You buy your property not to live in it yourself, but as an investment? Then don’t make yourself dependent on any place. It can be nice if your own investment is right on your neighbourhood, but you may get more return from a different location. Because how lucrative the purchase of a property is varies from region to region, city to city and sometimes even district to district.
If you live in Munich, you can charge high rents for your property there, but you also have to invest a lot. The situation is different in a rural area in the east, for example. Here it is still possible to acquire a property at a reasonable price. However, many vacancies make it difficult to find a tenant for the property. And purchase price and demand are not the only factors determining a good location for investments. The interest rate or, for example, the ratio of management costs to rent also play a role.
An experienced investor and real estate expert will find the right investment concept for every location. However, as a layperson it is advisable to weigh up risk factors and thus find the right location. In addition to the expected returns from rental income, performance can also be an interesting incentive for an investment. What are the forecasts for the next 10 years? Will the prices per square metre continue to rise in one region? Then you can also make a profit by buying a property now and reselling it in a few years.
The investment pays off in these regions
Various market research institutes provide investors with data on the current top regions. The Hamburg Institute of International Economics (HWWI), for example, has identified Heilbronn as the city that can expect the highest increase in value per square metre by 2030. Whoever bought a house with an area of 100 m² in 2017 could expect a net profit of 150,000 euros if sold in 2030. However, prices in Heilbronn and southern Germany in general are already significantly higher than in the rest of Germany.
For investors who do not want to invest much at the moment, but are nevertheless looking for a property that promises high returns in the future, the northwest of Germany is particularly interesting. The investments are particularly worthwhile on the Dutch border of Lower Saxony. The Emsland is at the forefront. Here the price per square metre is approx. 21 percent below the national average and the increase in value is 1.14 percent annually. Who buys now a 100 m ² house and sells it 2030 again, can count so on an increase of 24.000 euro.
Another study focuses less on rural regions than on suitable investment locations, but rather on so-called B cities, i.e. cities that do not rank among the major metropolises but nevertheless promise a good return on investment. This risk/return ranking was carried out by real estate service provider Dr. Lübke & Kelber. Large amounts of data on 110 German cities were compared. The focus is on the ratio of potential risks to actual expected returns.
The study made a distinction between existing properties and new buildings. The city of Wolfsburg in Lower Saxony scores particularly well in both categories. The cities of Aschaffenburg and Fürth are also interesting places to invest in new buildings. The cities of Osnabrück and Worms are also recommended for investment in existing properties.
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