Israeli Investors Shift Focus From Germany to France for Real Estate

Germany, once a prime real estate investment destination for Israelis, has fallen off their radar, according to a report by Globes' "Kesef BaKir" podcast. While Germany offers stability and a strong economy, its market is now characterized by slower returns, making it less attractive for those seeking quick profits. Matan Kessler, who manages the Israeli operations of Inspiration Group, notes that Germany is not the market for significant, rapid gains, but rather for stability. He points to the country's political and economic steadiness as key advantages, along with a favorable Euro exchange rate. However, recent economic challenges, including the impact of the war in Ukraine, have led to a decline in property prices, estimated at 15-20% over the past year.

Kessler also highlights that the typical Israeli investor in Germany today is older, between 45 and 60, seeking to diversify established wealth. A significant factor influencing investment decisions in Germany is the strict rental regulations, which make it difficult to evict tenants. This can drastically affect property value, with apartments occupied by tenants often costing half as much as vacant ones. Assaf Oni, Globes' European correspondent, describes Berlin as hostile to investors due to its stringent regulations, causing many to reconsider investing there.

In contrast, France is presented as a potentially overlooked investment opportunity. Lawyer Gregory Weitz, who has invested in Nice, points to France's economic stability, well-defined laws, and the possibility of up to 100% financing as key attractions. While direct returns might not be the primary focus, the stability and long-term perspective are appealing. Property prices in Nice have seen a modest average annual increase of 3% over the last five years. Weitz also notes that French real estate transactions are transparent, with clear rules for negotiations and binding offers, and that mortgage approvals are a condition for finalizing deals, mitigating risk for buyers.

Despite these advantages, Israeli investors have been hesitant to invest in France. Weitz suggests this may be due to perceptions of the country's political climate and the presence of Muslim immigrants, though he believes these concerns are unfounded in desirable areas like Nice and the Côte d'Azur. The article concludes that successful overseas investment requires a deep understanding of local rules, whether it's Germany's strict tenant laws or France's financing and tax structures.