Germany’s population, which is ageing and expected to fall by 12% over the next 40 years, could reduce demand for traditional real estate and create opportunities in newer sectors.
The prediction came from Aviva Investors which said Germany is facing a demographic bust, with a sharp fall of 27% in the working population by 2050, driving up the dependency ratio. As a result, demand for traditional real estate, such as offices, family housing and retail assets for lower age groups could fall, while there could be opportunities in healthcare, nursing homes and assisted living. Aviva added that there are big differences between states within Germany. Aviva research analyst, Darren Sriharan, commented: “At a state level there seems to be an East-West divide. With the exception of Berlin, forecasts suggest that over the coming decade, the East of Germany will see a greater fall in total population and working age population, and a steeper increase in the dependency ratio. The rate of change is less dramatic but still evident in western and southern states.” He added that the changes would require better local knowledge as investors adjusted their exposure and found opportunities for new real estate investments.