Here's How the Boring German Housing Market Turned Piping Hotby
Rents climbing in Berlin, Hamburg, as more people move there
Germany has one of the world's lowest home-ownership rates
Germany’s housing market is hot.
Rents are rising in big cities including Berlin and Hamburg as young people seeking work move there from rural areas and elsewhere in Europe. Construction, however, has been slow to catch up, which has led to housing shortages and made leasing apartments a bonanza for landlords.
Low interest rates make it cheaper than ever for companies to buy apartments, fueling record acquisitions by landlords including the country’s biggest, Vonovia SE. Portfolio sales rose from 5 billion euros ($5.3 billion) in 2011 to 18.4 billion euros in the first nine months of this year, according to data compiled by Savills Plc.
While shopping-mall owners and office developers dominate the listed-property sector in other countries, Germany’s residential property market is lucrative for landlords because it’s a nation of renters -- and Germans tend to pay their rent on time.
The surge in mergers and acquisitions, coupled with rising stocks, have allowed the market value of Germany’s publicly traded landlords to grow tenfold since 2012. The top two -- Vonovia and Deutsche Wohnen AG -- are now among the world’s biggest owners of homes, surpassing peers in the U.S. What’s more, Vonovia wants to buy its rival to create Europe’s No. 2 property company.
With about 1 million refugees expected to enter Germany this year, the most of any European country, demand for apartments is unlikely to shrink anytime soon.