GermanyGermany is tipped by some pundits to head the list of investment hot spots for Irish investors, a remarkable achievement for a country where property prices have been falling for the best part of two decades

Prices began to slide in 1990, following the reunification of the former East Germany and West Germany, and they only started to turn around in 2004.

Neil Jakob, who runs the listings website germanproperty.ie, says that demand for property in Germany is now high.

Despite its many attractions, Germany has not been a massively popular holiday destination for Irish people, and neither has it traditionally been a target for buyers of holiday homes.

The majority of Irish people who buy property in Germany are investors who are content for a management company to take care of their asset and do not care about personal use.

Most investors look for properties which have a mix of residential and commercial use, says Jakob. "If you are going to finance the property through a German bank, it is easier to get finance if the commercial element of the building is less than 30 per cent."

German banks typically lend about 60 per cent of the purchase price, meaning that investors will have to come up with the other 40 per cent through a combination of equity release or their own savings.

Rental income is not too difficult to come by in a country where home ownership is low. "The only thing you need to be careful of is that you don't invest in an area that has high numbers of apartments. In some of the old socialist parts of Berlin, there are a lot of vacancies," says Jakob.

But with prices so low, compared to Ireland, investors find that they can afford a full building of up to 30 apartments for a cool €1 million, according to Mark Crosbie, who runs an auctioneering firm which sells German property to Irish buyers. "In the short term, Germany has a good capacity for producing income," he says. "Investors can get yields of 9.5-10 per cent, compared to maybe 4 per cent in Ireland."

Apart from Berlin, Leipzig and Nuremberg are two increasingly common investment locations.

The "affordability factor" in Germany is such that people can get Bulgarian property prices in a country which has been a very strong economy in the past and could be a very strong economy again. "You could buy an apartment in Bulgaria, but Bulgaria has never seen its day. Germany is a solid concept," Crosbie says.

However, although prices are starting on an upward curve, it is not expected that they will soar, warns Jakob.

Germany and Ireland have a double-taxation agreement, so investors will not be taxed twice on the same income. If buyers hold their properties for 10 years, they will not be liable for any tax on the capital gains.

Irish buyers will be taxed as non-residents on their rental income at a rate of 25 per cent. However, expenses such as management fees can be offset .