Real estate gaining in popularity as an investment in Germany

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Brandenburg Gate, Berlin

Real estate is gaining in popularity as an investment, according to a representative survey of more than 2,000 German citizens that has now been conducted on behalf of Commerz Real for the third time by the market research institute YouGov. 

Accordingly, more than 57 per cent of the population regard real estate as a sensible investment to develop private wealth. In June of last year this figure was 56 per cent and in February 2020, before the first lockdown therefore, it was 51 per cent. Still regarded as less attractive are shares (41 per cent), gold (38 per cent) and endowment insurance policies (16 per cent).

For 51 per cent of the respondents real estate is above all a secure cash investment. Following on from 45 per cent in February 2020 and 49 per cent in June 2020, this equates to a constant increase in the security argument. This is followed by the qualities “safe in a crisis” (40 per cent; June 2020: 34 per cent; February 2020: 30 per cent), “very well suited to developing wealth” (29 per cent; 30 per cent; 31 per cent) and “protected against inflation” (27 per cent; 24 per cent; 22 per cent). In contrast, only 22 per cent regard a good return as a benefit when reaching an investment decision (June 2020: 21 per cent; February 2020: 20 per cent). 

The classification of real estate as a sensible investment correlates – on the basis of the survey results – with the net household income: whereas a mere 42 per cent of the respondents from households with a monthly net income of EUR1,000 to EUR1,500 rate real estate investments positively, in the case of households with EUR3,000 to EUR3,500 this figure is already 66 per cent, and for households with more than EUR10,000 it is as much as 83 per cent.

The necessary high level of equity capital is regarded by every second respondent as the obstacle to a direct purchase of real estate, with about 40 per cent seeing the level of debt as an impediment, and around 35 per cent considering the financial burden posed by the repayment of the mortgage loan as a hindrance. For approx. 49 per cent of the respondents indirect real estate investments – be this in the form of open-ended real estate funds, shares in real estate companies, shares in real estate investment trusts or even crowd-investing – are an attractive alternative, therefore. This is a clear increase over the 41 per cent from June 2020 (43 per cent in February 2021). At 16 per cent open-ended real estate funds are considered, together with shares in real estate companies, as the most attractive form of investment – a slight increase of one percentage point compared to the two previous surveys. At 21 per cent open-ended real estate funds are most popular with the age range 25 to 34-year-old respondents. The lowest figure in this respect is found among 35 to 44-year-olds with twelve per cent.