According to an article about East German property “Fast vergessene Perlen im Osten” from Heiko Metzger in Financial Times Deutschland (Print issue 03.01.2008) some local markets in East Germany are more than worth a look.
Take Jena e.g. the vacancy rate at 2.2% is lower than in most West German cities.
Potsdam e.g. has the highest rate of people working in the service industry troughout Germany, while in addition having the youngest population at all.
It seems that foreigners are the first who discoverd this opportunity. Especially West Germans tend not to invest in East German property. This is based on a couple of prejudices about “the East” as well as on experience at the end of the ninties when the mainly high-income-investors put their money, driven by a heavy tax-refunds into East German Building Developments.
A couple of investments were just spend based on the tax-refund while the builidng itself didn’t even had renters.