The number of deals in Germany has grown recently by 40%. For example, a property delivering a 5.5% capitalization delivers an 8% overall rate of return, which includes debt without amortization. Such profitability is now available both for offices on the periphery and in small logistics complexes.
In terms of taxation, regardless of the deal structure, Real Estate Transfer Tax (RETT) is a must. Its size typically depends on the region of Germany, but on average it reaches up to 6%.
In recent years, as the demand for real estate in Berlin has increased, the profitability has dropped to a similar level to that of Germany’s other largest cities: Hamburg, Munich, Cologne, etc.
Globally, the total volume of all German real estate investments has decreased by 17%, displacing the UK. Sector-wise, the hotel, retail, and all related sectors have failed. Profitable real estate, warehouses and offices, has grown. Coworking and coliving spaces are also on the rise worldwide, including Germany where this sector has developed exponentially over the last years.
Mikhail Devyatov, Managing Director of Real Estate Department, UFG Wealth Management