Is buying property in Germany truly worth it as an investment? Let’s explore key factors based on the personal experiences of someone who has lived and invested in both Germany and Georgia.

Comparison of Property Prices: Germany vs. Georgia

Germany, as a developed nation, naturally has higher property prices compared to emerging markets like Georgia. While owning property in Germany seems promising, the numbers tell a different story. The rental yield in Germany is considerably lower than in countries like Georgia. For example, while an investment in Georgia can bring in an annual rental yield of up to 20%, the same property in Germany might only yield 5%.

This high difference in rental income is a significant factor for investors. In Germany, properties costing around one million euros can generate a rental income of roughly €2,000 per month. In contrast, a property in Georgia that costs a fraction of that—around $120,000—can also bring in $2,000 per month in rental income.

Real Estate as an Investment in Germany: Is It Worth It?

When analyzing the German real estate market, it’s essential to consider the country’s current economic conditions. Interest rates in Germany have risen significantly, from below 1% to around 5%. While low-interest rates made real estate investments attractive in the past, the current rates make it harder to justify the cost.

With rising interest rates, property buyers in Germany are faced with higher mortgage payments, reducing their return on investment (ROI). For investors seeking higher yields, the German market may no longer be the best option.

A Lucrative Alternative: Investing in Georgia

For those looking for better returns, investing in property in Georgia offers a viable alternative. Not only is the upfront investment significantly lower, but the rental yields are also higher, making it a more attractive option for investors seeking passive income. With interest rates for loans as low as 5% in Georgia, it becomes a lucrative investment compared to the rising rates in Germany.

By diversifying investments across countries like Georgia, investors can achieve higher returns and still enjoy the benefits of living in developed countries like Germany, renting a home without the hefty investment in German real estate.

The Strategy: Rental Properties vs. Owning Property in Germany

Given the lower rental yields and higher property prices in Germany, an alternative strategy for foreigners is to rent a home in a prime location like Frankfurt while investing in properties in markets with higher rental yields, such as Georgia. This approach allows investors to maximize their income potential while enjoying the high quality of life that Germany offers.

Conclusion: A Foreign Investor’s Perspective on the German Property Market

In summary, for foreigners considering real estate investment in Germany, it may no longer be as financially rewarding as it once was. With interest rates climbing and rental yields remaining low, investors may find better opportunities in emerging markets like Georgia. The key takeaway is to weigh the risk and reward carefully, considering factors like interest rates, rental yields, and long-term investment goals.

How We Can Help

If you’re a foreigner looking to invest in property—whether in Germany or abroad—we offer services to help you navigate the complexities of international real estate. Our expertise of Remote Investment in Real Estate can help you make informed decisions that maximize your returns. Contact us for more information on the services we offer.