Real Estate Industry in the DACH Countries – Flying out of the Squadron

The real estate market in the D-A-CH region is one of the most attractive areas worldwide. Not only because it’s the largest in Europe but also because of its stability and quick development.

The Flags of Germany, Switzerland and Austria

In the same time, some Euro countries  (Ireland, Netherland, Greece, and Spain) passed by an unstable state of housing prices. Germany, Austria and Switzerland moved into another direction of steady reasonable increase in prices. This was between the second half of 1990s till the early of 2000s. This path remains constant until the economic crisis in 2007 arise that resulted in the highest property prices in the Euro area. On the contrary to the rest of Europe, Germany watched a significant price rise by 44% in 2014 and stand out with a 1.3% annual increase in housing prices between 1980 and 2013.
 


 

From this graph one can easily figure out that these three countries have made a unique experience in the real estate market, they remained on a constantly increasing flow facing all the economic crisis and sailed against the current. This triggered the important question, why only Germany, Austria and Switzerland managed to do this, what are their pillars that saved their market structure?

The answer is below:

  • Well planned rental markets.
  • Low home ownership ratio.
  • Improved tax system.
  • Market enhancements.
  • Demographic changes as immigration.

 

In the next part, you will know more insights about the business environment and what are the next future trends you need to watch out.
 

Germany as an Indicator for Real Estate Market Stability – A Closer Look

The German real estate market has been called the “safe haven” for years now, it’s attracting investors worldwide because of the steady economic state and low-interest rate. The real estate industry in Germany represents 20% of the total GDP. The book Understanding German Real Estate Markets have stated that “The German economy is the largest in Europe and ranks fourth in the world. Property values in Germany reflect that importance; net fixed assets currently amount to approximately 8 trillion euros, of which approximately 60 % is residential property, 25 % commercial, and 15 % public real estate and infrastructural construction.” If we divided the real estate industry into two dominant sectors, we will find:
 

Residential Market

After years of moderate growth rates in sale and rent prices. Germany experienced a dramatic change in the low-interest rates maintained by the European Central Bank and thus massive liquidity available in market, that all led to a significant price and rent increase.  There are two major factors that affect the residential units demand in market, the population and the number of properties existed.
Graph - Deutsche Bank Research of the German Housing Market in relation to the Population

With the continuous increase in population and the low number of units available in market the rent growth is accelerating, pushing the construction and real estate industry to move forward faster to provide sufficient relief.
 

Commercial Market

Considering the commercial real estate in Germany, a study made by PWC  showed the division of investment in commercial real estate by type of use as following “office real estate made up the most significant part of turnover at €16.8 billion, accounting for 42.5% of total turnover. This was followed by investments in retail real estate valued at €8.52 billion, comprising 21.6% of total turnover. In these times of e-commerce, people are able to purchase goods and services easily from home, and the demand for faster delivery in big cities has led to an increasing demand for logistics real estate over the last five years. At around €6.67 billion, retail real estate was responsible for some 16.9% of the transaction volume. The smallest part of the transaction volume came from hotel real estate, with a turnover of €3.07 billion or 7.8%. Experts predict a further positive trend and expect a total investment volume of at least €50 billion for 2017”.

Graph Investing in German Real Estate

Now you can easily realize why investors called this market a safe haven and what supported its stability for all these years. If you want to invest in the real estate industry in the DACH region you must cope up with the fast pace of technology. Keep yourself updated and know what the future predictions and trends in this market are.
 

What are the Future Trends in the D-A-CH Real Estate Market?

The real estate industry is one of the most complicated industries in the whole world. It consists of multiple interlaced branches, if you want to develop the industry you must trace these branches and develop all of them. Here are the 8 main sectors of the real estate industry and what are the emerging trends in each one of them.

  1. Changing of work
  2. Smart real estate.
  3. Digital real estate marketing.
  4. Real estate management.
  5. Construction planning.
  6. Building management.
  7. Valuation asset management.
  8. New business models

 

Table of New business models in Real Estate by Peter Sittler
These trends have made a revolutionary change in the real estate market. Also, the newly developed tools and software in the PropTech sector are changing the whole business environment into a more integrative and productive area. In addition to that, real estate industry is one of the top safe industries to invest your money in. It’s no longer only an asset to save your money in, but a profitable and progressive industry. All that you need is to implement the right technological tools that match with your business type and wait for the yield. Today is better than tomorrow, don’t hesitate and be part of this industry now.

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