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Foreign Investors Turn to German Property Market

March 17, 2005

British and American investors are turning to the German residential property market due to low euro zone interest rates of two per cent and the fact that German house prices have hardly risen in the last 15 years, making mortgage payments equivalent to or less than rent levels. John Carrafiell, head of European real estate at investment bankers Morgan Stanley told reporters that the boom in German property was the investment opportunity du jour during a speech at the annual MIPIM property trade fair in Cannes on Wednesday. Carrafiell's comments echoed a recent report by the Royal Institute of Chartered Surveyors which described the German housing market as a "long-term stagnant market which appears to be picking up as owner-occupiers increase their mortgage demands." The report also found some regional differences, with East Germany still afflicted by oversupply of housing, whilst house prices in cities like Munich and Frankfurt have seen moderate growth.