Frequently Asked Questions

What makes investing in Germany viable?

The German property market has largely been in the doldrums for the past decade, a period when the rest of the world saw unprecedented growth. The OECD cite Germany as the most undervalued property market in the world.

The German residential sector has a high proportion of tenants (60% in the West to 90% in the East). The rental market is well regulated, transparent in terms of returns and very sophisticated.

The German economy is the biggest in Europe and Germay is still the biggest exporter of products in the world. GDP levels are amongst the highest in the world, whilst property prices are some of the lowest. Finally, the legal system is very robust in Germany, making your investment safe.

Why Leipzig / Why Berlin?

Whilst returns can be interesting in many cities across Germany, the cities in the former east with the strongest economies stand out as having the most potential for a range of investors. With finance rates around 4-5%, net yields of 7% or higher ensure a positive cash flow from day 1. Net yields of above 12% are not uncommon in certain areas, with good tenant demand in place.

Do I have enough money to invest?

In the general case, finance of up to 80% is possible for foreign investors. With property prices starting as low as 50.000 Eur for a single apartment in Berlin and the purchase of an apartment block from around 100.000 Eur, investors will need only a low level of finance to make their first investment.

What Finance is Available for Foreign Investors?

A number of banks lend on a favourable basis to foreign nationals. For EU citizens, only a limited amount of paperwork is required and this can be handled by ProVenture on your behalf. For those with an income of 40.000 Eur or more, the majority of banks will consider your case favourably for finance. For those with an income lower than 40.000 Eur or an income which is difficult to show evidence of (such as the self employed) banks will still consider your case but will look for additional security from the property. This will usually mean demonstrating that the rent levels are stable, sustainable and give around 125% coverage over finance payments. This is usually fairly straight forward. Mortages rates are typically fixed for 5-10 years at rates of around 4-5%. A proportion of repayment of the capital is usual.

Why are these properties for sale if they are such good investments?

All property markets move in cycles depending on economic factors and investor confidence. As a result of re-unification, the German property market saw a wave of speculation in 1990 which lasted around 6 years. The property cycle was at its peak in around 1996-2000, just when other markets across the world started to pick up. After a period of falling prices and stagnation, prices in Germany stabilised around 2003 and are showing signs of steady growth, in line with increases in rental returns. Prices today, especially in the east, still represent very good value with well-refurbished and fully-tenanted apartment blocks selling from around 500 Eur per sqm. Property prices in London by comparison can be 5000 Eur per sqm and upwards. Of course, rental returns are what should be determined and these can be from 8-14%, depending on location and type of property.

With such high levels of rental returns currently available, with good finance in place, Germany should be considered to be at the bottom of the cycle and an area meriting investigation.

Are ProVenture agents or property finders?

All the staff at ProVenture are active investors themselves in German property and enjoy introducing other investors to this exciting market. We work with a range of partners on the ground to source, secure, finance and manage your investment. We also will give our honest opinion on the advantages and disadvantages on a range of investments that you find of interest. In summary, we aim to find property that fits your investment objectives and support you through the purchasing process and during your term of ownership, as required.

What are the total costs when investing?

The cost of transactions can vary from deal to deal, depending on a number of factors including the method of sale. In the general case, the following transaction costs will apply:

- Stamp Duty or Land Tax – 3.5% of the purchase price

- All Legal Work and land registration – 1.5% of the purchase price

- Our agent fee typically ranges between 2.5 and 5%, depending on the nature of the property sale and the property price.

Are property prices negotiable?

Unless listed as a fixed price, we provide a guide price for all our property. This is the price that we feel will be achieved, as a result of the process of negotation. The final price can sometimes be slightly above or below this guide price.

What other services do ProVenture carry out?

In addition to introducing investors to the German market, we provide an independent property consultation service for investors analysing investments in locations around the world. Please contact us for more details on this valued service.

Where can I find further information about the state of the German property market?

Please click here to visit our resources page where you will find a number of relevant, up-to-date articles on the German property market and the investment potential it holds.