GERMANY – Residential property in urban German markets is seeing a "balanced" increase in price, according to GSW Immobilien, despite headlines that the Bundesbank is concerned over the appreciation in value of the country's housing.
In a statement sent to IP Real Estate, GSW Immobilien's co-chief executive also said investors could still be able to avail themselves of opportunities in parts of the Berlin market, despite the city – alongside Hamburg and Munich – seeing prices rise by nearly one-quarter since 2010.
According to Jörg Schwangenscheidt – named co-chief executive of GSW in late August after previous executives suffered a vote of no confidence led by Dutch provider PGGM – those worried by a recent Bundesbank analysis that a "price boom" could manifest in urban residential assets should also bear in mind that property value had risen in line with rents.
"This, largely, speaks in favour of a balanced market," the company's former COO said.
Schwangenscheidt said GSW agreed with the central bank's assessment that price pressures would not decrease in the short term, and pointed towards Berlin as a market that would continue to see prices rise.
"This is largely due to the population increasing significantly faster than the number of new properties being built," he said.
However, he nonetheless sees opportunities for investors interested in Berlin properties to benefit from growth, pointing towards the central Berlin districts of Schöneberg and Wedding, and the slowly gentrified areas of Neukölln and Lichtenberg, as offering "opportunities to catch up on rent and price".
"While the past few years has seen increased investment in higher-quality stock in the centre of Berlin, investors have lately also expressed an interest in residential units at the bottom end of the market," he said.
"This reflects the belief that such investments will offer returns above the average."
Patrizia Immobilien's Marcus Cieleback previously warned against capping rental increases as a way of addressing the Bundesbank's concerns, as such an approach would skewer metrics employed to monitor the market.
"Then you give rise to a bubble, at least from the fundamental valuation point of view, by the price-to-rent ratio," he said.
GSW's rival Deutsche Wohnen recently announced it hoped to acquire the company to achieve "critical size" to tackle the European market.
