Munich

Property investment in Munich: real estate market in 2020

Munich Real Estate marketplace review

There is plenty that Munich can boast about. There are top companies in Munich such as BMW, Siemens and Allianz which help make the city one of Germany’s hotspots. Economic prosperity has influenced house prices and has caused them to rise over the last few years. Today, according to Engel & Völkers, Munich is Germany’s most expensive city to purchase land, with asking rates in some exclusive developments exceeding €35,000 per square meter. In the area, the average price per square meter is €7,630, dwarfing the €2,993 in Germany as a whole. In fact, prices have risen so steeply that a UBS report regards Munich as Europe’s largest bubble risk. In the 20 cities analyzed by the Real Estate Bubble Index, only Hong Kong is at greater risk.

It is essentially a perfect time to buy a house or a flat. Particularly because long-term interest rates (ECB) look set to remain very low for some time to come. Compared to major cities like Frankfurt, Munich, Berlin, Düsseldorf and Hamburg, there is a dichotomy in property prices between more regional and small town locations. A lot of the larger towns have also seen a major price rise for both rentals and purchase rates.

In Munich & Germany, buying rates remain moderate overall as opposed to many other economic hotspots.

Unlike many other countries, Germans prefer to buy real estate for life. They still don’t see the more traditional, Anglo-Saxon custom of now purchasing and constantly updating. It explains why there are less fluctuations in real-estate values on the market, even as demand for some locations remains strong. Investing in property in better places is usually wise. Location is still the prime driving force when buying property. A good transport, schooling and business score in infrastructure also pays long-term dividends.

Compared with elsewhere, the percentage of Germans owning their homes in Munich is relatively high. It is the lowest in the entire European Union at about 52 percent. That has grown from around 46 percent in 2014, though. This substantial pace of growth is expected to continue at key locations. The ratio, as in other nations, varies according to level of income. The more wealthy, the more likely they are to own their own house.

The number of Germans owning their homes in Munich is quite low when looked elsewhere. At around 52 percent, it’s the lowest in the EU. However, this has risen from around 46% in 2014. This significant growth rate should continue at key locations. As in many countries, the wealth distribution causes the ratio to differ. The more affluent people are more likely to own their own property.

It might be that extensive home purchases from expatriates are causing that rate to rise further. There are no legal limits on land owned by non-Germans, and many expats have considerably higher income levels and requirements for housing. This, combined with the ECB’s inability to raise the deposit rates at this time, is causing capital flows in many markets to try investment in property as a way forward. The only obstacle to foreign property ownership can lie with the financial institutions offering mortgages.

Property investment for foreigners

The Munich & German real estate market is obviously an investment-friendly stronghold situated at the center of Europe. International buyers are not faced with any clear limitations but rather enjoy fair rights and responsibilities when it comes to land acquisitions. Because of the rise in the number of city dwellers, the increasing rent rates and a healthy and attractive environment, property owners can benefit and expand accordingly. In short, there is a place for any serious investor to take an active part in the Munich real estate market.

Is real estate investment in Munich a good idea?

Sure, as Germany is attracting a growing number of international and domestic investors searching for high-quality, highly-profitable real estate. Assets produce income of 3–4 percent per year and up to 5–6 percent in the north of the country. Interest rates will remain low for some time, which is good for those who want to buy the property and keep it at key locations.

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