INVESTING IN GERMANY:Munich is the number one city in Europe to invest in according to a survey by Jones Lang LaSalle - while Dublin is number 73
THE FINANCIAL crisis and Ireland’s burst property bubble have tarnished somewhat the term “safe as houses”. That’s why investors still in the market and looking to play it safe are advised to turn their attention to Munich.
In recent years, while Berlin was the property darling among foreign investors, the Bavarian capital remained the insider tip of German property buyers.
But now the secret is out: Munich has been crowned Europe’s best investment location in a new survey by international property agents Jones Lang LaSalle.
In its European Regional Economic Growth Index (E-Regi) survey, the company studied 100 cities in 31 European countries and found Munich offered the best opportunity for investors, knocking London from its top spot. (Dublin came in at number 73, down from 68 last year.)
Like London, Munich is home to an array of international companies, but the survey found the Bavarian capital has escaped the worst of the crisis thanks to the strong performance of local small- and medium-sized businesses. While London has nose-dived to eighth place, Munich’s buoyancy has propped up the residential, but above all the commercial and retail, property markets.
“Munich offers particularly favourable business conditions, which are complemented by extensive RD activities,” says the E-Regi report, which is now in its 11th year.
Munich narrowly beat Paris and Stockholm in the quantitative survey that examined current, as well as future, prospects in three areas: economic growth, prosperity and business climate.
Germany as a whole fared well in the E-Regi survey, with authors praising the residential market in particular as “an opportunity with an exceptionally attractive chance-risk profile”.
Munich is Germany’s third largest city after Berlin and Hamburg. Best known for its yearly Oktoberfest beer festival, the city is home to over 100 leading companies such as Siemens and BMW. It is also one of the most popular tourist destinations in the country, attracting two million visitors last year.
In 2007 Monocle magazine ranked Munich in 2007 as the world’s most liveable city, writing: “A winning combination of investment in infrastructure, high-quality housing, low crime, liberal politics, strong media and general feeling of Gemütlichkeit (cosiness) make Munich a city that should inspire others.
The city’s popularity is reflected in the local property market. A recent survey by Munich’s Süddeutsche Zeitung newspaper suggested that property prices in the Bavarian capital are rising by as much as 15 per cent annually, particularly in the most desirable neighbourhoods of Schwabing, Nymphenburg and Grünwald.
Driving prices and demand is the city’s economic dynamism: Berlin’s reputation and quality of life are undermined by a consistently weak economic performance. Munich has reputation and quality of life supported by a purring economic engine that is kept in tune by the likes of Siemens and BMW.
With just 4 per cent unemployment, Munich generates €75 billion in GDP annually – 21 per cent of the Bavarian total.
Add an effective infrastructure, in particular excellent public transport, and it’s no wonder that Munich is a magnet for workers from elsewhere in Germany.
The Bavarian capital is the city that most Germans mention as a place they’d like to live in. A study by the Bavarian state government suggests that another 150,000 people are expected to move to the city by 2025.
That would put the city-limits population of Munich above 1.5 million; currently the Munich metropolitan area is home to over five million people. The migration trend will boost further what is already Germany’s most expensive residential property market.
Since 2005, rents have risen consistently, reaching an average of €12.80 a sq m in 2008, a German record. Just 7,000 new apartments are needed to satisfy demand, according to official statistics, far beyond the 3,000 coming on the market each year.
“Whoever’s looking for residential property in Munich should, besides price and financing, keep a close eye on location,” says Artur Riedel of the Bayerische Hausbau property company. “Munich is a very attractive location and an investment here means security both for investors and for owner-occupiers.” Despite Germany’s economic downturn, several high profile projects are proceeding to plan. The Skyline Tower promises to be a new city landmark: construction began last December on this office block tower in the Schwabing district to a design by German architect Helmut Jahn.
Meanwhile the Welfenhöfe, currently under construction in the Au-Haidhausen neighbourhood, is one of the last large-scale mixed developments on the horizon in the city centre. Anyone interested in getting a feel for the residential property market should get to Munich’s Olympia Park event area for the Eigentum Wohnen trade fair. Opening tomorrow, it brings together developers, agents, lawyers and city officials.
TOP 10 CITIES
1. Munich
2. Paris
3. Stockholm
4. Oslo
5. Luxembourg
6. Moscow
7. Helsinki
8. London
9. Stuttgart
10. Gothenburg ...
and Dublin comes in at number 73
E-REGI Ranking 2009
