Thursday, 19 October 2017

Study: Eastern Germany's mid-sized cities are becoming increasingly attractive

TAG Immobilien AG Housing Market Report 2017

  • TAG Housing Market Report Eastern Germany 2017 analyses 27 large and mid-sized cities in Eastern Germany
  • Growing demand for housing in areas around major Eastern German cities
  • Increase in popularity and new residents drives up rents and purchase prices, while vacancy rates fall 
  • Household housing cost burden remains stable or even declines due to strong purchasing power growth

Hamburg, 18 October 2017 - Eastern Germany's housing markets are on course for further growth. Urban populations continue to expand while vacancy rates fall. As a result, rents and property purchase prices are increasing in many locations. The good news: "Despite the fact that rents are rising, dynamic purchasing power growth means that household housing cost burdens remain stable or have even declined in some places", said Claudia Hoyer, Member of the Management Board at TAG Immobilien AG. This has been confirmed by the "Eastern Germany Housing Market Report 2017", published by TAG Immobilien AG today. As with last year's study, the real estate consultancy firm Wüest Partner Deutschland analysed data from 27 large and mid-sized cities in Eastern Germany, including data on population and economic growth, rents and purchase prices, property yields and the financial burden of housing costs across the region.
The report also includes interesting details about the development of gross yields and price development in Berlin.


Further findings, including the complete Housing Market Report Eastern Germany 2017, can be downloaded for free here.






Share/Bookmark

Thursday, 12 October 2017

Winning in Growth Cities - Cushman Wakefield Report 2017 and Outlook 2018






Key global cities are winning the race for investment – but which ones? The ‘Winning in Growth Cities’ report, published today, is an annual survey looking at global commercial real estate investment activity.


Key Highlights

  • Global property investment rose to $1.5tn in the year to June.
  • Led by New York, the US dominates the ranking of global cities but Asian markets made the most impressive gains in the past year.
  • London is still the number one global market for cross border players. Paris closed the gap in third place but German cities are the ones to watch.
  • While gateway cities again dominated, with the top 25 taking nearly 50% of the market, tier two cities have taken market share.
  • The economic background is more encouraging for real estate than many expected, with global growth forecasts raised by the IMF for the first time since 2011.

One of the key factors determining which cities will out perform is technological change. Developments such as virtual reality and big data are set to enable more rapid change and will start shaping cities and tenant demand within months rather than years.

This report aims to identify some of the key enablers and emerging technologies and looks at what will determine which cities are the winners in this radically shifting environment.

For Germany and especially Berlin we support all activities regarding property investment with our experience and specialized network of property professionals.

Download the PDF


Share/Bookmark

Monday, 2 October 2017

International Property Handbook - Trends 2017



The International Property Handbook from Deloitte’s Global Real Estate & Construction group tracks real estate capital flow, and provides a view of investment trends and key deals in the most active international markets. It reflects back on 2016 analyzing economic data and real estate investment in 21 countries around the world to provide insights on potential trends in 2017.
Key trends include:
  • Overall economic outlook is stronger, and there’s a significant increase in cross-border investments, especially in Europe.
  • While the total investment volume remains stable, countries with positive investment volume growth are those in which investors expect growth due to macroeconomic indicators, expectations of rental growth, and yield compression.
  • Offices continue to be the preference for investors.
  • Private and unlisted funds are the most active net investors, followed by institutional funds.
  • The capital raised continues to increase and investors are exploring new alternative markets.
Download the handbook to learn about the trends in the market.


Share/Bookmark

Monday, 18 September 2017

City Ranking in Germany for 2017 With Some Surprize Stars in The East

After 2015 the HWWI (Hamburgische Weltwirtschafts Institut) and Private Bank Berenberg have published their City Ranking 2017.



It looks at the 30 biggest German cities using a selection of indicators to determine the dynamics and direction of their development. There are quantitative indicators like demographics and an approach to qualitative indicators like the share of "high skills" jobs in the total number of jobs.
I don't want to make this too dry to read but there are some questions regarding the value of the findings: The indicators are ranked by the diversion from the statistical average for each indicator and then compiled into a summary indicator providing the overall ranking. So 100 new jobs in a city of 500,000 has the same impact as 500 new jobs in a city of 3.5 million.
It still provides an interesting insight into the general direction of the development of cities as well as their surroundings as cities have a growing importance for the development of their region.

So here is the ranking for 2017 in comparison to 2015:

The most remarkable result has to be Dresden, the capital of Saxony going up by 6 ranks and Leipzig in the same state moving up to No.2, both Ex-East-Germany.

Both cities have been the darlings of Anglo investors about 10 years ago driving up prices for investment properties.Subsequently many have abandoned the locations due to high vacancy rates which are now disappearing because of a turn-around in the job market in the region.

The full report is available here: City Ranking 2017


Share/Bookmark

Friday, 15 September 2017

Have You Recently Bought a Condominium Apartment in Berlin?

Many international investors have bought condominium apartments in Berlin during the last years. Some will have full-service packages taking care of everything, hoping that everything will be alright. Some have bought an apartment, maybe even coming personally for the handover, proudly looking at their apartment - but what now?

Photo by All Bong on Unsplash

Just a few points to be thought of, best done a few months before:
  • Who makes sure that any snagging is done right and timely while you are back home?
  • How serious will the developer be when his last payment depends on the tick in the box on snagging - do you trust him to be acting in your best interest without supervision?
  • Who holds the keys?
  • At what rent should the property be rented - or should it be rented furnished with short-term contracts?
  • If you want to go down the "Furnished Apartment" road, who takes care of this and who does the marketing for it?
  • Who manages your apartment and rent collection, including
    • Budgeting
    • rent collection incl. chasing if necessary
    • payment of contributions to the owners association
    • property tax payment (quarterly)
    • tax documentation and handover to tax consultant in Germany
    • representation at annual owners meetings

Critical Point in Your Investment

This is the point in your investment that is as important as the purchase contract. The purchase contract and all the brochures are a promise. Now it comes to the fulfilment of your expectations - don't leave it to the developer and the agent who received a healthy commission - either from you or the developer - to make sure your plans work out. Even more important if reality does not meet brochure - you want someone on your side who knows the game. It also is a critical point for reclaiming some of the money you paid for a promise that was not 100% fulfilled - the clock starts ticking on handover day.

Our recommendation

Be prepared, don't leave it until the last day. But even if your handover has already happened and you are in the midst of having to make decisions by the minute - get some professional support with local experience. Someone with broad knowledge, experience and solutions. Everybody can point out problems, the next step is much more important - what to do? You don't need a lawyer, an architect and a rental agent to identify your next steps, you need someone who "owns" and "lives" your property and then proposes other specialists when needed and with specific tasks. Otherwise, you are likely to receive long documents with lots of possible or even real issues attached to a big fee account and still no solution.

We don't offer off the shelf solutions because every investor has a personal view about the degree of their own involvement. We can go from one-stop-shop including the management of the investment to just the production of a checklist based on the contract and its documentation. We are happy to engage in a conversation to find out what you feel is best for you.


Share/Bookmark

Wednesday, 13 September 2017

Global Real Estate Market Perspective August 2017 As Seen by JLL

Renewed momentum extends real estate cycle


Global economic growth has invigorated real estate markets worldwide. Leasing demand remains steady, while investors continue to allocate a larger portion of their capital to real estate. Deal flows so far are in line with what we saw in 2016.

2017 Prospects
Capital Values Capital Values 6% Increasing
Rents Rents 3% Increasing
Develoitpment Development 28% Peaking
Vacancy Rate Vacancy Rate 12.1% Rising
Leasing Leasing 39 m sqm Stable
Investment Investment US$ 650bn Firm

Leasing, vacancy, development, rents and capital values relate to the office sector. Full-year 2017 forecast values. Capital values, rents and development figures refer to percentage change. Global vacancy rate - percentage value, leasing volumes in million square metres, investment volumes in US$ billions. Source: JLL, August 2017

There is a wealth of analytic information in the most recent report and we will look at it especially as it applies to Germany and compares to other reports. One item that sticks out when looking at residential investment in Europe is the JLL clock:
After all the persistent talk about aproperty bubble in Germany JLL research does not seem to confirm this for Berlin.

Some more headlines from the report:
  • Office rental growth quickens
  • Western Europe leads as most dynamic leasing market (office)
  • Global retail markets facing unprecedented structural changes
  • Logistics rents surging
Here is the linkk to the full report: https://goo.gl/RERdk6


Share/Bookmark

Thursday, 7 September 2017

What is the best Property Location (In Berlin)?

In my career as a property professional I have heard plenty of advice about property investment and to come to the conclusion right up front -  there just is no lid that fits all pots.

There are investors with various investment philosophies, one that will go for prime locations for investment, put the lid on the pot and see what happened after 10 years. You know what, if it was not a major natural disaster area (take your pick) or politically unwise like Crimea, they will most likely be delighted about the value appreciation.
Now turning that theoretical value appreciation into cash through a sale to someone who believes in this new value is another story. This is an investment philosophy for someone who wants to park their money in a safe and useful way but does not need it for income purposes - this comes from somewhere else. They say that only poor investors look for income from property.

A different weathered property investor in the GERMAN rental market, the emphasis is on purpose, told me once that he would always invest in blue collar areas, anywhere in the world, because these are straight forward people who would do anything to pay their rent and stay out of trouble (eviction) as opposed to white collars who would rather pay a lawyer than their rent.

Let's take another angle:
If you invest 500k in a rented apartment(s) and buy a top tier apartment in Berlin-Mitte it would buy you 1 with about 60 m². How are you going to monetize it? Lock it up, air it once a month and run the taps and hope the authorities will not catch up on you for "housing speculation"? Rent it - furnished or not furnished? What will be the extra cost for furnishing and upkeep and frequent change of tenancy? How big will the gaps be? Did you choose the right location for furnished rentals? What is the cost of vacancy - 100% plus. You don't only not get the rent but you have to pay all utilities charges etc. (Betriebskosten) throughout the vacancy.
If you bought 3 apartments at the same price in a blue collar area you were hedging your bets: How likely is it that all three tenants would default at the same time? Given the current housing market, it is very unlikely that you would be facing a vacancy of more than one month on any of those three units. I think going into more details at this point would be insulting your intelligence ...




Now here comes what you have been waiting for while you were reading: My proposal for the income orientated investor. At this point, I have managed to source two offers for multi family properties that are a fair offer in the current market scenario and have room for improvement in the mid-term. Have a look at some of these locations and maybe you will get interested. ... https://propertylocations.blogspot.de/



Share/Bookmark

Wednesday, 6 September 2017

Deutsche Bundesbank: There is no property bubble in Germany

There are always those predicting doom and if they just keep doing so long enough they might be right one day and nobody counts the false alarms - they hope. The Deutsche Bundesbank (German Central Bank) does not belong in this category but is known for being very cautious about price developments, especially when they have an impact in banks lending policies for properties.

Only in May of this year Dr. Andreas Dombre, a board of directors member at the Deutsche Bundesbank warned about a price bubble building up in the German property market and the fact that you can't predict the actual "pop" only acknowledge when it happened.
Speech transcript in German:  https://www.bundesbank.de/Redaktion/DE/Reden/2017/2017_05_04_dombret.html#doc398274bodyText2

Photo by Markus Spiske on Unsplash

Asked about the topic at a press conference on 30.08.2017 introducing "Results of the 2017 low-interest-rate survey" Dombre stated that the Deutsche Bundesbank currently does not see a property bubble but fears a tendency that financial institutions are considering taking higher risks in residential property financing. Press release: https://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK/2017/2017_08_30_joint_press_release.html
 
Especially in the Berlin housing market, we are successfully sourcing off-market investment opportunities for private investors in the popular segment between 1 and 2 million Euros as well as high-end private homes and villas. For more information please contact us at: http://www.berlin-portfolio.com/feedback.html
 

 


Share/Bookmark

Tuesday, 5 September 2017

Sharp price rises continue for condominium apartments in #Berlin - JLL Report First Half 2017

The sharp rise in purchase prices for condominium apartments continued in the first six months of 2017. Compared to the same period last year, asking prices for condominium
apartments rose by around 12.5% to €3,730 per sqm.

Source: JLL Residential City Profile Berlin 1st Half 2017


The trend of higher price rises observed over the past six months is therefore ongoing, and prices are continuing to grow at a similar rate as in the period between 2011 and 2014. The average growth rate since the onset of the current upswing which started in 2009, is 10.9% per annum. Purchase prices have risen by an average of 6.5% per annum, or by a total of around €2,130 per sqm since records began in 2004. If prices continue to rise, which appears likely at present, it is possible that the average purchase price will break through the €4,000 per sqm barrier, bringing Berlin up to the price level of Stuttgart.

Download the full report with details on all Berlin districts:

Residential City Profile Berlin - 1st half-year 2017

We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.

Contact: http://www.berlin-portfolio.com/feedback.html


Share/Bookmark

Monday, 4 September 2017

Sharp Rise in Rents in #Berlin - JLL Report First Half 2017

Asking rents in Berlin increased to €10.80/sqm/month in the first six months of 2017, approaching the €11.00/sqm/month mark. The last time rents increased as sharply was in the first half of 2012. Then, the annual increase was 13.1%, compared to the current 12.8%. Since 2016, the housing market has returned to a phase of strongly rising rents. The upswing in the Berlin housing market began in the second half of 2006, initially with moderate increases (+3.0% per annum) until 2011, and then with significantly stronger momentum (+8.0% per annum).

Overall, rents have risen by an average of 6.1% since the beginning of the cycle in 2006, and have almost doubled over that period. Given the high demand and lack of supply, rents can be expected to increase further over the next six months.

Source: JLL Residential City Profile Berlin 1st Half 2017
 Download the full report with details on all Berlin districts:

Residential City Profile Berlin - 1st half-year 2017

We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.

Contact: http://www.berlin-portfolio.com/feedback.html


Share/Bookmark

Sunday, 3 September 2017

Chinese investors seize on cheap #Berlin properties

Photo by Artem Sapegin on Unsplash

Investors 'unaware' that tough tenancy laws limit potential for rental growth

JENS KASTNER, Contributing writer at NIKKEI ASIAN REVIEW





This article provides different views of the situation in the Berlin Housing Market and how long distance and lack of local knowledge are exploited by some selling to Chinese Investors. But the treatment was no better when Irish Investors invaded the Berlin property market 10 years ago.

Read the full article here: NIKKEI ASIAN REVIEW

We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.

Contact: http://www.berlin-portfolio.com/feedback.html


Share/Bookmark

Saturday, 2 September 2017

Surprize Results In The Top 50 House Price Index: #Berlin at No.18 and Waterford, Ireland at 9

The Hurun Research Institute released the Hurun Global House Price Index 2017 Half-Year, listing the 50 cities with the highest house price changes in the twelve months to 30 June 2017.

China housing prices growing fastest in world

 6 Chinese cities in Top 10 & 21 in the Top 50

Toronto jumped 26% yoy, Number One in world

Hong Kong Top 5, with house prices rising 20.8% yoy

Wuxi fastest growing city in mainland China; Zhengzhou, Changsha, Guangzhou and Shijiazhuang in Top 10

USA, with 15 cities, led way for highest global property ROI (housing price change + RMB change + rental yield), followed by Germany (5), Australia (4) and Canada (4)


 The ranking for individual cities shows some surprizes:

Hurun Report 1-2017
Source: hurun.net
There are only 7 non-Chinese cities in the top 20 (blue frame) out of which 3 are European.

The report also looks at the ROI where Berlin ranks at No. 16. You can download the press release including the ROI ranking here ⇒ Hurun Report 1 - 2017 Press Release.


Share/Bookmark

Sunday, 19 March 2017

EMEA Investors Intentions Survey by CBRE: Germany at No.1 again with Berlin moving up to No.2 city


INVESTOR INTENTIONS SURVEY 2017

Berlin moved up to No.2
 The CBRE has arrived at these conclusions:
  • Economic conditions are positive and investors have ample capital to deploy in real estate
  • In EMEA, investors are planning for $475 billion in real estate investments in 2017
  • For 2017, 85% of investors intend to spend at least as much as in 2016, and 40% expect to spend more
  • Germany is ahead of the UK as the most attractive place to invest, as was the case in 2016, but investors are showing an increasing tendency to invest in the UK despite uncertainty over Brexit
  • The Nordics enters the top three with a significant jump compared to 2016
  • London retains the top spot as most popular city to invest in with an increased share, but Berlin shows the biggest increase, moving into second place
  • ‘Pricing’ and ‘Availability of product’ are the biggest obstacles to investing in EMEA real estate
  • Office is the most popular sector: interest in logistics has increased
  • Risk appetite has increased slightly
  • Income related factors such as ‘Yield relative to other asset classes’ are investor’s key motivations for investing in real estate
  The full report is available: https://researchgateway.cbre.com/PublicationListing.aspx?PUBID=6e0d802a-c164-48fd-acb3-1057547a0312 

Another interesting result is the preferred property type:



For support in property search and optimisation of property operation please visit our website http://www.berlin-portfolio.com



Share/Bookmark

Sunday, 12 March 2017

How secure are you when buying off-plan property in Germany?

Buying Off-Plan Properties, i.e. properties that are not yet as they are supposed to be according to the purchase contract, can be seen as risky. This could be a family house or a condo yet to be built or renovated. There is a building specification and some material samples trying to describe what the property should look like when it is finished.
In an ideal world for the buyer, no money changes hands before the project is finished and the result is satisfactory. For the developer, there is the worry if the buyer can and will pay once the project is finished.
In the German legal system, there is a regulation with a monstrosity of a name: Makler- und Bauträger Verordnung (MaBV),  which can be translated as Agent and Developer Ordinance - not much better. I will ignore the part dealing with agents for this purpose.
This ordinance regulates when and under which conditions a developer is allowed to take money from a buyer or the buyer's bank. Yes, this is right, he can not only not ask for the money if the conditions are not fulfilled, he is not even allowed to take it if you offered it - who would?
The regulation defines 13 instalments of the purchase price related to the building progress. Only up to 7 instalments are allowed, meaning that the developer will provide a payment plan which will bundle some of these instalments.

Here is an infographic about the 13 instalments:


Instalments according to MaBV

To receive the full-size infographic and detailed information about all aspects of the security system for Off-Plan Property buyers in Germany including a translation of part of the actual regulation regarding the payments please leave your information below. After the usual confirmation email, you will receive an email with the download link and an extensive report.


Share/Bookmark