German property firms: Safe as houses THE British are obsessed with property ownership, but Germans, by and large, are happy to rent. The European Union's biggest economy also has its lowest rate of owner-occupied housing, and the highest proportion of people living in homes rented at market prices (as opposed to state-subsidised ones). That is why rising rents, not rising house prices, were a theme in Germany's recent elections, with even the conservative Christian Democratic Union and Christian Social Union showing sympathy for some kind of "rent brake." Germany's renter-heavy housing market has unique historical and cultural causes - and interesting consequences. Much housing has been owned by state or city governments, or public-sector firms like Deutsche Bahn, the national railway. Germans have usually put their savings into banks rather than homes. But the gradual privatisation of Germany's housing stock has led to the emergence of unusual beasts: big, stockmarket-listed property firms which mainly rent out homes, not offices or shops. Two of the biggest will soon become one: this week GSW Immobilien said it had agreed to a takeover by Deutsche Wohnen. If the deal goes ahead, the combined company will be one of Europe's largest listed property firms, along with Deutsche Annington, another German residential landlord, which floated on the stockmarket in July. Most of Europe's other property giants deal mainly in commercial premises (see chart). The two merging firms have big portfolios in Berlin. Of their combined 150,000 flats, about 108,000 are in the capital region. So in contrast to many mergers, there is a good chance of achieving the promised cost savings. For the deal to go through, 75% of GSW's shareholders must accept it. Many may conclude that it is a good time to sell: rents in Berlin, having risen sharply, are likely to be flat in the near future, reckons David Eckel, a consultant and lobbyist for housing developers and owners. A bigger company should be better equipped to thrive in a heavily regulated business. For example, the government has many requirements for the energy efficiency of new buildings, something smaller landlords have a harder time coping with. The larger German companies should also find it easier to negotiate deals on big and prominent development sites, says Yolande Barnes of Savills, a London-based property consultant. Philip Charls of the European Public Real-Estate Association notes that many Germans are queasy about the idea of treating housing as a speculative investment. But the current low interest rates, which the local financial press moans about daily, are driving Germans to seek creative ways to earn returns. Bigger housing companies, like the merged Deutsche Wohnen-GSW, should provide liquid investments, offering attractive and fairly predictable yields. However, in the financial crisis many Germans lost money on failed savings vehicles which, without them realising it, had invested in commercial property. Publicly quoted firms that rent flats to families should be a safer investment. But those who got burned on property last time may take some convincing.