Investing in properties in Germany

Why invest in a property in Germany?

Today, Germany is a healthy market with reassuring economic indicators. A growth rate above the European average, a low debt ratio and the lowest unemployment create ideal conditions for investment in land in Germany, whether it is agricultural, buildable, serviced or not.

Cities such as Berlin, Hamburg or Leipzig have become real centres of attraction for talent from the country and from all over Europe. The current rental and sales market is saturated, prompting municipalities to look for solutions. One such solution is the construction of new housing. One of these solutions is the construction of new housing, including the redevelopment of former industrial wastelands that were previously considered uninhabitable, creating great opportunities for added value.

Agricultural land on the outskirts of towns and cities also attracts attention even though the return on investment is more uncertain. After all, agricultural land can only be made suitable for building on the advice of the municipality, depending on its needs. The possibility of added value therefore exists, but it may come after many years.

In terms of taxation, Germany distinguishes itself by a lighter system compared to other European countries like France. There is no wealth tax for residents, property tax is at its lowest, and exemption on capital gains on resale is possible after 10 years.

What are the criteria to consider?

Bare ground is by definition virgin. It is therefore defined by its great versatility. However, there are limitations in the use that can be made of this land.

It is imperative to consult the cadastre to see the history of the land and collect valuable information. For example, the cadastre can tell if the land has been used by industrial exploitations during previous occupations. The soil may then be contaminated and unsuitable for construction. The land register can also tell you whether neighbours or a farmer have a right of way to the land. Moisture in the soil or the proximity of a groundwater table can also lead to additional costs if foundation insulation has to be increased. It is also essential to contact the municipality to find out about any future developments that may increase or decrease the value of the land. The municipality can also inform you of any restrictions. There may be certain local standards to be respected, especially in the case of charming villages, which limit the number of floors or even the building surface. If the land is not yet serviced, make sure you check whether the contract already provides for the connection and who has to bear the costs. An offer at a lower price than expected may mean that one of these criteria is not in the buyer’s favour.

In the case of an investment in land in Germany which will be used for industrial or commercial activities, the municipality may also have a say in the type of activities. Environmental factors may, for example, exclude certain polluting or harmful activities from being located too close to the city centre, certain dwellings or a protected area. Here too, a thorough study of the municipality’s projects is required.

The golden rule “location, location, location” always applies here, even if in the case of a larger development project, it is sometimes more a bet on the future of the site than on its current value. In the case of housing, proximity to schools, supermarkets and recreation centres will make the difference. If the land is to become commercial or industrial, its accessibility for customers, employees or service providers will be the priority. In the same way, a beautiful site that was previously considered unbuildable can become so if the municipality is extended. In this case, the possibilities of added value increase considerably, provided that information is available close to the land, allowing the right investment to be made at the right time.

Finally, pay attention to the service providers that you choose in the case of a building plot. The bankruptcy of one or more of the companies working on your building site can mean months of delay on the project and just as many losses for your investment. Our agency can help you choose the best partners to bring your investment in land in Germany to a successful conclusion.

The advantages of our agency for your search

• We carefully study your project and your objectives
• We put at your disposal our extensive network of partners close to the field
• We are present at every stage of your search, from the first visit to the signing of a lease with an occupant.
• Our legal and tax advice optimizes the management of your investment