Dresden. Source: flickr.com/milanboers

Residential investment: The East is totally underrated

Speaking about Germany's prime investment markets like Hamburg, Tobias Just, professor and managing director at the International Real Estate Business School at Regensburg University, told Immobilien Zeitung: It's amazing how many cities have had prices rising faster than rents in the last three years, and then the kicker: The East is totally underrated.

Just sees a risk in cities where rents have grown less than 1.5 percent per annum for the last three years with a larger increase in price. Cologne tops this list, with the university town of Bayreuth not much further down, followed by Stralsund, Wiesbaden and Magdeburg.

On the other hand, the eastern city of Zwickau has offered rent increases of 4.6 percent per annum and registered a rent return of 4.7 percent per annum, the greatest profit potential in the country, followed by Mülheim, Gera, Griessen and Dresden. There are three eastern cities in the top 5, but after investors got burned in the East in the '90s and following the financial crisis, they've steered clear of the region, said Just.

As always, Just recommends taking a close look at the micro-market you're looking to invest in. He gives Munich as an example, where more modest sites had rent increases of 4.4 percent per annum, compared to a mere 2.6 percent per annum in prime locations.

Greeks Invest in Berlin Homes

Berlin has always attracted international capital to its real estate market, Reuters reports, but recently Greeks have showed up in droves at brokerages, seeking a safe haven from the turmoil in the economic turmoil in their home country and much of the rest of the eurozone. One Italian broker in the German capital who caters to foreigners told Reuters, All the Greek investors that we have work mostly in Greece, earn money in Greece, and spend money in Greece, and then invest their money in Europe. I can't blame people for looking for alternative investments. Another broker said that people of modest means were on the hunt for investments in Berlin, which is known--by Greeks and also other foreigners--as a safe and attractive market to invest in.