German Bunds may still be considered safe havens despite their recent low and negative returns as investors continue to seek low risk assets.
According to CNBC, however, “investors are flocking to the German real estate market, lured by steadily rising house prices, low mortgage rates and a stable macroeconomic outlook.”
Dr. Frank Porschke of Jones Lang LaSalle Germany said: “Safe haven is on everyone’s lips. And if investors ask themselves which regions and with which investment vehicles it is still possible to invest, they will not be able to avoid property.”
So far, the main buyers in the sector are insurance groups, pension funds and open ended funds, according to Jones Lang LaSalle Germany’s Helge Scheunemann. The investors are primarily German. He explained:
“The rise in prices we currently see is mainly due to the stable economic situation we have in Germany and a decreasing unemployment rate, as well as a lack of supply of good property. The higher demand is related to the overall economic situation. We have low interest rates and fewer alternatives for institutional investors.”