlike many Americans or Brits, most Germans are happy to
rent for longer and don’t dream of home ownership (related: Americans Rewrite the Dream) .
In
addition, 100 percent home purchasing loans are not available and
buyers need a deposit of as much as 30 percent. These factors could help
to explain why prices have remained relatively low.
“It is not a boom. You can’t compare it with the U.S. the U.K. or Spain,” Scheunemann said.
The
gains witnessed in Germany are in line with economic growth in the
country, analysts say, and differ significantly from the double digit
increases seen in Ireland and Spain (related: Europe's Modern-Day Ghost Towns) before the credit crisis.
“Despite
the deep global recession in 2008/9, Germany has experienced average
annual real economic growth of 2 percent since 2005 compared to less
than 1 percent between 2000 and 2005. The economy and residential
property prices developed quite similarly,” Deutsche Bank said in a
recent report. “The recent increase in residential prices went hand in
hand with a rise in disposable income, so the price-to-income ratio
remained flat.”
The
bank believes the flight to safe havens is likely to continue to
support German house prices in the near future with prices are likely to
rise fastest in cities with more than 500,000 inhabitants.
Scheunemann
agreed that prices were in line with the economic fundamentals, and
largely dismissed talk of a brewing bubble in German property.
“There
is good demand and incomes are stable,” he said. “There is a danger (of
a bubble) maybe in a few years,” he said, with some signs in certain
locations, but the gains seen so far in prices were not a cause for
serious concern.
沒有留言:
張貼留言