For some German lenders, Brexit has already happened, despite banks raising their loan-to-value limits for foreign buyers.
Until recently, non-German nationals purchasing a property in Germany would be expected to put up at least half of the purchase price – plus pay all purchase costs. This changed last year, when some lenders raised their loan-to-value limits to 75 per cent in certain circumstances, but the effect of the UK’s Brexit vote last June has already deprived many British buyers from this increased availability of capital. Why?
In short, the pound. Since last June, the value of sterling has taken a downward direction against the euro and many other major currencies.
“Apart from making property prices on mainland Europe more expensive in relative terms for UK buyers, the volatility of currency values we have already seen – and are likely to continue to see over at least the next two years – has made many German lenders nervous to lend at all to people who earn their main income in Sterling,” cautions agency Black Label Properties.
“With UK domestic inflation also rising and wage growth stagnating, lenders are taking the view that British loanees are becoming to high a risk. For these institutions, Brexit has already happened.”
Nonetheless, Berlin remains a popular target for foreign investors, thanks to the country’s booming population and shortage of supply, which both underpins capital growth and demand for rental property. Indeed, the German mortgage market’s tougher regulations than the British lending industry is an indication of how much more seriously Germans take homeownership, often making that commitment later in life and living in rented accommodation for much longer.
With property prices in Berlin still rising from their historic lows, the capital city remains a particularly popular target for foreign investors. Indeed, UK buyers who bought property in the city in the last decade have made a very healthy profit on their investment, although the city still ranks as more affordable than other German cities such as Frankfurt, Hamburg and Munich.
“Over the past year we have seen increasing interest from buyers who have released equity from their UK property and are looking to invest in Berlin rather than the frenetic and expensive British property market,” adds Black Label Properties. “Some of these are parents with children who are studying in the city and are buying both for them and for long-term investment. Others are simply attracted by buying in one of the best-regulated and safest property markets in the world.”
Germany dominates property investment wishlist
24th October 2016
Germany has emerged at the top of real estate investors’ wishlists, according to new research, which sees the country account for two of Europe’s three most attractive cities in 2016.
The year has been one of surprises for the property world, thanks to the UK’s unexpected vote to leave the European Union in June. Since then, the Brexit vote has seen the pound weaken against other countries, boosting the appeal of UK property to foreign buyers. While London is the most sought-after city for commercial real estate investment, thuogh, a study by BrickVest reveals that Germany’s popularity has enjoyed the biggest boost post-Brexit.
The country makes up two of the top three most attractive cities for commercial property investors: Berlin (36 per cent of survey respondents) and Munich (31 per cent). Both are ahead of Paris (22 per cent) and behind London (38 per cent). The top five is completed by Dublin (21 per cent). Germany accounts for four of the top 10 in total, more than any other country, with Hamburg (21 per cent) and Frankfurt (16 per cent) also present.
BrickVest found that three in ten institutional investors believe Brexit will either increase or significantly increase European commercial real estate investment opportunities. A further one in four believe that Brexit will have no impact on commercial real estate investment opportunities.
Emmanuel Lumineau, CEO at BrickVest, comments: “Our research has identified London as the number one European city to invest in commercial real estate as investors seek to capitalise on potential price discounts and market uncertainty. However Germany dominates across the leaderboard and we have seen plenty of appetite from investors looking to capitalise on income producing portfolios across Europe and take advantage of the Brexit vote.”
BrickVest allows investors to invest from €1,000 in real estate that previously was only accessible to large institutions such as pension funds, insurance companies and large family offices.
BrickVest offers a range of investment opportunities allowing investors to select an opportunity based on the preferred asset class, geography and return profile. Unlike property crowdfunding platforms, which first need to raise enough financing from investors in order to acquire a property, all the investment opportunities on BrickVest’s platform to date have already been closed. This means that investors can immediately acquire their stake in the property.
The rise in Germany’s appeal since the UK’s vote to leave the EU is backed up by TheMoveChannel.com research, with the country rising to become the fourth most popular destination on the site in July 2016. Since then, it has remained in the portal’s top 10 destinations for three months in a row.Google+