Publications

- March 1, 2020: Vol. 14, Number 3

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The weight of red tape: How increasing political regulation is changing the German real estate market

by Esfandiar Khorrami

The German economy has experienced an unprecedented boom over the past 10 years. Coupled with low interest rates and cheap loans, GDP growth has boosted the real estate market and prompted many investors to put their money into German property.

Demand has been exceeding supply in many places for years and property prices are rising, which is why the German housing market, in particular, is now under immense pressure. As a result, after many years of promoting the purchase of rented residential property, German politics is now once again exerting a stronger regulatory influence on the German real estate market.

From land transfer tax reform to rent brakes and rent caps, market activity in Germany is becoming increasingly influenced by the state — at the expense of investors.

Putting a “cap” on the problems

The political influence on what is actually a healthy market knows hardly any limits. This is especially true in the German capit

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