The Pfandbrief 2011 | 2012
The Pfandbrief 2011 | 2012
The Pfandbrief 2011 | 2012
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<strong>The</strong> German Property Market – Guaranteeing the Sustained Value of Mortgage <strong>Pfandbrief</strong>e<br />
Low Structural Risk by International Comparison<br />
Germany belongs to a small group of markets worldwide which exhibit very low risk potential<br />
for medium to long-term property investments. This is borne out by the annually updated<br />
Eurohypo Real Estate Appraisal & Consulting (RAC) property market ranking* which, based on<br />
a dataset containing macroeconomic and property-related determinants, identifies long-term<br />
structural risks and condenses them into a risk ratio (country score).<br />
Structural Risks of National Property Markets: a Global Comparison<br />
66<br />
Country score<br />
1<br />
2<br />
3<br />
4<br />
5<br />
6<br />
7<br />
8<br />
9<br />
10<br />
Country score 1 = property market with very low structural risk; 10 = property market with very high structural risk<br />
Source: Eurohypo RAC Research<br />
Since the ranking was first compiled in 2005, Germany has held one of the top places, with a<br />
country score of 2 (meaning the structural risk is particularly low). Besides the appeal of the<br />
market (market size, wealth, etc.) the main points in Germany’s favor are political, legal and<br />
fiscal stability. <strong>The</strong> freedom offered in a market economy, legal certainty and market transparency<br />
ensure that cross-border investments are characterized by investor-friendly market entry<br />
conditions and costs in every market phase. Efficient market mechanisms and a diversified<br />
economic structure guarantee that, after phases of cyclical downswing, economic expansionary<br />
forces again become broad based. Moreover, the financial crisis showed that Germany has<br />
efficient public institutions in place which are able to identify systemic risk both quickly and<br />
purposefully, and to curb systemic risk by way of concerted crisis management (e.g. bank res-<br />
* In terms of the information it provides, methodological procedure as well as the selection and weighting of relevant criteria,<br />
the Eurohypo RAC property market ranking is heavily modeled on the Property and Market Rating concept of the European Group<br />
of Valuers’ Associations TEGoVA.
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