The residential sector has drawn significant interest in recent years from both local and international investors, prompting the question of whether a housing bubble is now emerging.

The residential sector has drawn significant interest in recent years from both local and international investors, prompting the question of whether a housing bubble is now emerging.

But although price increases have been evident now for three to four years, the trend is not broadly based across Germany, according to Marcus Cieleback, head of research at Patrizia Immobilien.

‘There’s no bubble from that perspective. And we’re seeing migration within Germany as well from Spain and Italy. Demand is picking up and construction is not moving substantially. There’s a huge imbalance in supply and demand, which is driving up prices and rents. It’s a low-risk environment also due to the lack of stock that is available.’

While Germany has seen a number of big portfolio transactions in recent years, they are not on the cards going forward, Cieleback said. ‘The big portfolio transactions were forced by EU regulation or distress. We won’t see sales on that scale, so in that sense they won’t be as attractive or as big as in the past. In any case, you need a bigger platform to manage big-sized portfolios. There are some risks on the political side, with talks of rental regulation. But even so, the sector is still attractive.’

Cieleback made the comments during a presentation at the PropertyEU Germany Investment Briefing at the Provada real estate fair in Amsterdam in June. Matthias Euler, CBRE senior director and co-head of international investment capital markets, also sees opportunities for student housing and hotels.

‘We have a big hotel investment team and it is increasing. We’re seeing interest from Middle Eastern investors and big local players like Union Investment and Deka which have their own hotel funds. For student housing, healthcare and senior living, there’s also a market for development and investment.’

The full reports from the Germany Investment Briefing and a briefing on the European residential market appear in the the July-August edition of PropertyEU. You can also read them here in PDF form: EU powerhouse sees
global interest
and Fundamentals favour resi