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Impact Investing

IPE special report May 2018

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Germany: Deutsche says ageing to hit property

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GERMANY – Germany’s investment products must diversify more strongly across regions and property categories, says Deutsche Bank.

According to a new research note from the bank, demography is set to have a stark effect on Germany’s property market. As a result of an ageing society, the number of households will continue to grow until 2030. The authors of the report, however, believe that demand for space will decline after that time.

As the population ages demand for housing by type will also change, with housing suitable for the elderly increasing and demand for housing for young families falling.

Demand for property will also vary by region as a result of demographic changes, says the report. Regions with low demand for labour will experience out-migration and therefore over-supply.

The commercial property markets in Germany will be hit, as the number of people of working age shrinks after 2020.

To cushion against the risks attached to the demographic change, property investment products must diversify more strongly across regions and property categories, say the authors. In particular, investors should consider a property investment strategy on a global basis.

“Global investment strategies merit primary consideration here, since not all countries will suffer the effects of the demographic burden to the same degree or at the same time as in Germany,” says the report, adding, ”The property market will always be a regional one, but property investment is likely to become more internationalised in the future.”

The report from Deutsche Bank is entitled: “Demography send tremor through German property market”.

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