Hi,
I have bought two properties in Munich, and I consider them a low risk investment. Economy is good, according to the local Press Sueddeutsche Zeitung there is a shortage of flats(20000). Demand is being driven up by people relocating from other parts of Germany - the unemployment rate is one of the lowest Germany and a trend to single living. Rents are forecast to rise between 10 and 30% over the next three years.

Berlin has 17% unemployment, I guess you can make money there but you really need to be an expert. I am not and Berlin is too risky for me.

Normally if you buy an apartment in Munich you should factor in
1.5% Notar legal fees
3.5% Estate agent or Makler fees
3.5% Tax.



If you buy a new flat off plan direct from the Builder you can skip the Estate agent fees. Some property management companies also bundle the Tax and Notar into the purchase price. Many German banks will only provide a loan on 60% of the property.

Property prices have increased a little in the last year however it's hard to get definite facts. Many of the property agents in Munich (I talked to alot) believe that there will be a significant increase in value over the next 3 years. This is driven by the improved economy, empolyees no longer feel that their jobs are at risk, real increases in salary are starting to come through (Inflation adjusted the average German salary was the same in 2006 as 1998).

Once you have bought your property you can manage it yourself or pay €20-30 to a property management company. I pay €47 to an agency who also manage the rents upward. This is more expensive than normal, but paid off because one set of tenants involved the mieterverein, there was lots of discussions, lawyers involved to drive up the rent by 6%.

Overall Germany is a risky enough proposition, birth rate is low, there is little immigration as in Ireland or the UK. In fact the german population should be starting to decrease significantly sometime soon. Munich is forecasting a population increase, it has significant industry clusters for future employment e.g., hightech, biotech, and of course the old reliables car manaufacture, brewing. THe airport is due to get a third runway and that's forecast to add 50,000 jobs to the economy.

Other cities I would invest in are, Stuttgart(Diamler), Nuremberg(adidas, puma), Frankfurt(finance), Dusseldorf(telecommunications), Hamburg (shipping).

regards,
Mart123