If Germany's stability is one of its main attractions for foreign investors, then the solid performance of its huge residential market is the jewel in the crown. As demand grows, more international money keeps coming in, delegates heard at the PropertyEU Germany Investment Briefing which was held recently in London.

'Investors look at the facts, and in the core residential development and refurbishment market there has been growth for the last forty years,' said Felix Bauer, CEO of Deutsche Real Estate Funds. 'There have been periods of stagnation, but no volatility and never a decline.'

While the core residential market has long been of interest to international investors, they are now venturing into secondary cities and niche markets, attracted not by the lure of high returns but rather by the country’s safe haven status and reputation for stability.

Now investors are for example 'beginning to learn about student housing, which in Germany is a natural extension of micro-living, which in turn is a natural extension of the residential market,' said Bauer. 'It is quite the norm to find students and young professionals living in the same building, and they tend to stay in the same place for a long time.' The trend is for German students to leave their large shared flats, often provided by semi-public organisations, and move into smaller units or purpose-built student accommodation with good transport connections and internet access, said Bauer.

International students’ demand is also high and constantly increasing, as they are attracted to Germany in ever-greater numbers by the harmonisation of degrees, the good reputation of its universities, the vast choice available and the low fees. 'I have seen buildings in minor towns that are fully occupied by foreign students, despite the fact that there are nicer prison cells in Germany than those rooms,' said Karsten Kohlmann, managing partner at Waterway Investments. 'But demand is so high that there are no vacancies and the cashflow is guaranteed.'

As the new development sector is very niche, small and tricky to negotiate, foreign investors are better off focusing on ‘the good business of buying existing apartment buildings or hotels and converting them to microliving or student housing,' said Bauer. 'Location is key, and it is preferable to do less deals but good-quality deals in good areas.'

Despite the prominence the refugee crisis has had in the media and its social and political implications, its impact on the real estate sector has been and will continue to be limited, according to Bauer. 'There is much housing provided by the Government, but in any case we see the numbers of refugees falling dramatically and dropping even further in the next two to three years, so we definitely do not regard affordable housing as an asset class to invest in.'