While the COVID-19 pandemic has already left its mark on many areas of the economy, it seems to be bouncing off the real estate market.
In the Deutsche Bank newsletter “Perspective in the Morning” on October 23, Dr. Ulrich Stephan, chief investment strategist for private and corporate clients, on the interest of investors in German residential real estate with a view to the fourth quarter of 2020 and the coming year 2021.
Higher transaction volume
So far, investors’ interest in German residential real estate has not diminished despite the COVID-19 pandemic and the associated crisis, said Dr. Ulrich Stephan. According to the experts, the transaction volume for properties with at least 50 residential units increased by almost 30 percent in the first three quarters of 2020 compared to the same period of the previous year – to almost 16 billion euros. He expects that the investments of institutional investors, which include insurance companies and funds, will not suffer in the fourth quarter and will continue to invest “heavily in large residential buildings”.
No decline in demand is expected
In addition, the Deutsche Bank expert assumes that the total amount of transactions for the entire year 2020 will exceed the value of the previous year of 17.2 billion euros, which means the second highest volume ever achieved. “A decline in demand for real estate investments is hardly to be expected in the next year either. […] Major price corrections are not to be expected in view of the persistently scarce supply at most locations. ” Ulrich Stephan in the newsletter. In addition, the comparatively high returns would speak in favor of the attractiveness of German residential real estate.
Price increase for residential real estate expected by 2030
According to a study by the Hamburg World Economic Institute (HWWI), which was carried out on behalf of Postbank, prices on the residential property market can continue to rise until 2030. As the Postbank press release regarding the results of the study shows, owners of apartments in more than half of the 401 German districts and cities can expect the value of their property to increase in real value by 2030, i.e. adjusted for inflation. Annual price growth until 2030 is assumed across the board, especially for residential real estate within Bavaria.
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