This week, I was at Spark Europe in Frankfurt's Junghof Plaza. Several project developers, including Bonava, SwissLife, Instone, and Die Wohnkompanie, had been invited to a presentation of their current new development projects in Frankfurt and the surrounding area. For me, the substance of Germany's residential real estate market is strong. The structural fundamentals for residential real estate investments are despite the recent rise in interest rates intact.
There is a considerable need to catch up in terms of residential construction in the conurbations. In recent years, significantly fewer apartments have been completed than were actually needed due to population growth, immigration, and social change. According to the Federal Statistical Office, prices for residential real estate in Germany are already on the rise again. Rental growth is very dynamic. The demand for housing continues to be driven by the growing population and the increasing number of households.
A higher government debt ratio in the future will also increase inflation expectations. As a result, tangible assets such as real estate will become even more critical. The planned government investments in infrastructure will tie up construction capacity. Prices for the construction of new residential properties will increase. The result will be a worsening housing shortage.
Anyone with sufficient equity and liquidity should act now and secure attractive entry opportunities in the residential real estate market.
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