The German real estate market promises stable long-term returns especially in urban areas with excellent location-factors such as Berlin, Munich and Frankfurt. International investors have the chance to profit from good framework conditions, high trust and potentially attractive returns in the future. This is exactly one of the reasons why ImmobilienScout24 decided to launch a Minimum Viable Product (MVP) testing how to best connect developers with international investors: www.propertyinvestgermany.com
We sat down with Binfang Zhu, intern at Group Business Development and Strategy, Marco Rahn, Project Consultant, and Eduardo Cusano, Senior KAM (Key-Account-Management) Strategic Accounts, to talk about the project’s history, why Germany is a good choice and the project’s next milestones.
1. Tell us a bit about the story behind this project. How did you come up with the idea of connecting leading German property developers with international investors?
Eduardo: The idea came from a combination of market information and insightful inputs from our clients. A growing number of international investors are looking at the real estate market in Germany. Last year, eight percent of our total users on www.immobilienscout24.de were international property seekers. Project developers account for a large share of the real estate transactions in Germany and our project developer and project marketer clients are interested connecting with international investors. Based on those facts, we see the opportunity to develop a new product for this market. Therefore, the idea was born and a cross-functional team was built to carry out the project.
2. What can international investors expect from the German real estate markets and which trends should they pay attention to in particular?
Eduardo: There are several promising market conditions affecting the German real estate market. A stable political climate, a growing economy, continuously low interest rates & easy financing access , as well as low legal hurdles collectively make Germany highly attractive when it comes to property investment. One interesting investing trend is definitely the increasing level of micro-apartments. These are apartments of between 20 and 40 m2, which are in high demand amongst young people – with a particular preference towards being fully furnished. Whilst they are seldom available within the resale market, there has been an increase in micro-apartments under construction in an attempt to keep up with demand.
3. Berlin, Frankfurt and Munich all hot spots but they also differ from each other. What does an investor have to consider when investing in those cities’ real estate markets?
Marco: Those three cities are all considered bustling cities in Germany, or even in Europe. Berlin is well known for its strong vitality, high diversity and booming start-up ecosystem; while Frankfurt is renowned as a global financial centre. Munich, on the other hand, is undoubtedly the economically strongest city with various national and international corporations. All of them provide promising investment prospects in terms of return, but also very different living atmospheres. In order to make the optimal individual decision given the diversity mentioned, it is wise for international investors to take their purchasing intentions and their preferred life style into consideration. In other words, they should ask themselves whether it is purely for investment or combined with self-usage.
4. Creating such a platform both for developers and investors requires strong collaboration within different teams. Which teams were involved in this project and what challenges did you have to solve?
Binfang: Sure, various teams in our company contributed and will continue to invest effort into this platform. This cross-functional team consists of colleagues from online marketing, content, sales, group strategy and our premium product services team. The primary objective for us in this project was to proceed quickly, from the design of the product, the creation of the marketing strategy, the agreement with the different clients, etc. To achieve this goal, effective communication and timely action from everyone in the team played a crucial role in the launch of this MVP within around 4 weeks.
5. What do you plan for the future? What are the next milestones of this project?
Eduardo: This MVP is the first step to test and learn how to connect with international investors. In the beginning of 2018 we will assess the results of the MVP and decide on how to progress the project, for example, improve the functionality, the design and the content on our platform, increase the visibility to international investors, or increase the number and scope of projects listed. A systematic integration of the portal into Scout24 is also a big opportunity we will evaluate.