The German economy appears to be on the mend with consumer confidence returning and there are hopes among European property investors that the market may soon be set for strong growth.

Significantly, the European Commission has raised its 2006 forecast for eurozone growth from 1.9 per cent to 2.1 per cent in the Spring economic report.

Monetary affairs commissioner Joaquin Almunia has stressed that the EU and the Euro area in general are expected to grow at a much stronger rate this year, but he has positioned Germany as the driving force behind this improvement.

Germany is Europe's largest economy and Mr Almunia has indicated that its growth will be 1.7 per cent this year, almost doubling from the 0.9 per cent growth in 2005.

"The main impulses stem from a robust increase in investment, continued strong world growth and improved outlook in Germany," said a commission statement, in its assessment of Europe as a whole.

A BBC report on Germany's economic condition has said that exports are proving essential to the country's improvement, with Hamburg predictably enjoying the benefits of this.

Workers have made great sacrifices for the good of the economy, it is claimed, with many working longer hours and not receiving a pay rise above the rate of inflation for a number of years.

The report claims that the impact has been significant, with German industry again competing internationally. In February, the country had a trade surplus of €13bn and there are clear signs that the situation is continuing to improve.

As industry returns to health and the economy is brought back to its feet, consumers will presumably regain an appetite for property and there is evidence in the real estate industry that this is already beginning.

The International Herald Tribune recently reported that enthusiasm for property investment in Germany is now beginning to build.

"German cities are lining up to catch a mammoth wave of foreign investment in German property. Lured by low interest rates, a property market that has stagnated for more than a decade, and a vast supply of well-kept public housing, the foreigners have already snapped up dozens of projects in Berlin, Bremen, Essen, and other German cities," said the report.

Phillipe Tannenbaum, a researcher from a German bank, told the publication that potential for growth in Germany is very evident but that it is in need of a spark.

"Germany is a very wealthy country, but their problem is that they don't know it," he suggested.

With less than 40 per cent of Germans owning their own home, it would certainly seem that astute investors have a big market to play with in the years to come. As Germany's economy embarks upon the road to recovery, many are expecting significant capital growth from property investment, aided by the fact that property is still relatively inexpensive.