Location, property type and development: Investment property

When it comes to the type of investment, the first thing you have to choose from is different types of apartments and houses. However, even more important, as all real estate investors know, is the location of the property. So if you are flexible in your property search and are looking for a good, profitable capital investment in Germany, regardless of the region, then you will find our guide here.

Tip! All cities, one guide: Real estate in Germany

In the guide you will find the most important German cities in focus, with the individual districts, advantages and disadvantages. We also give you an overview of the property prices in the individual districts, which we present here.

In this first guide you will find the complete overview of Germany. Here you will also get further information for each individual city, from the federal capital Berlin to the world-famous Bavarian capital Munich.

Guidebook contains:

• Property types (house and apartment)
• Facts and figures for all major cities in Germany
• Further links to the important districts
• District information with pros / cons
• Real estate prices
• Real estate statistics and development
• Company formation in Germany
• Legal forms (reference to real estate)
• Large real estate companies in Germany (stock exchange)

Which property is the best?

When deciding on the type of investment, you need to consider not only your own preferences, but also the target group. If you are not buying your property for your own use, but for rental, the wishes of the potential new tenants will also play a role.

The more typical, the easier to rent (60-120 sqm, 2-5 rooms)

Of course, the easiest apartments to rent in Germany are those that have a “typical” cut. Here we are talking about a typical apartment, between 60 and 120 square meters, with two, three, four to five rooms. This type of apartment, or even in the format of houses, rents out the easiest. Such apartments can use both single people, as well as couples and families.

If you want to invest your money in the luxury segment, the standard is of course quite different. A 260 m² penthouse in Berlin, with 1.5 rooms, is something rather fancy and only something for single people, maximum for couples. The rent is high, the rooms are not shared.

So the typical cut is easier to rent, much easier. For special types of apartments, types of houses, they first have to find the right tenant or the right tenant. The more special, the more difficult. Tip. Read this interview on “Classic or exotic investments”: Which properties should I invest in?

Property search and selection:

• Own preferences (region, property type)
• Own use or renting
• Preferences of the future target groups (tenants)
• Typical, ideal cut: 60-120sqm, 2-5 rooms apartment / house

House types: Terraced house, detached house, villa

Detached house, terraced house, semi-detached house or even designer villa, the possibilities in architecture and construction are so diverse that we have written here a separate guide on the subject of the different forms of houses. Especially when buying the first property very important, because each type of house brings its own individual advantages and disadvantages.

Advantages, disadvantages and differences at a glance:

• House types

Apartment types: Attic, Old building, Penthouse

Just as there are numerous types of houses, there are also different types of apartments. Top floor apartment, granny flat, maisonette or even penthouse and loft. Learn about the different types of apartments you can invest in here. When choosing an apartment, pay attention to the tips from above so that your apartment is not “too special” for the German market.

Comparison of apartment types:

• Apartment types

Depending on which target group you want to address as a real estate investor, you should therefore pay attention to the “marketability” of your apartment and houses in Germany in advance when buying (also when building) them. This is how you keep the vacancy rate of your real estate low.

But sometimes scarcity creates the right demand! Accordingly, we come back to the situation.

Germany: Cities, Facts and Figures

Now let’s move on to the German “Big 4”, the 4 largest cities in Germany: Berlin, Hamburg, Munich and Cologne. Tip! Further, interesting regions such as Frankfurt am Main, for your capital investment can be found here:

• Real estate in Germany

Berlin: Capital in East Germany

Berlin, as the capital, is the center of Germany when it comes to culture, business and politics. Berlin is also a cultural, economic and political heavyweight in Europe, alongside Paris and London.

Since reunification in 1989, Berlin has experienced a real estate boom like never before. Since then, the Berlin real estate prices rise, year after year. Meanwhile, it even goes so far that the city’s politicians introduced their own laws to take the “pressure” out of the real estate market, as well as the “Mietpreisbremse”.

Good times for both sides: Buyers and sellers of real estate. Buyers can achieve a good sales price, sellers in turn, can expect good returns now and in the future. But which districts in Berlin are interesting for your own investment? Here is a look at the German capital, real estate prices in Berlin and its districts:

• Berlin

Berlin (map), location in East Germany:

Hamburg: Port city and metropolis in the north

Hamburg is especially for the German celebrities the destination. Here you live relatively withdrawn from the hustle and bustle of Berlin. Fresh sea air, just two hours to the capital, with a fast drive, plus the most beautiful villas in Germany.

Through its history alone, Hamburg is a very special place. A city that has always been characterised by internationality due to its port. This is reflected in the cityscape and also in the real estate industry. Because Hamburg is not only interesting for German investors, also international investors invest money here in the north of Germany. But which districts are worthwhile for investors who are not from Hamburg and do not know the city?

Here’s a look at the city, its neighborhoods, real estate prices, advantages and disadvantages:

• Hamburg

Hamburg (map), location in North Germany:

Munich: The “typical German” in the south

Munich is pretty much the most “typical” German city if you ask foreign investors. Bavarian products like beer, events like the Oktoberfest, Lederhosen or even a big, international car brand with 3 letters: BMW. Munich is known worldwide and especially sought after by American and Asian investors.

Munich’s city centre is very different, e.g. compared to Berlin or Cologne, here it is very tidy, clean and accurate. Security and law is very important in Bavaria. The real estate prices in Munich are among the highest in Germany.

Therefore, here is a closer look at the city, districts and real estate prices in Munich:

• Munich

Munich (map), location in South Germany:

Cologne: Media City in West Germany

Cologne was and is an important media city. Through one of the largest German private broadcasters (RTL), but also through modern influences, e.g. through influencers (well-known people) in social networks, such as YouTube and Instagram.

If you compare the city with others, e.g. Berlin, Hamburg or Munich, you know that you won’t find great architecture in Cologne. The city was built up relatively quickly, as it suffered a lot during the Second World War. The fast buildings from the 60s, 70s and 80s dominate the cityscape.

Under certain circumstances the ideal leverage for your investment, because here the property prices will still develop. Cologne is located in NRW, the largest economic area in the whole of Europe, with over 20 million people in the catchment area throughout North Rhine-Westphalia and nearby cities such as Düsseldorf, Bonn and also Frankfurt am Main.

Here’s a look at the city, its neighborhoods, advantages and disadvantages:

• Cologne

Cologne (map), location in West Germany:

Düsseldorf: Immediate neighbour of Cologne

When looking at Cologne, here of course also briefly a look at Düsseldorf. The city is only 20, 30 minutes away from Cologne and is also part of NRW, the largest economic zone within the European Union. Advantages for the return of the property and the value development, also in the long term.

• Düsseldorf

From the “micro perspective” (cities and districts), back to the “macro perspective” on the German real estate market.

Tip! Investment in nursing care real estate and nursing care apartments

There are currently 4.1 million people in need of nursing care in Germany. 731,000 people are cared for in full inpatient nursing facilities. Germany has the most expensive healthcare system in the world. The biggest return factor when investing in nursing care real estate is, of course, the development of demographics, but also the economic capacity of a country, which ultimately supports the nursing care system and its financing. Like many rich or wealthy countries, Germany’s population is getting older and older.

Buying nursing care real estate as an investment?

Few people who want to invest in real estate, come in the first thought to care real estate, or apartments. But it is worth taking a look at this type of investment. Nursing homes are springing up all over Germany, not just in conurbations, as the population is getting older and older. There are properties and facilities for senior citizens in every district. They offer themselves thus investment object for regional investors, as capital investment in the proximity, in addition, for supraregional investors. How is the market for nursing care real estate developing in Germany? Which type / which location is interesting for investment as a yield property?

We have identified 5 factors in the first look at this form of investment.

• Capital investment nursing apartments

Numbers: Statistics, shares and companies

Last but not least, after the location and the appropriate property type comes the development of the region. In the individual articles, you have already learned a lot about the individual cities and also the individual districts. Here we would like to give you a more detailed look at the available real estate statistics in Germany.

Development in the real estate market

Let us first come to the most important question, the long-term perspective, in retrospect and with a view to the future:

How will the real estate market in Germany develop over the next few years?

Germany is the number 1 in Europe when it comes to the real estate industry. No matter if it is the construction sector, administration or even trade with real estate. If you look at the statistics of the last decades, there is only one way, upwards.

If you will, Germany’s real estate market is not fully developed to this day. Just remember the 70s, 80s buildings from Cologne. Of course, historical factors are part of the real estate stock. For example, the reunification of East and West Germany.

In eastern Germany in particular, there are whole swathes of land where real estate was extremely cheap just a few years ago and even today real estate prices are still not comparable with the cities of the old Federal Republic, especially the real estate prices in Hamburg and Munich. At the same time, the old Federal Republic is still marked by the effects of the Second World War. Meaning: While in other cities like London, Paris there are imposing buildings and architecture in every street, here, e.g. in Berlin, there are still whole districts with old buildings, which gradually, new, modern and more complex building concepts break.

If you are looking for an impressive skyline in Germany, you have only one choice, Frankfurt am Main. Due to various factors, the European building regulations, but also regulations of the cities themselves, there is no city in Germany with a high-rise skyline, except in Frankfurt. Comparing the German cities, you can quickly see how different the regions are here.

Statistics and charts say more than 1,000 words, here you will find a detailed, large collection on the latest and older statistics, for comparison. All surveys, analyses and evaluations are official and come from the Federal Statistical Office in Germany:

• Real Estate Statistics

Real estate on the German stock exchange

The stock market also provides an insight into how the German real estate industry is developing. This is where you find the big companies, the stock corporations and REITs. They build the large high-rise buildings in Frankfurt am Main, are landlords for millions of people in Germany, stable for decades. Among the best known representatives are e.g. Vonovia, Deutsche Wohnen and Patrizia Immobilien. Read more about the German stock market, especially the real estate sector:

• Real Estate Stocks

Establish a real estate company in Germany

Last but not least, let’s take a look at company forms you can choose in Germany. The following legal forms are interesting for foreign investors who want to establish a company in Germany, but also for those who are local and want to become real estate investors themselves. Because, in Germany, as everywhere, there are different legal forms, depending on the number of shareholders, the goal of the company, share capital and much more.

You can invest in real estate, rent out a house, privately, e.g. for retirement. But if you own several properties and want to buy several investment properties, you will not get around the formation of companies. Yes, exactly, the formation of companies, in the majority. That is why it is important to get to know the forms such as the limited liability company, more specifically the real estate limited liability company, but also a family foundation.

Do not worry – However, everything begins with the first company. Which one is the best? Where are the differences and what are the advantages and disadvantages of the individual forms of business? Here you will find a great overview of the possible legal forms in Germany:

• Legal forms

If you’re actually starting your very first company, here’s another very basic guide to the startup process.

• Form a company

Conclusion: Capital investment in Germany

Let’s sum it all up in one question:

Investing in Germany: A good idea?

Advantage: Strength of the real estate market – As you can read above, Germany is the strongest real estate market in Europe. The real estate statistics show that the growth has existed for decades and is well above any monetary devaluation (inflation). Accordingly, the yields for the different types of houses and apartments are stable and very attractive compared to the other European countries.

Advantage: Legal certainty – Many investors appreciate the legal certainty in Germany. In Germany, everything is very meticulous, but there are clear laws, structures and procedures. That is why many investors from all over the world come to Germany. Security is a big aspect, especially for wealthy buyers and sellers.

Germany is an excellent location for real estate and investors.

Are you looking for good investments in Germany? Get in touch with us.

• Contact

Types of shares: transfer, rights & capital split

There are many different types of shares, which in turn belong to different categories. For example, a distinction is made between types of shares according to the degree of transferability, or according to the scope of rights, or even according to the method of dividing the share capital. In some cases, the term “order paper” is also used. This simply refers to securities that are registered in a specific name and can change hands by agreement, transfer or endorsement. Incidentally, endorsement refers to the endorsement on such a security, which enables the rights to be transferred in part or in full. The word “order” thus derives from “order”, since the transfer of the share is ordered.

Generally speaking, the value of a share – or a bond or an investment certificate – can be expressed in two terms: On the one hand, there is the nominal value – also known as the face value – which is the numerical value expressed economically in money, as found on banknotes, coins or securities. On the other hand, there is the stock exchange price, the price of securities determined on the stock exchange – in other words, the current market value.

Types of shares by degree of transferability

When distinguishing types of shares according to the degree of transferability, bearer shares and registered shares as well as registered shares with restricted transferability are combined.

• Bearer shares (inh.)
• Registered shares (NA)
• Registered shares with restricted transferability (vink. NA)

Bearer share – transfer by agreement & surrender

Bearer shares – in short: Inh. – are usually made out to the bearer according to their designation and form the standard type among the share types according to the degree of transferability. They can be transferred to a new owner by agreement and transfer, which enormously simplifies the tradability of this type of share. The only restriction is that the shares may only be issued if they are fully paid up.

Registered shares – minimum deposit 25% par value & premium

Registered shares – abbreviated to: NA – are “born” order securities in terms of form. By law, negotiable instruments are regarded as securities. In addition to registered shares, these include cheques and bills of exchange. Registered shares are made out to the shareholder who is listed in the share register. This authorizes him to participate in the Annual General Meeting and to exercise his voting rights. Furthermore, he is the only one entitled to dividend payments for these shares. The minimum payment amount corresponds to 25 percent of the nominal value and the premium. The transfer of ownership of registered shares is effected by endorsement, handover plus transcription in the company’s share register, which places a corresponding burden on tradability.

Registered shares with restricted transferability – transfer with the consent of the company

Registered shares with restricted transferability are abbreviated as vink. NA and represent a special form of conventional registered shares. In terms of features, there are no differences, but a registered share with restricted transferability is only transferable if the company confirms its approval. This is particularly advantageous in order to be able to precisely control the ownership of the shares and to be able to detect early on the intentions of other companies to take over these shares. However, if many small investors are represented by major shareholders – banks, for example – registered shares with restricted transferability can also be transferred easily. If a shareholder leaves the AG, he can even transfer his claims to shareholders unknown to him by means of blank assignment and the signing of a special deed.

Types of shares according to legal scope

In accordance with the distinction between types of shares based on the scope of rights, a distinction is made between ordinary shares and preference shares.

• Ordinary shares (SA)
• Preference shares (VA)

Ordinary shares – original form of the share with fourfold legal entitlement

Ordinary shares – abbreviation: SA) – are the standard type among the types of shares in terms of legal scope and probably represent the most original form of all shares. Ordinary shares contain four main rights: First of all, there is the right to a dividend payment, i.e. there is a legal entitlement to a certain share of the balance sheet profit. Furthermore, ordinary shares allow participation in the general meetings of the stock corporation, including the exercise of one’s own voting rights. A third aspect concerns the right to a share in the liquidation proceeds, according to which a portion of the money from the liquefaction is due to the holder of an ordinary share by operation of law. Last but not least, an ordinary share also entitles the holder to challenge resolutions adopted at the general meeting.

Preference shares – privileges in profit distribution & company assets

Preferred shares – VA for short – are called preferred shares because their features include certain privileges compared with ordinary shares. These are usually either preferential rights in the distribution of profits or special rights with regard to the company’s assets. Preferred shares with multiple voting rights – so-called multiple voting shares – are not permitted in Germany under the German Stock Corporation Act (AktG).

Preferred shares without voting rights – also called non-voting preferred shares – are considered a special form of preferred stock. They are often used to finance equity when a capital increase is not possible due to poor share prices. In compensation for the loss of voting rights, the share holder is offered, for example, a higher dividend or a right of succession, and at the same time the equity capital requirement can be satisfied.

Excerpt from the law – § 12 AktG:

(1) Each share shall confer the right to vote. Preference shares may be issued as non-voting shares in accordance with the provisions of this Act.

(2) Multiple voting rights are not permitted.

Types of shares according to the method of dividing the share capital

If the method of dividing the share capital is considered, a distinction is made between par value shares and no-par value shares. The form and any applicable minimum amounts of the shares are specified in the German Stock Corporation Act (AktG).

• Par value shares
• Quota shares
• No-par-value shares

Excerpt from the law – § 8 AktG:

(1) The shares may be created either as par value shares or as no-par value shares.
(2) Nominal value shares must be denominated in at least one euro. Shares with a lower nominal value shall be null and void. The issuers shall be jointly and severally liable to the holders for any loss arising from the issue. Higher nominal share amounts must be denominated in full euros.
(3) No-par-value shares do not have a nominal value. The no-par value shares of a company participate in the share capital to the same extent. The proportionate amount of the share capital attributable to each share may not be less than one euro. Paragraph 2 sentences 2 and 3 shall apply accordingly.
(4) The proportion of the share capital shall be determined, in the case of par value shares, by the ratio of their par value to the share capital and, in the case of no-par value shares, by the number of shares.
(5) The shares are indivisible.
(6) These provisions shall also apply to share certificates issued to shareholders prior to the issue of the shares (interim certificates).

Par value shares – Money shares from 1 Euro & par

Par value shares – sometimes also called nominal value shares or aggregate shares – are, as the name suggests, denominated in a fixed nominal amount or par value, which is expressed in monetary terms. They may not be issued below par, which means that the nominal value may not be less than the market value. If this is the case, the difference is called a discount. If the par value of a share is above par – i.e. if the par value is greater than the market price – the difference is known as a premium. Par value shares are set at a minimum value of one euro. The sum of the par values results in the share capital of a company.

• Above par: nominal value > market price (difference in premium)
• Par: Nominal value = stock market price
• Below par: nominal value < market price (difference = discount)

No-par-value shares – Quota shares & no-par-value shares

No-par-value shares are a collective term for shares that have no stated par value. A distinction is made between quota shares – as “genuine no-par-value shares” – and no-par-value shares – as “non-genuine no-par-value shares”. Sometimes both types of shares are also referred to as genuine and non-genuine quota shares respectively.

• Quota share: genuine no-par-value (quota) share
• No-par-value share: non-genuine no-par-value (quota) share

Quota shares – shares in the share capital

Genuine no-par-value shares are quota shares whose share in the share capital of an AG is stated in a document, e.g. 1/1,000 or 1/50,000. They therefore represent a fraction of the company’s assets corresponding to the share right and are not, as the name “quota” might suggest, based on a certain minimum amount of the company’s share capital. Accordingly, no nominal value can be calculated for these shares. If the percentage of the share is indicated on the certificate, the quota share is referred to as “speaking”. A “silent” quota share, on the other hand, lacks this notation.

Caution: Although true no-par value quota shares are common in the USA, Canada, Belgium and Italy, among other countries, they are generally not permitted in Germany, as these shares are marketable and can therefore represent an extreme balance sheet concealment.

No-par-value shares – most common type of share since the introduction of the euro

No-par-value shares – abbreviated with o. N. for “without par value” – are considered “non-genuine”, as they are neither denominated in a certain par value nor in a certain quota. They are expressed in terms of quantity as the result of dividing the share capital by the number of shares, whereby their nominal value is calculated fictitiously. Thus, in contrast to quota shares, no-par shares embody a share in the capital stock of an AG and may not fall below a specified minimum amount of one euro per share. They are the most common type of share in Germany and were originally introduced to make the conversion of shares to the euro easier for stock corporations.

AG: foundation, legal form, real estate shares

1. Real estate shares: List of companies
2. Stock corporation (AG)
3. Real estate stock corporation (REIT-AG)
4. Real estate company

Real estate shares: List of companies

Real Estate Shares – Not everyone can afford real estate as a capital investment. Through real estate shares, however, everyone can participate in the real estate market and invest money. The share prices of the big players are rising year after year. Vonovia, Deutsche Wohnen, Dream Global, CBRE and Patrizia are a few of the best known active companies in Germany. In addition, there are more than 25 other companies. We have an overview of the most popular real estate stocks for you as an investor. But first a look at the risks of a stock, the stock market, for beginners and beginners. Now to the list and more on the real estate market, your investment options and all prices at a glance, here in the article on real estate stocks.

• Real Estate Stocks

Stock corporation (AG): Formation, liability, legal form & Co.

Aktiengesellschaft (AG) – The stock corporation is a German legal form founded by at least one person and organized by different bodies. Instead of a managing director, the company is managed by a board of directors consisting of at least one person. As the name already indicates, this legal form of a company primarily stands for stock trading. You would like to start a company alone or together with other people and learn more about company law forms in advance? Then you’ve come to the right place!

• Stock corporation (AG)

Real estate stock corporation (REIT-AG)

Real estate stock corporation / REIT-AG – You don’t find the idea of a stock corporation bad at all and are now wondering how you can combine your capital company with the real estate industry? A real estate company is a company that serves the financing, development, realization, leasing, or marketing of real estate – starting with a single property up to a real estate portfolio in the three or multi-digit range. The management of real estate property or third-party real estate on behalf of third parties can also be handled by a real estate company.

• Real estate stock corporation (REIT-AG)

Real Estate GmbH & Asset Management GmbH

Alternative – In this article you will learn the basics about real estate companies. Briefly explained, a real estate company is a company that has the purpose of leasing, developing, financing, realizing and/or marketing. It doesn’t matter if it is one or more properties. The management of residential and commercial real estate – in its own interest or as a service offered to third parties – is also a popular focus for real estate companies and asset management GmbHs. Find out more about the main advantages and disadvantages of buying real estate and the expected costs.

• Real estate company