Discover more about Germany and its investment potential.
Learn about the companies and individuals making an impact on investment in Germany.
Economic History in Brief
Germany is a country located in Mid-Western Europe. It consists of 16 constituent states and covers an area of approximately 357,021 square kilometres. With over 80 million inhabitants, Germany is the most densely populated nation in the European Union. It is also one of the world’s most popular immigration destinations, second only to the United States. Because of its strong investment culture and a GDP of around US$3 trillion, Germany is the largest individual economy in the European Union.
Before the 1800s Germany was mainly rural, with scattered urban trading hubs. The 19th century brought heavy industry, and economic growth with it. By 1900 Germany laid claim to the largest economy in Europe. During Hitler’s era the support of government subsidies not only gave Germany military power, but also independence from the global economy. Despite the devastation of the war, West Germany eventually became known as an ‘economic miracle’.
After 1950 Germany increased levels of productivity to such an extent they surpassed Britain. The German economic reform was largely ascribed to the powerful support the country received from a variety of investment sources, particularly the Marshall Plan. Subsequently, Germany underwent a memorable boom with a massive industrial production growth rate. This trend continues to this day.
Germany has a social market economy. Its labour force is highly skilled, and it boasts a substantial capital stock, high levels of innovation and low corruption levels. In relation to investment potential, Germany is highly rated for its transport infrastructure, and in particular for its airports. Although German roads have somewhat declined, their ratings continue to remain well above the European Union average, increasing the country’s popularity.
The property market in Germany is also known as being particularly lucrative, especially after Brexit. Some of the investments previously targeted at the United Kingdom are now being spent elsewhere, and Germany, specifically, has been identified as a beneficiary. A mere three months following Brexit, Germany overtook the United Kingdom as Europe’s leading property investment destination.
In this relatively short timeframe Germany drew in EUR13.6 billion in comparison to the UK’s EUR10.1 billion. What sets the property market in Germany apart from the typical European market in terms of investment is that home ownership rates are significantly lower. Instead, residential properties tend to be owned by property companies – a huge draw for foreign and domestic investors.
In addition to profitable investment opportunities, the biggest driving force behind Germany being a prime investment destination is the combination of its economic stability and rock-bottom interest rates.
Companies Investing in Germany
Many of the global industry leaders are setting up base in Germany. In 2017 the world’s biggest online retailer, Amazon, invested EUR100 million into the construction of a 64,000 square metre logistics centre in the city Winsen in northern Germany. In the same year, Google announced plans to double its amount of IT specialists in their Munich development centre, raising it to 800.
In keeping with the property investment trend in Germany, Primonial, a French company, has spent over EUR 1 billion on German housing for retired people in 2016.
While Germany has significant investments from all over the world, China seems to have an insatiable appetite for making investments in the country, even with new investment restrictions being rolled out by German regulators and capital outflow controls implemented by the Chinese authorities. Phicomm, a renowned Chinese telecoms group started setting up a EUR85 million headquarters in Unterhaching in southern Germany, with plans to employ as many as 1,100 people. Another major investment from China is the acquisition of robot-maker Kuka by home appliance manufacturer Midea Group.
Investors with Interests in Germany
For several decades Germany has had a steady influx of foreign investors boosting the economy and enjoying the fruits of the lucrative investment options the country has to offer. Some of the most prominent investors in Germany include Paul Fang, Jeff Bezos and Laurent Flechet.
Through various investments and joint ventures, Paul Fang, the chairman of China’s Midea Group, has played a role in firmly establishing his company’s global market share and maintaining Midea’s reputation as the largest appliance company in the world. One of Fang’s most significant achievements was investing in Germany by acquiring a company with advanced robotics technology.
American investor and technology buff, Jeff Bezos, expanded his massive online retail company Amazon to Germany and, in late 2017, announced plans to expand their service offering in the country to include brick-and-mortar stores.
Laurent Flechet is the chairman of the management board of Primonial, a French real estate investment firm that has been making substantial investments into German property. As the person in charge of the company’s portfolio management, Flechet is responsible for over EUR8 billion in assets, of which more than EUR1 billion has been invested in Germany.
In addition to a substantial portfolio of investors, Germany also has a range of angel investors who continue to make their mark on the German economy by investing in a range of industries that include the Internet of Things, consumer electronics, mobile commerce, big data analytics, financial technology and drones.
Germany is considered one of the top three global investment locations, alongside the United States and China, and is rapidly developing a reputation as the top European business destination. Although the United States considers Britain to be the main investment destination in Europe, the rest of the world appears to prefer Germany. Between 2016 and 2017, the number of foreign investments in Germany increased by over 10%. The United Kingdom increased by only 7%, placing Germany in the lead in what has been an ongoing competition for foreign investment. While the UK achieved 788 foreign investment projects, Germany landed 869. China has consistently been the largest single investor in Germany, followed by the US, Switzerland and Britain.
Although some level of restriction does exist for a few particular business activities in the form of licencing, foreign investment is welcomed in Germany. There are no substantial restrictions to deter foreign investors, there are no permanent administrative or currency controls on investments, and attitudes towards foreign actors in the German economy are generally positive.