Real Estate Market- Introduction
The properties that are available for purchase or sale in a certain location make up the entire real estate market.
If a location is called New City and there are properties up for sale, the area is known as the New City Real Estate Market.
When individuals say the market is down or up, they are referring to economic forces that might result in a decline or increase in the supply of properties in the given area (i.e., factors that determine the competitiveness of the real estate market in that area).
Property prices may increase or decrease as a result of it.
The rule of supply and demand determines how the real estate market works, and it states that prices will increase when supply is less than demand and decrease when supply exceeds demand.
You should be aware of the following things regarding the real estate market in your country:
1. Governmental policies
It plays an essential role in the real estate market. By providing tax deductions and credits to developers and investors, the government not only promotes better national development but also has the potential to draw in international capital for investments in both residential and commercial real estate.
2. The economy
The nation’s economy is another crucial factor. Investors will be attracted to your country if its economy is strong, has plenty of jobs, a strong GDP, and a strong financial system.
Therefore, if your country’s economy is unstable enough, no one will invest there.
3. Trust in Market
People will be more willing to invest in real estate if they have faith in the market, thus developers and investors must be honest.
By doing so, customers will gain confidence in the market and invest more money.
4. Property Interest Rate
The interest rate on homes and other rental properties is another major element that is crucial.
Fewer people will participate in the real estate market if taxes are high; instead, they will choose to engage in some form of business.
Due to this factor, some people may also use illegal ways to invest in properties or lands.
5. International Investors
Real estate can develop more effectively if the country encourages international investors to invest there.
If foreigners invest in your country, they might also bring machinery, human resources, cash, and technology.
The budget is another crucial aspect of the real estate market. The government’s decision to provide cement, bricks, and other building materials at a high price would result in a high total cost of building a house, which is bad for those looking to invest.
So, the correct way is to provide building materials within a reasonable budget to reduce the expense of constructing a house.
The real estate market may be directly impacted by demographics. People will have a significant beneficial impact on the real estate market if they are making a well enough living and are from the top or elite class.
8. Possibilities for Work
Another key factor is the availability of employment options. The population is financially stable enough to invest in the real estate market if the employment ratio is high.
Germany Real Estate Market
Germany is the most populated country in the whole of Europe. It has a strong real estate market.
Within a year, the investment in residential real estate in Germany’s real estate market was about equal to 25 billion euros.
In Germany, more than 50% of homes are owned, which is lower than in the rest of Europe. This indicates that renting a home is quite common and that most Germans live in apartments.
Although a slight decrease, the German real estate market is still stable and expanding.
The residential investment market is at a high level without any interruption in 2021 due to the low-interest rate, lack of fundamental supply, and undervaluation of Germany.
The housing completion rate in Germany’s real estate market changed in the middle of the 1990s, and this drop was brought due by changes in policy. The VAT has increased from 3 percent in 2007 to 19 percent as part of the change.
For the German real estate market to avoid a housing shortage in the cities, four million apartments must be built.
About 45 percent of people in Germany own their own home, however, most people prefer to rent rather than buy an apartment.
Benefits of home ownership include stability, pride in ownership, and a sense of community.
Due to the high cost of purchasing a home, Germans choose to put their money in more easily convertible assets to maximize their returns.
The total cost of purchasing a home exceeds the whole cost of renting a home. That, in my opinion, explains why Germany is renowned for having excellent financial education and a sizable population of individual investors.
In 2018, there were 1.4 million apartments rented in Berlin.
In a few years, Berlin’s growth rate increased and it becomes more attractive to companies. Berlin’s office market occupied about 365 square meters in the first half of 2021.
The increasing demand for prime offices is the reason for the decrease in property rents.
Germany’s economy is based on manufacturing and exports; retail and wholesale make up 36.8% of industries and logistics while manufacturing assets make up 26%.
Hamburg, on the other hand, has one of Europe’s biggest harbors. While Stuttgart and Munich have a larger portion of production, industrial, and craft industries.
Hamburg has a larger share of transportation systems and logistical services.
Overall, we may conclude that the German real estate market was extremely valued in comparison to that of other countries. But things have changed now.
Within the past ten years, the pricing rate has steadily climbed. Germany’s different regions make the real estate market incredibly complicated and challenging.
The German real estate market in my opinion is financially quite stable.
Germany Real Estate Market 2022
After the losses brought over by Covid in 2021, the real estate market is in a strong recovery phase as of 2022.
In 2022, it is predicted that investments in the German real estate market will total 85 billion euros in transaction volume.
International and domestic investors are concentrating on long-term sustainable and secure investments, which might be in office buildings, logistical hubs, residential neighborhoods, as well as some new alternative assets.
Working in flexible workplaces is still preferred over working from home, according to the latest trend in office real estate.
If we’re talking about the logistics market, e-commerce and the supply of logistical services help it to grow.
The following factors will probably have a significant impact on the growth of the German real estate market in 2022:
Market of Investment
Transaction volume will return to a reasonable level from the previous record, but it cannot increase to a high level.
Office property investors have expanded their portfolios by making investments in senior housing, healthcare, and multi-family housing.
In 2022, domestic and foreign investors will conduct 80 billion euros worth of transactions.
The retail market was impacted by COVID’19, particularly in the areas of footwear, electronics, clothing, and textiles.
Due to pandemics, the environment in retail is still tight and challenging. In comparison to 2020, Germany’s overall retail market revenue climbed by 3.1% in 2021.
Germany’s saving rate in 2020 was 16% lower than in 2020 when it was 51%, a number that is historically high.
The overall wealth of the German people has grown and now stands at approximately 7.7 trillion euros. In 2022, the retail market will thus grow, according to this.
Office and Logistics
In 2022, foreign and local investors will pay more attention to cold chain logistics, light industry, and last-mile logistics.
Investors will also be interested in locations outside of logistical zones or in urban areas. Smaller urban areas, such as retail properties with efficient transport connections, might be the locations.
Deliveries may be made using these features to provide both food and the end customers. The number of companies shifting to new offices will rise by 2022.
Even though there is still some uncertainty around the Omicron variation of COVID-19, several companies have developed solutions over roughly two years.
Therefore, after the epidemic has been controlled, we predict that the German real estate market will keep growing in 2022.
Germany’s economic recovery rate will gain significant speed in 2022, and the country’s economy will see rapid growth.
We may expect that the supply shortfall problem will be overcome in 2022. We predicted that in 2022, the GDP will expand by 3.2%, while the unemployment rate will rise to 5%.
We predict that in 2022, there will be reduced price pressure and that the inflation rate for forests will be 2.4 percent in 2022 and 1.2 percent in 2023.
Residential and Hotels
In Germany, residential property investments will be high in demand in 2022. Without being affected by construction companies or building authorities, the speed of house construction will increase significantly.
In 2022, platforms in Germany will still be used by foreign investors to search for residential properties.
To solve the housing problem in German cities, 4 lac new flats are constructed each year.
The investment market is still seeing hotels. Both domestic and foreign investors are still interested in the hotel business.
However, several investors stayed away because of the epidemic, which resulted in a decrease in investment activity in 2020.
Hotels are now instantly booked by tourists and other visitors after the pandemic. In the upcoming year, a significant number of domestic commercial markets will experience rapid growth.