German residential property’s been described (particularly recently) as: ‘Perhapsone of the safest & most attractive asset classes in Europe, or even the world‘.

OK, seems like typical talking-head hyperbole! But in this instance, I’d really have to agree… In fact, I’ve agreed with that thesis for the last couple of years now, and v profitably too! Whenever somebody I meet tugs my sleeve for an investment tip, that’s exactly what I offer up (in all good conscience): German residential property is a safe & compelling long term investment.

Hmm…it’s amusing, and extraordinary, how rapidly most people lose interest in such a dull recommendation! Which just goes to show:

i) I guess most people are truly just looking for a tip…in the v worst sense of the word. Perplexing..!? Do they have some bizarre faith I can conjure up, at will, a stock that’s sure to double for them within a week!? Is this really how some people think investing works? In the end, it illustrates how few people walk the talk – they just don’t apply themselves & follow through consistently with their investing. Often, when they actually decide to invest, it seems like their decision may just boil down to the persuasiveness of the ‘tipper’, rather than the merits of the actual stock thesis!

ii) The utter revulsion most people now feel in relation to any kind of residential property (investment). Which is ridiculous – almost as ridiculous as what went on during the whole 2003-07 property boom (mostly in the Anglo-Saxon world). People have completely forgotten residential property’s normally a genuinely safe, but relatively low return, investment. Yeah, seriously!

It’s ultimately bounded by & tethered to the growth in inflation, construction costs & personal incomes. If you remember & track residential property in relation to those anchors, it definitely offers you safety and, occasionally, significant upside… Forget all that, and you’re just in a fool’s paradise of people buying beyond their means, buying second homes just like cars, and flipping houses like pancakes. Until it all goes splat, that is… 

Property’s also a labour & admin. intensive investment. Which makes it all the more bizarre to see it nominated as the inevitable third choice for investors, after cash/bonds & equities. Tip residential property, and people automatically presume you’re encouraging them to buy a house, or two. Nothing could be further from my mind! If you want diversification,…

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