Germany has a growing economy and a very dynamic market that attracts many foreign investors. How do you invest in Germany? What areas should I focus on? Is it easy to find financing? Here are some tips for making your investment in Germany a success.
Why invest in Germany?
Germany is a major power in Europe and the fourth largest economy in the world. The economy is stable and unemployment is low (5.5% in September 2022 – Source: German Federal Statistical Office). GDP per capita in 2021 was €42,918.
Germany also attracts many non-resident investors as it is not subject to any specific rules or administrative regulations. Furthermore, despite their status, these investors benefit from easy access to bank credit. These many advantages make Germany one of the best destinations for foreign investment.
4 tips for investing in Germany
Here are the main steps to follow if you want to invest in Germany:
Find investment projects in Germany
Thanks to its economic dynamism in several growth sectors, Germany offers investment opportunities in a variety of sectors, including automobiles, machine tools, food processing and real estate.
Investing in CBD products in Germany
One of the most popular businesses in Germany is the sale of CBD-based products. On a European scale, this market represents a turnover of 475 million euros, or 32% of the global market. In Germany, CBD is sold over the counter (with a maximum THC content of 0.2%).
Nevertheless, investing in CBD in Germany remains a risky investment, considering that the laws regulating CBD products are constantly changing.
real estate investment in germany
For foreign investors, purchasing real estate in Germany is a very strategic investment. Foreign investors benefit from high rental demand and favorable financing conditions in many attractive cities. Additionally, there are no status restrictions when purchasing property in Germany, even if you are a non-resident, making it very easy to do so.
Germany has a very dynamic and lucrative real estate market, especially in the capital Berlin, which also offers high rental yields. Berlin remains the most attractive city for rental investments, with prices per square meter of 5,388 euros (source: First Citiz Berlin) and city center rents of up to 3,000 euros. By comparison, the average square meter price for an apartment in Paris is 11,723 euros.
Another advantage of renting in Berlin is that the city does not charge housing tax and property tax prices are very low at an average of 150 euros for a two-room apartment in the capital (source: l.loriz.io ).
Local market knowledge
Before investing abroad, you should thoroughly research the local market and understand the risks and difficulties involved. The following points should be considered:
The economic and political situation of the target country All administrative, legal and financial issues (laws related to the project, conditions of access to credit, tax rates, etc.) Growth areas of the country The most suitable urban targets for the investment project, their typology , consumption habits, average budget, needs, facilities and infrastructure available on site to establish the project.
Find financing
In Germany, foreigners can access bank loans without any nationality or residency requirements, and there is no need for investors to work in the country. As a foreign investor, you can apply for a loan from a German bank.
However, as a non-resident investor you can only apply for a mortgage in Germany for up to 70% of the purchase price (100% for residents). However, of course, the condition is that you submit reliable evidence. Meeting the necessary conditions for obtaining a mortgage (guarantee, stable income, contributions, etc.).
The importance of using expert advice
An investment project in Germany cannot be completed without the support of professionals such as lawyers, notaries, accountants and bankers.
Additionally, you need the services of a translation company that can translate administrative, legal, financial, and commercial documents (business plans, identification documents, financing documents, marketing materials, commercial contracts, etc.) into German.
Document translation is essential when dealing with local banks, German partners, customers, suppliers, etc., as well as to comply with the legal requirements of government authorities.
Our translation company Alphatrad specializes in relevant fields of activity (real estate, retail, banking, agri-food, etc.) and relevant language combinations (German-Danish, English-Danish…).
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We will answer your questions about investing in Germany
With an 80% share of renters, Berlin offers one of the best real estate markets in Europe and is a leading destination for rental investments. After Berlin, cities such as Hamburg, Frankfurt and Cologne also offer good real estate investment opportunities. However, if you are looking to buy real estate, these cities are not as suitable as Berlin. The price per square meter is about the same, but the rental price is cheaper.
Buying property is relatively easy for non-residents in Germany, as access to mortgages is similar to many European countries and there is no need to prove nationality, residence or employment. However, language barriers can exist when dealing with real estate in Germany, so it is important to use a professional translator for documents and transactions.
Located at the crossroads of Europe, Germany's capital is a green, dynamic and culturally rich city. Rental prices are high and square meter prices are affordable for investors, ensuring very good rental returns and added value on sale. Eight out of ten Berlin residents rent, making the city a veritable El Dorado for real estate investors.
