GERMANY - Property holdings in seven of Germany's largest cities routinely outperformed inflation over the past 30 years, a study by the German real estate federation IVD has found.

Examining both rental yield and properties' increase in value between 1977 and last year, the group found that real estate saw rents increase by 130% compared with an average rise in inflation of 111%.

Jürgen Michael Schick, vice president of IVD, said the increase over the 30-year period applied to both office and residential holdings.

"Our analysis shows that a property's ability to withstand inflation increases was largely dependant on its location, with a holding's use is seen as secondary," he added.

Of the seven cities examined, one was a former East German city - Berlin - while Frankfurt, Stuttgart, Cologne, Düsseldorf, Hamburg and Munich were in Western Germany.

While rental increases were smallest for high quality and newer developments, residential properties nonetheless saw rents increase by 130% over the timeframe, with period housing built before 1948 seeing rental earnings rise almost 240%.

Examining individual cities, new capital Berlin saw rents and values increase the most, rising by 454% over 33 years, followed by Munich, where value increased 323% over the same timeframe.

Düsseldorf fared less well, still outperforming average inflation, but only seeing prices rise by 142%.

Schick noted that the calculations only took account of the cities as a whole and did not break down into specific areas, meaning certain districts could therefore have seen less steep rises - or ones above city average.

However, investors holding residential properties would have seen a different picture, with the value of Munich town houses rising by almost 290%.

This compared with town houses in Berlin, which had only seen values increase by 14% since 1977, with Schick indicating that there had been an upward trend since 2005.

"There is considerable space to catch up," he said.

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