Irish set to invest €500m in Germany

IRISH investors are expected to invest in excess of €500 million in Germany’s commercial property sector this year.

The amount, which is being predicted by leading property company Colliers Jackson-Stops, would amount to a record investment in the country by Irish investors.

Foreign investors accounted for 53% of all commercial transactions in the German market last year, something which is unprecedented.

An estimated €200m has been invested in commercial property in Germany over the last six months, as foreign investors have started taking a punt on Germany's economic fortunes finally turning around.

Collier Jackson-Stops' head of investment services Jonathan Hillyer said: "Never before has the German market seen such overseas investor interest. It is this factor which could, potentially, drive capital values going forward, together with the growing expectation of an economic recovery in Germany."

Mr Hillyer said there has been huge interest from Irish investors, keen to take advantage of "the window of opportunity which exists" particularly in the €5m-€50m investment bracket.

"Rental increases in most office leases are generally in line with inflation, which produces moderate rental growth throughout the term of the lease. Income returns are more attractive than the home markets, ranging from 5%-7% for prime product.

"We're confident that the office market may show more attractive returns going forward on the back of a recovery in rental incomes, while the retail sector remains attractive to Irish investors due to fashionable income returns compared to other international markets," he said.

German-based property experts are fully expecting a recovery in the German economy after years of poor economic growth and low consumer and company demand.

The feeling is that the property market is to see a marked improvement in the short-term, with the advice to those considering investing to begin due diligence sooner rather than later.