German real estate market faces high interest rates and price fluctuations

The German real estate market is currently characterized by high interest rates, which impact both private and professional investors. According to Sven Schwarzat, Managing Director of Schwarzat Capital GmbH, investors must consider the relationship between financing costs and rental income rather than looking at nominal purchase prices in isolation.

In cities like Leipzig, investment potential often depends on the property's condition and development opportunities. While properties requiring renovation may offer lower prices per square meter, the necessity for significant additional investment can offset these initial savings. Properties with underutilized space or suboptimal layouts may offer value if improvements can be made to increase yield.

Furthermore, mortgage interest rates vary significantly among different providers. These rates, which determine monthly credit installments and total financing costs, are influenced by factors such as the applicant's creditworthiness, equity, property value, and Schufa score.