UK investors have piled into the German capital Berlin over the last few years, but it seems they might have done better to look at other cities in the former East Germany.
A study by research company Prognos, which ranked German cities and counties by their economic potential, showed that while Berlin has remained languishing mid-table, nearby Potsdam had soared from 148 out of 439 to number 15. Eight of the top 10 climbers since a similar survey was carried out in 2004 are in East Germany, with Dresden and Jena alongside Potsdam being rated as having "very high potential in future".
Dresden-based property management group dMAXS comments: "Eastern German property has been one of the most undervalued in the world. Investors from the UK, Holland and other countries have already recognised that the Eastern German property market offers exciting capital growth potential, strong and high yielding rental income and some of the lowest property prices in Western Europe."
The company adds: "Berlin, Saxony, Thuringia and Saxony Anhalt are now top investment locations, overtaking regions such as Rheinland-Pfalz, Lower-Saxony and Nordrhein-Westphalia in Western Germany. Top cities for property investment in Eastern Germany besides Berlin are Potsdam, Dresden and Jena but also cities such as Leipzig, Rostock, Halle, Erfurt and Frankfurt/Oder offer good investment returns."
What makes property in the former communist East Germany particularly attractive, it seems, is the large amount of renovation work that has taken place since reunification, while the demolition of poor quality properties means there is little vacant housing stock.
It's certainly one place where property is still reasonably affordable to those holding a weak pound. A studio flat close to the Elbe in Dresden is on sale from dMAXS for €24,000; while a fully-tenanted detached house converted into nine apartments in the same city would cost you €420,000. A good rental yield in Euros might look an attractive proposition in the coming months and years.
Alexander Garrett is a freelance property writer who contributes regularly to The Observer and British Airways' Business Life.