Wednesday, 3 December 2008

Residential Property in Germany - Better Performance

According to a current IVD study tenants in Residential Property in Germany have to spend more than one third of their net household income for rent and operating costs, in Berlin 40%. IVD is Germany's biggest organisation of property professionals like agents, property managers, valuation experts etc.. According to the study, the biggest factor for increases in the area of operating costs ("Betriebskosten" *)) was fossil fuels. The cost of heating alone rose by an average of 38% during the past five years and now has a share of 40% of all operating costs. The second largest block in the operation costs is water and sewage at 20%.

Even though there was a rise in the net rent in big cities, especially Berlin in the last 2 years the scope was limited by the sharp rise in operating cost. A good Property Asset Management will have to apply measures of Property Performance Improvement to create options for an increase in the net rent. For the tenants the bottom line of net rent plus operating cost determines the budget. A decrease in operationg cost will create scope for further increases in the net rent.

Uwe Falkenberg

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