(1888PressRelease)
April 21, 2007 - Germany is the largest economy in Europe and the forecasted growth should mean increased affluence and the creation of more jobs. "German exports are surging, joblessness is falling and consumer price increases moderate," according to Business Week analysts. Another possible side effect is a higher demand for commercial property in key German cities.
The latest European property report issued by Scottish Widows Investment Partnership (SWIP) found that the German property market had experienced "significant growth" in 2006. This was attributed to a rising service sector, which is beginning to fill he gap left by the decline in the traditionally dominant marketing sector. According to SWIP, the rise of the service sector will fuel a demand for office property.
Frankfurt was found to have seen the largest returns for office property last year, which at 32 per cent have reached their highest levels in more than 15 years. The commercial property rental market in the city has also experienced "positive growth", the report found, attributed to "booming growth in the business and financial sectors, which now accounts for a third of employment in the city".
Indications for future growth in Frankfurt are good, according to SWIP, because there is a low vacancy rate for office property, especially in Grade A buildings. Service sector growth has apparently boosted commercial premises rentals by 14 per cent between 2005 and 2006. Another city that has been identified as being a positive prospect for the future is Hamburg.
SWIP expects the city "to lead Germany's office property market over the next five years". A "well positioned" service sector is singled out as being the most likely driver behind a boost in the commercial property rentals market and the organisation is prediction returns of around nine per cent in the city.
According to Robert Matthews, head of international property at SWIP, "we're seeing the start of a three to four year cycle starting now which will see the German market gain confidence". In his opinion, "Germany doesn't have a single dominant city" and has several areas that present a range of opportunities for buy-to-let investors. However, he added: "Our forecasts point towards steady growth in Hamburg over the next few years, where economic indicators and increased demand for office property bode well for future growth."
