German property prices making up for lost time, stoking bubble concerns
Berlin tops global ranking of 150 residential markets compiled by Knight Frank, with Hamburg, Munich and Frankfurt also appearing in the top 10
German home prices are rising at the fastest pace in decades, reviving talk of a property bubble. Michael Zahn’s company owns more than 160,000 apartments and he’s having none of it.
“For 20 years, we had no growth in Germany at all – nothing,” the 54-year-old chief executive of Deutsche Wohnen said in an interview. “We’re now making up for lost ground, but that doesn’t mean the market has peaked.”
German homes have appreciated by about 60 per cent since 2010, Fitch Ratings said in a report last week. That’s an unprecedented increase for a market that was slow to embrace home ownership and attract foreign investors.
“Property yields have come under extreme pressure in the big cities,” said Udo Cordts-Sanzenbacher, co-head of residential investment at BNP Paribas Real Estate in Frankfurt. “On the other hand, there’s a huge amount of liquidity in the market, and prices are still relatively low by international standards.”
Berlin, Deutsche Wohnen’s base and its largest market, has been the boom’s biggest winner.
Investors spent a total of €14 billion (US$17 billion) on German homes last year, up from €13.5 billion in 2016