Location, location, location. The three golden rules of property. Yet they seem to have been forgotten in recent years as people rush to snap up 'bargains' across the globe, no matter how far from home or desolate the surroundings. But for property investors who would rather not have to take a long-haul flight when they want to inspect their purchases, there is still one location in Europe that offers value and a potentially excellent return on your investment: Germany.

Germany's economy finally has started the road to recovery. Confidence among business leaders is high. In addition, a strong and competitive export industry and a government committed to economic reforms will support this sleeping giant as it awakens from its long slumber.

Property prices have shown their biggest gains in many years in the last twelve months, with official figures showing over 7% price growth from Q3 2006 – Q3 2007.

German Property: Attracting Huge Investment;

Large funds such as Goldman Sachs have invested hundreds of millions of euros in Berlin property. The German property sector as a whole has seen an influx of foreign investment in the past few years. After a long period of economic stagnation, especially in the east, which kept house prices low, investors now see this as an opportunity. Property prices in former East German cities such as Berlin and Dresden are up to 30% lower than the rest of the country.

Apartments in Berlin can be bought for a quarter of the price of similar properties in London and are even cheaper than several eastern European capitals, yet this is the capital city of the largest economy in Europe. Just 40% of people own their own property in Germany and only 11% own their own property in Berlin, but domestic demand, and therefore prices too, are set to rise as the German government starts to liberalise the mortgage market.

German Property Hotspots;

Dresden
A city of great beauty and with a strong cultural history was obliterated in the bombing of Dresden in World War II, but much of 'Florence on the Elbe' has since been rebuilt. In 2004, Unesco declared Dresden and the surrounding area of the Elbe valley a World Heritage Site, while a flourishing cultural scene and a burgeoning technological sector point to a sustainable future for the Saxon capital.

With many of the low-quality housing estates due to be demolished in the next few years, good quality apartments will then come into demand and could be capable of showing strong capital gains.

Commercial property in Dresden (and Leipzig) can provide high NET yields of 10% p.a.

Leipzig
With a student population of 40,000 and excellent research facilities for medicine and biology, more people are being attracted to this city. A modern quarter created by the authorities, called 'media city', has already created major employment in the television industry.

Berlin
Central areas such as Charlottenburg and Mitte in West Berlin, which are among the most exclusive in the city, are also the most popular areas for investors. In former East Berlin trendy areas like Prenzlauer Berg and Friedrichschain are very popular, however, this also means yields tend to be lower.

Other parts of Berlin such as Pankow and Weissensee which border the areas mentioned above are likely to see strong growth in years to come.

Renewable Energy Sources Act (EEG):
For solar investment projects installed in 2009 the EEG Law guarantees a 20 year long constant feed-in tariff of between 31.94 €cent/kWh (solar farms) and up to 43.01 €cent/kWh (roof-top systems). Recent amendments confirm strong incentives for photovoltaic investment systems installed from 2009 onwards.

Environmental Protection Loan Program
The German development bank (KfW) offers attractive 20 year loans below market interest rates to support renewable energy investment.