France, Germany & Czech Republic See Tremendous Real Estate Growth
The French residential property market has been on a positive curve since 2016 and the country is also witnessing an increase in the number of homes being built, which is expected to continue at 3.6% up to 2022 and beyond. France is fortunate to have a low-interest rate policy, carried out by the European Central Bank, and has introduced 10 Billion euros worth of tax cuts and further initiatives to revitalize the new build property market. In spite of the reduced demand for housing during the start of the Covid-19 outbreak, house prices rose by 3.7% last year overall. This price increase was also seen throughout the rental market, where demand remained high, particularly in Paris. The French capital is still one of the hottest locations for real estate investment as demand outstrips supply for rental properties. Its international prestige and liquidity make it a great place to invest, particularly in apartment properties where prices rose by 6.4% in 2020. France’s neighbour, and European powerhouse, has been blessed with a decade of economic growth, an influx of immigration, and record-low unemployment - the optimal mix for the real estate market to flourish. Germany is one of the few countries where property has somewhat escaped the effects of the Covid-19 pandemic and prices are continuing to rise. In fact, according to Deutsche Bank, prices on existing homes have risen by 123.7% on average in the seven major cities over the last ten years. However, this has priced many young people out of the market, particularly in Berlin, where the population has rapidly increased and there are not enough units to keep up with demand. At the same time, the average rental price for the capital city is only 9.1 euros per square metre, comparable to smaller cities in Europe such as Lodz (9.26 euros per square metre). Germany also has the largest housing stock of anywhere in Europe with 42.5 million homes, which are also relatively affordable, given the country’s average annual salary - you can buy a standardised dwelling for roughly five times the average annual salary. Looking over to the eastern side of Central Europe, the Czech Republic has a rapidly developing real estate market even with lockdowns. Prior to Covid-19 restrictions, transactions and prices of residential properties were increasing year-on-year for the majority of the regions of the country. Furthermore, after the initial lockdown caused by Covid-19, the residential real estate market made a significant recovery in the third quarter of 2020, with the average selling prices of Czech apartments increasing by 4.9%. Take-up in the office market was also relatively subdued in the first half of 2019: “There are not too many new tenants coming to the city. It is always the same tenants moving around, so the demand is not that high for brand new offices. Like Warsaw, it is becoming more of a market for rented residential, and there are companies developing apartments for lease.” Despite increasing prices in the Czech Republic, rent is still much lower than the majority of countries in Western Europe, while net rental yields are still close to (3.14%). These factors help explain why the Czech Republic is experiencing large growth in the property market. The country is also lucky to have a beautiful capital city full of rich history and character, making it a very popular tourist destination. There has been a slowing of new developments in the city, particularly in the commercial property market, as there isn’t much demand for new offices at the moment - the Covid-19 pandemic has stopped the steady influx of new tenants. However, according to a survey from PwC, the real estate market in Prague is categorised as having good prospects for 2021. These three countries offer the best representation of real estate growth in Europe, due to both existing infrastructure and positive emerging trends.
Tags : INTERNATIONAL Real Estate growth France germany & Czech Republic See Tremendous