Residential Real Estate Hot in Germany

IPD’s DIX German Property Index indicates investors in residential property in the country enjoyed a record-breaking return on investment in 2011 as compared to analyses that go back …

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IPD’s DIX German Property Index indicates investors in residential property in the country enjoyed a record-breaking return on investment in 2011 as compared to analyses that go back as far as 1989. Gains were recorded at 5.5% for the year, combining income returns of 5.3% with capital growth of 0.2%. This places residential real estate above any other sector for investment growth, including industrial and office properties. Investors are now looking at the opportunity in a new light, particularly as a long-term portfolio option. For more on this continue reading the following article from Property Wire.

Residential property is providing the best investment returns for the German real estate sector, according to the DIX German Property Index for 2011 published by IPD.

The total return before tax and financing for all German properties reached a record level in 2011, said Daniel Piazolo, managing director of IPD in Germany.
 
The DIX German Property Index for 2011 stood at 5.5 %, representing the highest return of this millennium and exceeding industry expectations, which had been reflected in a total return forecast of 4.8% for the year.
 
IPD has been measuring the annual performance of German institutional investors’ property portfolios since 1996. The analyses go back to 1989 and the 2011 results of the German Index DIX are based on more than 4300 properties with a capital value of €50 billion.

Last year the highest sector level total return was achieved by residential property at 7.8 %, followed by industrial and retail at 7 % and 6.1 % respectively. Office properties also saw improved performance at 4.3 % compared with 3.1% in 2010 but the return remained significantly behind that of the other German property sectors.

For 2011 an income return of 5.3% was recorded, 0.2% higher than in the previous year.  Meanwhile capital growth was positive at 0.2%, in contrast to the negative figure of -0.9 % recorded for 2010. This was the first positive capital growth seen for many years.

‘With capital growth of 3.2% in 2011, residential properties achieved their highest return since IPD began collecting data on the direct property holdings of institutional investors,’ said Piazolo.

‘In contrast to the other sectors, residential property has now provided consistently positive capital appreciation over a period of six years. Combined with an income return of 4.5 % in 2011, residential property not only represents a popular choice for new investment, but has also proved to be a productive long term holding within portfolios,’ he added.

This article was republished with permission from Property Wire.

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