Wednesday 10 December 2008

German Property Market: Property firms keep on investing

According to a poll of 200 executives in the property sector conducted by ZIA, German property firms are planning new investments despite the financial crisis.

  • One third of the companies polled want to acquire properties during the coming weeks and months;
  • 42 % claim that financing in the eight-digit range can certainly still be had;
  • the prospects for residential properties were evaluated as positive and are the preferred property asset type.
Not quite 7% are planning sales of individual properties (De-Leveraging, see also Berlin Residential Market 2009 Outlook this blog).

Some 86% of those questioned were expecting the residential property market to remain steady or show positive development with increasing yields during the coming six months. Hotel properties, on the other hand, are largely viewed with scepticism and for office properties ca. 50% are expecting falling rents.

The German Property Federation or ZIA, is a regulatory and economic lobby group for policy in the property sector.


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

*) For a free Glossary of German-Englsih Property Terms and a property newsletter you can sign up on our website


Wednesday 26 November 2008

Berlin Residential Market 2009 Outlook

A survey of 118 cities in Germany has seen the average rent level in Berlin at 5.58 Euro per sqm per month net rent. This takes Berlin to rank No. 55 with Munich in the lead with an average net rent of 11.36 as shown in a study published by the association of the Berlin-Brandenburg housing corporations. Even in small cities like Jena (7.06), Greifswald (6.49) or Lübeck (6.07) the average rent is currently higher than in Berlin.

Yet another indicator for the development potential of the Berlin residential market. With the current price level for Investment Property at early last year's level and growing numbers of pressured sales due to "De-Leveraging" where investors sell properties to generate fresh cash the yields have improved significantly. Recently some big investors in the Berlin market like ORCO Germany have sold properties between 2 - 20 % below their book values.

The take-up by the market is relatively slow as most banks require up to 40 % equity to match their lending. "Equity is king" and those who have it can cherry-pick. Any relaxation in this area will depend on the development of the financial crisis and any forecasts on this a currently very vague.

In order to make the right decision on property investments reliable pre-acquisition information and investigation is vital.
To then ensure a long term successfull outcome, performance targets, measurement concepts and concepts for performance improvement have to be implemented based on the information gathered during the pre-acquisition process.

A bundle of services and tools necessary to achieve the fundamental set-up requirements of a property investment are described on

Uwe Falkenberg


Thursday 20 November 2008

German Property Market: Further decline in residential building permits

The Federal Statistical Office has reported that building permits for commercial buildings has increased by 22 % during the first 9 months of 2008 while the permits for residential buildings has declined by 4 % compared to the same period of the previous year.

This development further contributes to the development of a more stable rental market with opportunities for increase in rents in good locations and good standard apartments. Reliable information and property market research is key for a sound investment decision. Some investment targets like Berlin Property will benefit more from this development than others.

For Pre-Acquisition Services and Market Research Services please refer to Berlin Portfolio Ltd. with their vast experience working for international investors in the German Property Market.


German Property Market: Cautious optimism despite sustained crisis atmosphere

Thomas Daily reports: William P. Kistler, the president of ULI in London, painted a dreary picture of the situation on international property markets yesterday at the Euro Finance Week in Frankfurt. A “slow recovery” cannot be expected until 2011, he said, and 2010 might, at best, “ease the pain.” ZIA's president, Eckart John von Freyend, also made worried statements about the present situation, but showed cautious optimism regarding the German market. Compared internationally, he argued, Germany is well positioned, since properties here are still undervalued. Barbara Knoflach, CEO of SEB Asset Management, made similar comments. To her, Germany still appears to be “one of the most stable markets in the world.” She said her firm started intensifying investments in German A locations some time ago. Thomas Ortmanns, CEO of Aareal Bank, expressed hope at the convention for enlivening capital markets. He is expecting improvement during the first half of 2009. Louis Hagen, executive director of the Association of German Pfandbrief Banks (VdP), is expecting a return of the Pfandbrief as the most important source of refinancing next spring, but added that higher margins were probable.


Wednesday 5 November 2008

More Real Estate Investment in Germany Planned

Thomas Daily reports that according to a poll by Estavis: "Some 50% of the investors questioned would like to augment their real estate investments in Germany during 2008; 25% said they will not change their property exposure. More than two thirds of those polled preferred commercial property and a mere 10% want to invest mainly in residential property. Besides German institutional investors, financiers from the U.S.A., Great Britain and Scandinavia were also questioned. A preference for western Germany for investment was expressed by 100% of the investors; 62% mentioned Berlin, but only 19% considered the rest of eastern Germany. On average, the investors expected at least 6.1% net initial return for core plus objects, 7.5% for value added and 8.6% for opportunistic investments. Increased activity in the property transaction market before the end of the year was anticipated by 24%. The remainder are more cautious: 43% expected no change, 33% feared that market conditions will worsen."


Monday 8 September 2008

Germany Ranking No.1 in Property Investment in Europe


Germany revealed as top property investment prospect in European real estate markets

Germany is the best country in Europe right now for property investors, especially those seeking long term prospects, according to an annual European survey.

It is revealed as the top prospect followed by Italy, France and the Benelux countries according to the annual survey of the state of real estate markets.

Spain, Ireland, Hungary and Portugal are more risky, according to the European Property Market Relative Attractiveness report from Invista Real Estate Investment Management.

It ranks countries in Europe according to risk adjusted performance prospects over the next five years.

Germany moved up from seventh place last year knocking the UK market off its first place ranking. Italy came second moving up from 11th place. The Netherlands stayed in third place, while Belgium moved up four places from eighth place last year. France dropped one place from fourth place last year.

The biggest fall in performance was in Ireland which dropped 10 places from fifth to 15th place as investors anticipate an exaggerated slowdown in economic growth in the country over the next five years.

Finland dropped six places from 6th to 12th while the UK, which was first last year, came in at sixth place. Spain retained the same ranking at 10th place but Invista said it expected its economic growth to slow down in the coming years.

Germany and Italy are regarded as good prospects because of their diversified investment opportunities and also returns can be enhanced over the medium term through active asset management.
Poorer performers were the smaller less liquid property markets, such as Portugal, the Czech Republic and Hungary, which fell in the rankings with higher levels of expected pricing volatility.

Invista said the changes to the rankings reflect higher economic and capital markets related risk created by the global credit crunch. It said investors are re-assessing their attitudes towards property pricing and risk but should look beyond volatile short term data and take a medium term view of market performance.

'The global economic events of the last 12 months have forced investors to reassess their attitudes towards property risk and pricing. Our research indicates which markets are expected to fare better over the medium term, and in our opinion, low-beta markets are better positioned to deliver attractive risk-adjusted returns,' said Tim Francis, head of continental European research at Invista.

'Despite recent weak economic data, we believe the German property market should consolidate its position as a key investment target for diversified investors,' he added.


Thursday 28 August 2008

Good news from the German Labour Market

In August 2008 the unemployment rate has dropped further by another 0.1%. The development is robust despite the slow down in economic growth in the Euro region. The tendency is expected to grow stronger once the summer holiday season is over and business is back in full swing.

The German unemployment rate is still higher than the average in the Euro-Zone but the positive development is supported by the need for qualified workers and a strong performance in the export industries.

For detailed statistical data also see "Bundesagentur für Arbeit".

For the German Property Market this means that the most important player in the residential market, the tenants, are moving into a better position to afford rent increases and new and better apartments.


Friday 22 August 2008

Six Berlin Housing Projects Declared World Heritage Sites

UNESCO has included 6 Berlin housing estates in its World Heritage List. The projects were built in the 1920s and 1930s. They had model model character for social housing with vastly improved living conditions for tenants at the low end of the income scale.

The ideas had impact on the development of social housing in many other coutries.

Avant-garde architects like Bruno Taut, Martin Wagner, Walter Gropius and Hans Scharoun were building some of the world's first modern apartments with kitchens, bathrooms, balconies and sufficient windows to provide light and fresh air.

More details at DW - World, Deutsche Welle

Some of these apartments are available for property investors. To get listings and detailed information please refer to Properties in Berlin


Wednesday 30 April 2008

German Unemployment further reduced in April 2008

Despite worries about how the global credit crisis and strong Euro might affect its economy, Germany's unemployment rate sank to 8.1 percent in April, down from 8.4 percent in March. The new government figures, which were announced Wednesday (30.04.), represent 94,000 fewer people out of work.

Together with wide spread wage increases this is one of the key factors that actually make the increases in rent feasible which were held back for a long period.


Wednesday 16 April 2008

Turkish property sales to foreigners temporarily halted

Hurriyet English with wires, Wednesday, April 16, 2008 21:54

Turkish property sales to foreigners is to be temporarily halted from Wednesday, declared a Ministry of Public Works and Settlement inline with a Constitutional Court ruling three months ago. A new regulation was delivered to the Board of Ministers for approval. (UPDATED)

A new regulation regarding the sale of Turkish property to foreigners was delivered to the Board of Ministers for approval on Wednesday.

According to information obtained from ministry's officials, a circular letter on Tuesday was sent to all land registry offices indicating the end of the sale of real estate to foreigners.

The related verdict of the Constitutional Court will come into effect from Wednesday.

The law does not restrict foreigners who already own property in Turkey from selling it to Turkish Citizens.

A total of 63,085 properties have so far been sold to 73,103 foreigners, with German, British, and Greek citizens being the leading purchasers of Turkish property.

Foreign investors’ annual real estate purchases amounted to $3 billion for the past three years, accounting for about 8.5% of the current account deficit.

"We believe that the government will take this issue seriously and is likely to pass the necesssary legislation through the parliament. However, the timing remains uncertain and the impact on the financing of the current account deficit should be negative in the near term," Raymond James Financial said in a research report on Wednesday.


Monday 7 April 2008

Net Yield 11.62% Residential Investment in Thuringia(Germany), 1.6 Mio. Euros

2 Apartment blocks, 43 (out of 64 condominuims / apartments) and 20 apartments completely. A 1972 building modernised in 1997. near the A9 autobahn and the cities Gera and Jena.
Net rent 185,927 Euro (currently 5 apartments vacant). New price 1,600,000, net yield 11.62% (440 Euro/sqm)

Please order detailed in formation at


Wednesday 2 April 2008

German Jobless Falls to 15 1/2-Year Low

German Jobless Falls to 15 1/2-Year Low; Italy Slows (Update1)

By John Fraher

April 1 (Bloomberg) -- German unemployment fell to the lowest since 1992 in March and manufacturing accelerated as Europe's largest economy helped the region cope with a global credit squeeze and weaker growth in Italy and Spain.

Germany's jobless rate declined to 7.8 percent from 8 percent in February, the Federal Labor Agency said today, and a Royal Bank of Scotland Group Plc index of German manufacturing rose to 55.1 this month from 54.3. Italian manufacturing contracted for the first time in three years and an index of Spanish factory activity was the weakest since December 2001.

German exports and corporate investment are helping to shore up growth across Europe as Italian manufacturers struggle to cope with a stronger euro and falling property prices curb growth in Spain. ...

Property Slump

``Germany and other northern European countries continue to see surprisingly strong performance in the face of current headwinds, while Mediterranean countries show a continuation of a worrying downtrend, especially Spain,''' said Royal Bank of Scotland chief euro-region economist Jacques Cailloux in an e- mailed note.



In the current situation with the aftermath of the subprime crisis originating in the US it seems a blessing that the German property market was not part of the property bubble of the last decade. There is solid development and opportunity for lucrative investment. The latest mega deal of Lone Star buying a portfolio of 1,300 properties from Deutsche Post shows the confidence of the financial sector in the German real estate market.

There are investments available at all levels. From a Buy to Let Investment Apartment at 40,000 Euro to apartment blocks between 600,000 Euro and 1.5 million Euro to mega deals.

Some of these you can find at

Uwe Falkenberg


Monday 31 March 2008

Abu Dhabi investors buy into Berlin City West

( dpa )- First it was Potsdamer Platz which was redeveloped, after the communist Berlin Wall was cleared off it.

Now, it is the turn of the heart of former West Berlin, near the war-ruined Memorial Church and Zoo Railway Station, to attract international investors.

Abu Dhabi and other emirates investors plan to plough millions of euros into a major revamp of what used to be the central business district of West Berlin in the bad old days of division.

Architects are planning a spate of new buildings around the Zoo Station and the high-rise Europa Centre shop and office complex nearby, and along a shopping stretch near the modern, blue-glazed Memorial Church.

As it is, Berlin's skyline is already set to change dramatically with construction later this year of a spectacular 120-million-euro (175-million-dollar) Giant Wheel, Europe's biggest Ferris wheel.

Although long-distance trains no longer halt at the Zoo station - they stop instead at the capital's new Hauptbahnhof station - a scheme to modernize the run-down station complex and other buildings in the vicinity is now programmed.

The Harvest investment group from the United Arab Emirates will be spending up to 200 million euros on a development, the Zoo Fenster , across the way from the Memorial Church.

The church, a popular stop with tourists, is a Lutheran church shattered during the Second World War onslaught on Berlin and rebuilt incorporating some of the ruins as a dark reminder of the evils of war.

The church is in the headlines, with campaigners seeking to raise 3.5 million euros for urgent repairs to its crumbling tower. Berlin's city government has promised 1.5 million euros towards the bill.

The high point of the Zoo Fenster project will be a 120-meter-high skyscraper. A premium hotel is also planned by 2010.

Important Abu Dhabi investors involved in the project predict a dramatic increase in commercial property values in the western downtown districts of Charlottenburg and Wilmersdorf in the coming years.

In a separate development, there are plans for the city's Schimmelpfeng Haus , a building built over the Kantstrasse , to be replaced by a 120-metre-high hotel, office and business complex, a brainchild of Casia Property Management

All told, an estimated 1 billion euros is being spent on the "City West" renewal project, including 300 million euros devoted to projects around the Zoo Bogen building estate.

As part of the revamp operations, the Budapester Strasse traffic tunnel near the city's Breitscheid Platz has been filled in, repaved and plastered, giving visitors easier access to the city's familiar high-rise Europa Centre shopping-residential complex.

It is here that Europa Centre operator Christian Pepper has spent 60 million euros modernizing the popular shopping haunt.

Investor interest close to the Kurfuerstendamm , Berlin's most prestigious shopping strip, is helping boost business confidence throughout the city's central Charlottenburg and Wilmersdorf districts.

For a period after the city's 1989 reunification, the Kurfuerstendamm appeared set to lose out, as a host of cinemas, theatres and restaurants went out of business.

The Kurfuerstendamm - Kudamm for short - still glittered at night but much of its old flavour and tang had dimmed in the 1990s, as talk focussed on the east with the reinvented Potsdamer Platz , the new Friedrichstrasse shopping malls, and the revival of the communist-era hub, Alexander Platz .

Now, that is less the case. The Kudamm has recovered much of its old glamour and assertiveness in the past three years, as new high-end shops open and its pavement cafes, restaurants and pubs win renewed popularity.

"The Kudamm is very much back in the frame, popular with Berliners and foreigners alike," say Berlin's mayor Klaus Wowereit , who now lives in an apartment overlooking the boulevard.


One way to participate in this development is through Investment Apartments in the districts of Charlottenburg and Wilmerdorf. Currently there are offers in these areas available at:


Wednesday 26 March 2008

German Business Climate Again Brighter Than Previous Month

Ifo Business Climate Germany

Ifo Business Survey March 2008
Results of the March 2008 Ifo Business Survey

Ifo Business Climate Again Somewhat Brighter

The Ifo Business Climate Index for industry and trade in Germany has risen slightly in March. The companies have again assessed their current situation more positively than in the previous month. The outlook for the coming six months has also brightened somewhat. These results indicate that with the beginning of the year the German economy has gained strength.

In manufacturing the business climate indicator has risen somewhat. The firms have assessed their current situation clearly more favourably than in February. Confidence with regard to the six-month business outlook has weakened only marginally. Despite the strong euro the firms are more optimistic regarding exports than they were in February. Their hiring plans indicate that the increase in staff levels will continue in the coming months.

In the construction industry the business climate indicator has risen. The dissatisfaction with the current business situation has weakened somewhat, and also with regard to the six-month outlook more confidence has been expressed than in February. In wholesaling the business climate has also improved. Current business has again been assessed more positively, and the outlook is also somewhat brighter. The climate indicator in retailing has fallen slightly following the strong rise in February. This is mainly the result of a worsening of the current business situation, whereas the six-month outlook has been assessed only slightly less optimistically.

Hans-Werner Sinn
President of the Ifo Institute for Economic Research at the University of Munich

The business climate supports the positive development in the German property market and is reflected in the rent increase already experienced in the Berlin property market. It adds attraction to the current offers of investment apartments because improvements on the rent level are viable.

Uwe Falkenberg


Wednesday 12 March 2008

Berlin Amongst The Top Ten Property Investments With Three Other German Cities

Boom town becomes slump city as report says 'no' to Dublin property

By Ailish O'Hora
Wednesday March 12 2008

Dublin has slumped to the bottom of a list of 27 European cities in a new report which looks at property and investment prospects in 2008.

According to the report, from the Urban Land Institute (ULI) and PricewaterhouseCoopers, more traditionally popular western European cities have lost ground on the list against the backdrop of economic woes in the US leading to higher risk and tighter credit.

The capital's property and investment prospects will suffer in 2008, according to the report, entitled Emerging Trends in Real Estate Europe 2008. It added that Dublin's office, hotel and retail sectors had the highest or second highest sell levels of the 27 markets this year.


The report also showed that investment prospects in Dublin reached a peak in 2006 and have been falling since.

Dublin dropped seven places to 27th in 2008 in terms of overall European investment and development while London experienced a dramatic slump to 15th place compared with second in 2007.

"Without question, Europe is facing a bumpier ride this year than the last few years," said Richard Rosan, president, ULI Worldwide.

"The findings in Emerging Trends show how markets in Europe have become more globally connected and more vulnerable to economic shifts occurring in other parts of the world. "However, the fact that many respondents remain confident about European markets points to the still-local nature of real estate.

"We are seeing a lot of guarded optimism."

The top end of the league also had its surprises. Moscow made an impressive leap in the survey to top of the league in 2008 compared with 19th place last year based on high rental growth and the opportunities retail offers.

The report states that while Moscow is seen as a challenging city with market entry more difficult than other countries, its investment prospects are likely to remain high.

Istanbul ranked second while Hamburg and Munich held the third and fourth spots as top investment markets.

Paris, which held the top investment rating in the past years, slipped slightly, taking fifth place for investment prospects and sixth for development prospects.

An improvement in Germany's economy is reflected in the inclusion of four German cities -- Hamburg, Munich, Berlin and Frankfurt -- on the list of top 10 investments.

"Despite all the turbulence in the international markets, the Germany property market is still on the upturn," according to the report.

Other cities listed as strong "buy" markets included Paris, Lyon, Stockholm and Helsinki while Prague and Warsaw have been listed as development prospects.

- Ailish O'Hora


Friday 7 March 2008

German Retirement Housing 2,750,000 Euro, 8.3% net yield

Germany, Retirement Housing with 55 apartments in 2001 redeveloped brick factory building above the Saale river. 472 sqm care unit integrated. Net rent 229,430,00 € p.a. (currently 2 units vacant). Price 2,750,000 € factor 11.9, net yield 8.3%.

Get details on


Thursday 6 March 2008

Investment in Retirement Housing in Germany -- A Prosperous Market.

What is the difference between sheltered housing, warden assisted housing, retirement housing, extra care, close care, assisted living, retirement villages and retirement communities?

Retirement housing is often called sheltered housing or warden assisted housing. Extra care housing, very sheltered housing, assisted living are terms used to describe a variety of housing designed with the needs of frailer older people in mind. These schemes have varying levels of care/support on site including a dining room, personal and domestic services and 24 hour support.

Due to the population development in Germany the proportion of retired people is constantly growing. It is a market segment of growing importance in all business sectors from medicine and consumer goods to housing of course.

Best positioned are properties with a flexible offer where the service expands along the growing support needs with increasing age.

According to the latest IKB Property Barometer (IKB Deutsche Industriebank AG) the 2007 - 2008 view on this property type is still positive amongst property developers. The rent/price factor was around 15 fold, the traded volume in 2007 was about € 1 billion.

An example for such a property is Max Steenbeck Str. in Jena (Thuringia) which was introduced in this blog earlier this year.

To request detailed information about this and other investment properties in Germany please visit

Uwe Falkenberg


Thursday 28 February 2008

Jena, Retirement Home, warden assisted 3,575,000 €, yield 6.38%

Jena (Thuringia, Germany)
Fully let new (2000) warden assisted Retirement Home with 65 apartments, 7 tenant related commercial units (physio therapy etc.) and 8 underground parking spaces. Actual net rent 228,000 € p.a.. Price 3,575,000 € factor 15.67, net yield 6.38%.

Get details on


Zwickau, Apartment Block 365,000 € 10.81% yield

Zwickau (southwest Saxony), Fully let and renovated 1900 Apartment Building with 7 apartments, 1 commercial unit (medical practice) and 10 parking spaces, 3 in a garage. Actual net rent 39,464 € p.a.. Price 365,000 € factor 9.25, net yield 10.81%

Get full information on


Dresden Suburb, Apartment Block 819,000 €, 7.65% yield

Kesselsdorf, a Dresden Suburb 16 km away from the central train station (16 min. via motor way). Fully let 1996 Apartment Building with 13 apartments, 16 parking spaces. Net rent 62,695 € p.a.. Price 819,000 € factor 13.0, net yield 7.65% (plus commission)

Property Details on


Wednesday 27 February 2008

Leipzig Plagwitz, Apartment building price 670,000 € yield 7.8%

Leipzig Plagwitz, Fully let Apartment building with 13 apartments 1 commercial unit and 6 parking spaces. Actual net rent 52.264 € p.a., price 670,000 € factor 12.8, net yield 7.8%(plus commission).

More information on


Tuesday 26 February 2008

Ifo Business Climate Brightens Somewhat

The Ifo Business Climate Index for industry and trade in Germany has risen slightly in February. The companies have assessed their current situation even more positively than in January. The outlook for the coming six months has worsened somewhat, however. On the whole, the economic situation of German industry and trade is robust, but the expectations continue to point to a cyclical weakening.

In manufacturing the business climate indicator has fallen marginally. The firms have assessed their current situation somewhat more favourably than in January. With regard to the six-month outlook, however, they are less confident. Also their optimism regarding exports has weakened. But their hiring plans point to a further increase in staff levels in the coming months.

In the construction industry the business climate has clearly worsened. The firms have assessed their current business situation more unfavourably than in January and are also less confident regarding the six-month business outlook. In wholesaling the climate indicator rose slightly. Current business has again been assessed somewhat more positively, but the surveyed firms are less confident regarding future business. In retailing the index has risen clearly, however, with firms assessing their current situation considerably more favourably than in January. The six-month outlook has also improved.

Hans-Werner Sinn
President, Ifo Institute for Economic Research

Download the press release of 26 February 2008 as PDF-file


Leipzig Residential Rental Market - Investor Information on Rent Level and Location

Leipzig has been the target of many international property investors over the last 24 months. Here are some of the hard facts why Leipzig has attracted over 1.6 billion Euros in investment capital during 2006 alone.

The economic situation in Germany and especially in Leipzig is positive with the prospect of at least mid-term prosperity. The property market has three main drivers for income improvement:

1. Positive population development accompanied by new jobs.

2. Reduction of vacant apartments by demolishing ca. 20,000 "outdated" apartments by 2010.

3. Active owners interested and acting on improvement of their rental income situation.

But as you know just being in the right region or city does not guarantee that the property offered is actually in a good location. This article will show the current rent structure in Leipzig and some of the sought after locations and which ones are on the rise. For background information on the economic development of the region and the current situation please refer to the details at the end of this article*).

The Leipzig Residential Property Market

The City of Leipzig has an official rent table which is dated 2005. A new one is being established in 2008. The current rent levels are from market research carried out by HVB and Eurohypo, two leading German property finance banks.

The rent level for renovated, medium standard and medium size apartments (70 sqm) is on average at 3.85 Euro per sqm in pre fabricated blocks and 4.40 -- 4.70 Euro per sqm in blocks built before 1945. For inner city prime locations the rent per sqm for the same standard and size is at 6 -- 7.50 Euro per sqm. Small apartments up to 45 sqm generate the highest rent in all categories and are on average at 5 Euro per sqm.

The rent table distinguishes locations between "Very Good", "Good", "Medium" and "Basic". The spread in the rent level for new rentals in these categories are:

Very Good: 6 -- 7.50 Euro per sqm

Good: 5 -- 7.50 Euro per sqm

Medium: 4 -- 5 Euro per sqm

Basic: 3 -- 4 Euro per sqm

Locations being categorized as "very good" can be found in City South, Gohlis, Schleussig, Leutzsch to name a few. Rents in good standard modernized period buildings are rising. Especially in preferred areas like Waldstrassenviertel, Musikerviertel, Bachviertel, Schleußig and Gohlis-Süd an increase in rent of 10 to 15% over the next 2 years is expected.

The good and very good locations mentioned above are only specific regions within the districts named and they can be right next to an area that is considered basic. So it is very important to have reliable information about the actual micro location of a property. I have yet to see an agent's exposé declaring the location of his offer as being basic. There are maps and street registers available that are based on statistics developed for the official rent table (Mietspiegel). This rent table plays an important role in German residential rent legislation. It is the main legal basis for raising the rent in existing contracts.

Next to the factor location there is a growing trend towards smaller apartments for single occupancy, especially near the university and other teaching institutions. Even though they achieve the highest rent an investor has to keep in mind that from experience these smaller apartments have a higher turnover with the risk of temporary vacancy and renovation cost.

*) What makes the Leipzig Residential Property Market so interesting? By Uwe Falkenberg

The author is a Berliner and active in the German property market for more than 25 years. Experienced as project manager, developer and head of the German Business for a UK based property consultancy he now owns and operates Berlin Portfolio Ltd His international background and local expertise is an ideal combination for an international investor. For Property Search we recommend Properties in Germany


Sunday 24 February 2008

Leipzig Residential Property Market -- What makes an Investment so Interesting?

The economic environment

The outlook for the German economy is positive and the economic upturn is continuing. 2008 will see a change from purely export driven growth to more growth support through domestic demand. For the first time in years significant raises in salaries are currently negotiated and the consumer climate can be seen as friendly. This will be associated with further reduction in unemployment, as companies are prepared to take on staff. Growth in the economy can be expected to stimulate the German property market.

The Local Aspect

Many of the major investments went into the federal state of Saxony with the main focus points in the state capital of Dresden and the traditional economic center of Leipzig. With regard to the economic growth Saxony has pushed Bavaria off the first rank amongst the German states.

BMW has opened a new production plant near Leipzig, Porsche is extending their capacities to produce a 4-door-sedan and DHL the logistics subsidiary of the German Post has decided to develop their new logistics turntable in Leipzig at the Halle-Leipzig-Airport which will be operational in 2008. Here investments will be 300 Million and will directly create 3,500 jobs with another 7,000 indirectly related jobs and another 10,000 in the car sector.

The German Property Market

Germany has seen a major influx of international capital to its property market over the last 2-3 years with record year 2006 which was considered a record year still being outranked by 2007. The year 2008 is seen by most market players as a year of consolidation. Increasing numbers of institutional investors will become sellers which should offer interesting opportunities for smaller and private investors as it is unlikely that all sales will be in large packages.

The Leipzig Property Market

Leipzig is one of the few places in former East Germany with a positive population development which is expected to keep going at least until 2012. At the same time the city runs a program to demolish old unsuitable pre-fabricated housing blocks and thus take pressure from the residential market. It started out with 1,000 apartments in 2006 and will be continued until 2010 with a goal to reduce by 20,000 apartments. The statistical vacancy rate in 2005 was at ca 16% but half of these were not accepted by the rental market and did not constitute a competition for prospect tenants reducing the market active vacancy rate at its highest in 2005 to 8% (EUROHYPO).

In 2006 over 1.6 billion in property value were traded in Leipzig out of which 26% were apartment blocks. The figures for 2007 will be slightly higher with approximately the same share of residential buildings. The vast majority of these apartment blocks were bought by foreign investors with an investment perspective of 5 to 10 years. The objective is to improve the rent and drive yield and value. This will push for an increase in rents.


The economic situation in Germany and especially in Leipzig is positive with the prospect of at longer lasting prosperity. The property market has three main drivers for income improvement:

1. Positive population development accompanied by new jobs.

2. Reduction of vacant apartments by demolishing ca. 20,000 "outdated" apartments by 2010.

3. Active owners interested and acting on improvement of their rental income situation.

This looks all very positive but there are still many investments on offer you should stay away from. With a follow-up article I will provide information about the rent in different parts of Leipzig and vicinity. You will find this article on the Property Investment in Germany blog.

The author is a Berliner and active in the German property market for more than 25 years. Experienced as project manager, developer and head of the German Business for a UK based property consultancy he now owns and operates Berlin Portfolio Ltd His international background and local expertise is an ideal combination for an international investor. For Property Search we recommend Properties in Berlin


Wednesday 20 February 2008

Leipzig Apartment Block, 1,150,000 Euros 6.85% yield

Why Leipzig? Leipzig is next to Dresden the main economic hub in the state of Saxony. Saxony has seen the strongest economic growth in all of Germany, West Germany and ex East Germany combined.The property is located in a sought area of the Center South within walking distance of the city center. Public transport, shops, schools etc..

read more | digg story


Monday 18 February 2008

Germany Europe’s Largest Contact Center Market

Call Center Science 2008: Germany Europe’s Largest Contact Center Market


Leipzig – The German-speaking market consists of an estimated 100 million consumers and is Europe’s largest. Germany offers the most advantages to companies seeking to best serve their German-speaking clients. Investors, executives and journalists can find more information about Germany’s contact center industry at Call Center Science 2008 in Leipzig, Germany from January 22-23, 2008.

Leading companies, such as Transcom, Telekom Italia, and ebay know the importance of effective consumer communication. Their investments in Germany’s contact center industry are examples of this industry’s significant growth in recent years - ten percent annually over the last ten years. Invest in Germany, the inward investment promotion agency of the Federal Republic of Germany, has supported many international companies, such as Dell, Transcom, and SNT establish branch offices in Germany.

Having a strong staff is essential in the contact center business. Germany’s workforce is productive, customer-oriented, and willing to learn new skills. The recent establishment of a practical and theoretical training program in “Dialogue Marketing and Sales” is raising the industry’s profile and ensuring the availability of top personnel.

Affordable real estate, in both urban and rural locations, and qualified employees are not Germany’s only benefits. There are also financial incentives available in certain parts of the country, mostly eastern Germany, that sometimes encompass 50% of investment costs—making investment conditions in Germany even more favorable.

Contact centers now contribute over 450,000 jobs to the German economy, and this number is expected to more than double in the coming years, as more international companies see Germany’s investment potential.

Invest in Germany is the inward investment promotion agency of the Federal Republic of Germany. It provides investors with comprehensive support from site selection to the implementation of investment decisions.

Media Contact:
Eva Henkel
Invest in Germany
Phone: +49-30-200099-173
Fax: +49-30-200099-111


Tuesday 5 February 2008

German homes appeal to Grainger

Created:4 February 2008,
Written by: Claer Barrett

Grainger , the regulated residential landlord, has increased its exposure to the German rental market by acquiring a controlling stake in FranconoRheinMain AG, emphasising that property professionals still see value in some European markets. ...more on Investors Cronicle


Sunday 3 February 2008

Berlin edges towards property boom second time round

BERLIN (AFP) — Some of the cheapest housing of any major European city is attracting a wave of foreign buyers to the German capital, promising a new property boom after a false start after the fall of the Berlin Wall nearly 20 years ago.

Buyers from Britain, Scandinavia, Ireland and the United States are leading the rush to snap up flats in the once-divided city, making the 12 months up to November last year the busiest on the property market since World War II, estate agents say.

Foreigners were responsible for 70 percent of the transactions, the German federation of estate agents said, with Danes spearheading the march. The interest is so high that Danish estate agents have opened offices here.

One Danish agent, Esben Tjalvi, said Danes found the prices too good to resist.

"At 1,500 to 2,000 euros (2,200 dollars to 2,950 dollars) per square metre, it's up to four times cheaper than in Copenhagen and Stockholm," Tjalvi said.

"People are buying what they can't afford at home."

But private buyers alone do not account for the eye-popping 28-percent rise in turnover in the first half of 2007 -- that is thanks to the muscular presence of investment funds, once a rare feature in the Berlin property market, that are snapping up dozens of apartment blocks.

Cerberus Capital Management and Goldman Sachs' Whitehall fund have invested 2.1 billion euros since 2004.

"In Berlin, the price per square metre is one of the cheapest of any major city in Europe, including those in eastern Europe," said Andrea Magnoni, the Italian co-founder of the Valore fund.

"The return [yield] for investors is higher than anywhere else at between seven and eight percent compared to 3.5 percent in Milan because even if the rents are moderate the purchase prices are always low enough to guarantee a good rate."

Investors are speculating on rents rising.

"In the rest of Europe, 50 to 60 percent of people's salaries goes towards rent. In Germany, it is about 20 percent," Magnoni said.

The influx of investors to Berlin is having a marked effect on the landscape of the city.

Whole streets are being renovated without the city authorities having to dig into their already massively stretched finances. The decrepit flats with coal-fired heating and toilets on the landing are disappearing and new shops are opening where they were once rare.

This in turn is creating jobs, not only in the property sector but also in the building trade.

But Berliners fear that the property boom is threatening to change the character of a city that has always had a more alternative feel than its German, and many of its European, counterparts.

The once rare occurrence of tenants forced to leave so that the owner can raise rents is now becoming more common, some say.

And new luxury blocks of flats are mushrooming on the choicest roads, with prices well beyond the reach of most residents in a city where 11 percent of the population is unemployed and thousands of students and hard-up artists make their home.

Investors would also do well to remember that many people lost heavily after betting on sharp price rises after the Berlin Wall came down and communist rule disintegrated in 1989. In fact, prices fell.

Andrea Magnoni says investors back then were motivated by the promise of big tax breaks instead of solid economic reasons.

"But today the market is underpinned by genuine economic growth," he said.


Saturday 26 January 2008

Berlin: Upswing in the Housing Market

After years of stagnation, Berlin’s housing market is prospering again. Rents and purchase prices are rising in a growing number of locations, and only a minority of districts are still suffering from declining rents and prices. That’s the result of the second Berlin property market analysis put together by Berlin’s leading private housing company, GSW, along with consultants Jones Lang LaSalle.

To download the full report please visit our website


Wednesday 23 January 2008

Mortgages for UK and Ireland residents for Property in Germany

Due to market request a well know overseas finance provider is making this offer:

If you are purchasing a property in Germany, German Mortgages are available for UK & Irish based Employed or Self-Employed Residents (who appear on that Country's Electoral Roll) or non-German Nationals living and working in Germany for House Purchase - other purposes on a case by case basis.

Loans are not currently available for Stage Payments or Buy-to-Let purposes.

Type of German Mortgage: Repayment Mortgage only

Minimum: € 40,000, Maximum € 1,000,000, but must not exceed 70% of the purchase price.

Proof of Income: required in all cases (can be made up of Earned or Pension Income and up to 80% of any Rental Income from the new property, if there is an existing Rental Contract in place).

Term: Minimum 3 years; Maximum 30 years

Currency: Euros only

Current Variable Interest Rate is from approx 5.70%.

Example German Mortgage: Repayment Mortgage of approx €70,000 over a period of 25 years at an Interest Rate of approx 5.70% variable = approx €444.00 capital and interest per month = a total approximate amount payable over the term of €135,900 including capital, interest, arrangement and survey fees.

Please contact Berlin Portolio Ltd. for further information on properties and Property Financing support.


Thursday 17 January 2008

Berlin Property - Cost of Real Estate Management and the Best Way to Control It - Part 2

Part 1 of this article series has explained some commonly used fee models for property management services and the going rates for these in the Berlin property market. This second part of the article will identify areas that frequently are omitted in management contracts and will lead to extra "surprise" cost that in most cases is not budgeted for. It will also provide guidelines how to prevent such surprises. Other areas of concern are not directly property management related services provided by the property manager and how this can undermine an initially competitive fee.

What is included in the agreed fee?

A healthy balance between what is included in the fee and what is included in the contract but for an extra fee and how is that fee calculated is key for cost control. If you want too much included you pay for it every month even when you are not using it. If you have too many extra services you are not in control of your cost and have to spend time signing off for extra delivery often not being in full possession of information needed for said sign off.

An example for useful extras: The writing of a rental contract should be included in the fee. The actual renting commission should be paid extra which also leaves you the option to use an external rental agent but still have the property manager responsible for the content of the rental contract. Similar regulation could apply to repairs once they exceed a certain amount.

I recommend agreeing a fee structure for extra services likely to be needed at some point during the contract during the competitive phase before the management contract is signed. You are likely to get better deals than asking for extras after signing.

Fee related performance measurement

I always integrate output orientated service descriptions or Service Level Agreements (SLA)and performance measurement tools like Key Performance Indicators (KPI) in the contracts I negotiate for clients. This way it can ensure that the property manager knows what is expected from him and also knows exactly what happens (to his fee) should he not perform as agreed.

Other services provided by the property manager

It is popular amongst property managers to have their own or be in partnership with all kinds of facility service providers like cleaners, landscaping, plumbers etc.. Without clear regulations on the letting of contracts a very compatible property management fee could easily be over compensated through these extra services.

Kick backs from suppliers, insurances etc.

It is not a general practice but not uncommon either that discounts, tip provisions etc. are paid out separately. It has to be made clear to the property manager that it would be seen as a conflict of interest if the property manager would not pass these benefits on to the property.

Overview of results

The two parts of the article Berlin property -- Cost of property Management and the best way to control it, have provided examples to illustrate the diversity of factors that influence the cost of property management and at the same time the quality of service. There is the fee model, fixed rate or percentage, no less important the contract specifications and last but not least other services provided by or under commercial interest of the property manager.

Especially international private investors will find it useful to have a local representation and an extra pair of eyes on their investment and the performance of its management. For single apartment buildings or small portfolio a full property asset management will not be affordable. In this case I recommend

  • a consultancy during the search and contracting of a property manager;
  • inspection every 3 to 6 months at the beginning going down to once or twice a year.

This allows the investor to focus on his investment plans and other activities while he knows that his property is well managed and an extra pair of eyes is watching over it.

The author is a Berliner and active in the German property market for more than 25 years. Experienced as project manager, developer and head of the German Business for a UK based property consultancy he now owns and operates Berlin Portfolio Ltd His international background and local expertise is an ideal combination for an international private investor.


Tuesday 15 January 2008

Berlin Property - Cost of Property Management and the Best Way to Control it (Part 1)

International property investors as well as German property investors are permanently facing the issue of getting value for money from their property management.

Which is the right fee level that does not absorb high proportions of the rental income but enables the property manager to provide the right service level required? How should the fee be calculated? What is the going market rate? What is included and what is extra? This article will give an overview of the rates an investor has to be prepared for and some existing fee models.

Every property investment needs a property management that is right for the property, right for the investor and right for the budget available. The requirements regarding qualification and quality are not discussed in this article and will be addressed in an upcoming publication. I will provide some examples fee payment models and then provide a fee span for the going rate for each model and an evaluation from the investor's viewpoint.

Fixed rate model

In the fixed rate model the property management fee is based on the number of units no matter whether rented or not. There is no relation to performance of the property manager or even the performance of the property. In other words you still pay the full fee, even if half the tenants move out. A variation on the theme is a slightly reduced fee for vacant units. Quite often this model does not differentiate between residential property units and commercial property like retail or office. It is only used when the commercial property has a relatively small share of the total investment.

The going rate in Berlin is somewhere between 14.00 € and 20.00 € per unit per month plus VAT (!) which is currently at 19%. The reduction for vacant units would be somewhere between 2.00 € and 4.00 € if it is offered.

The service provided by the property managers with this type of fee model seems to correlate with a quite basic service level. It is a preferred model used by small one man band or so called kitchen table managements working in a semi-professional manner.

Percentage model

At the first glance this seems straight forward and fair but it depends very much on the parameter the percentage is applied to. Let me show you some variations on the fee model:

  • gross contract rent including heating and ancillary cost -- Soll-Bruttowarmmiete;
  • gross contract rent cold (excluding heating) -- Soll-Bruttokaltmiete;
  • gross actual rent including heating and ancillary cost -- Ist-Bruttowarmmeiete;
  • gross actual rent cold (excluding heating) -- Ist-Bruttokaltmiete;
  • net contract rent -- Soll-Nettomiete;
  • net actual rent -- Ist-Nettomiete.

There are many more iterations possible but these are the most common ones. Again there will be VAT at the current rate of 19% added to the fee.

So if you are discussing property management fees and someone boasts that he is only paying 3.5% management fee what does that tell you? Right! It tells you almost nothing, only that they are using a percentage model.

Only the last option mentioned above based on the net actual rent really ties the fee a property manager receives to the rental income he helps to raise as a performance measurement. It is also the only model providing an incentive to not only sign nice rental contracts but to make sure the money is coming in every month. There are constellations like a renovation period when this fee-model would not be fair and another approach could be required that should be limited to the time of the exception.

Taking the just said into account it is a complex task to provide a guideline on going rates. There are guideline tables available but most are influenced by property managers associations. Also the size of a property or the fact that there is a portfolio with a single owner and one type of reporting will influence the fee calculation.

For a single apartment building with 20 to 40 apartments you should be able to get a decent management with simple reporting and bookkeeping for a rate of 4.5 to 5.5 % of the net actual rent. It will be some negotiation but is achievable. If you need balance sheet bookkeeping because you have a legal entity like a GmbH as owner it will be more to the upper end of the fee span.

A mix of fixed rate model for the residential units of a property and percentage model for the commercial part are quite widely spread in Berlin since many of the inner city apartment blocks will have some retail units on the ground floor and some other commercial units on the first floor while especially side wings and rear buildings will be predominantly residential.

In part 2 of this article series I will investigate

  • Other factors that influence the fee and the cost of property management.
  • What is the difference between the fee and the cost?
  • Other service provided by the property manager at high prices to compensate for competitive management fees.
  • Kick backs from suppliers or insurances.

For a check up on the content of property management contracts and related costs please contact the author.

The author is a Berliner and active in the German property market for more than 25 years. Experienced as project manager, developer and head of the German Business for a UK based property consultancy he now owns and operates Berlin Portfolio Ltd His international background and local expertise is an ideal combination for an international investor. For German terminology used in this article please refer to the German English Property Glossary available on the website of Berlin Portfolio Ltd. For property search we recommend Properties in Berlin


Monday 7 January 2008

Berlin Property Auctions--- 5 steps to success

Everyone looking for properties in the Berlin property market will sooner or later come across information about property auctions, private voluntary property auctions or forced court auctions / foreclosures. I will focus on the latter because this is where the real opportunities lie. There are various lists available and some agents are instructed by the banks involved to find sufficient bidders for the auction. This article will provide a step by step check list to pilot an investor through the thicket.

Every foreclosure requires an independent valuation with a description of the technical state and a tenant list and information on the deeds register. This will naturally be in German. Another issue is the fact that by the time the auction date is set this valuation will be easily one year. During this time property is under forced administration with hardly any money spent on the smallest of repairs. Further information gathering and updating is required and obviously a viewing of the property.

As a private investor or a property fund manager you are hardly in the situation to achieve all these tasks without travel and a considerable commitment of time. This will easily lead to discarding of what could be a lucrative investment.

The service required will have to cover these 5 steps to avoid and manage risk:

  • Review of the valuation and documentation and English summary of the information contained, highlighting of risks and restrictions.
  • Viewing of the property with photo documentation, highlighting any possible deterioration compared to the valuation.
  • Clarify the development of the rental situation since the valuation.
  • Discuss any opportunities for pre-auction purchase with the foreclosing bank.
  • Produce a “Business Plan” to calculate the maximum bid. This item is especially important for the investor to protect him from himself in the heat of the bidding process. I have seen many cases where bidders walked away spending 10 % more than they intended with detrimental result for the yield.

These are five key items other may evolve in the process.

To cover these items you need local knowledge, bits of time here and there. Unfortunately it will be almost impossible to co-ordinate all these items to be taken care of in a short visit so local support is inevitable for a foreign investor. Some of the work will be offered by the agents who in the case of a foreclosure are paid by the bank --- only if sold though. The motivation is clear so independent advice is highly recommended.

Uwe Falkenberg, the author is a Berliner and active in the German property market for more than 25 years. Experienced as project manager, developer and head of the German Business for a UK based property consultancy he now owns and operates Berlin Portfolio Ltd His international background and local expertise is an ideal combination for an international investor.

He offers a "Property Health Check" and problem solving for non or not as good performing properties as promised at the outset. This includes "forensic" review of the information provided at the purchase and review of the performance of the property management - all in English!


Thursday 3 January 2008

Service Level Agreements in Real Estate Asset Management

Performance measurement is key to a successful service philosophy:

What you measure is what you get!

We have developed a system of Service Level Agreements (SLA) with Key Performance Indicators (KPI) for Property Management and other property related services like facility management. A vital part for the system is the inclusion of performance reviews and evaluations. We always incorporate a performance based element into any management or service fee.

In order to be able to measure results these results have to be defined and just as important a measurable unit has to be associated to it to determine the fulfilment of degree of fulfilment of the desired results.

An example: You want correct and timely reporting because that is also what your bank or your shareholders expect from you. So you have to define what the content of the report has to be. This would be your very rough service level for “reporting” in your service level agreement. The next steps are the measurements for the delivery of the results (key performance indicators, KPI): There should be no errors in the report. The report for the previous month should be delivered to your e-mail or uploaded on a reporting portal at the latest by the 10th of the following month and in hard copy 2 days later.

But of course this is only half the job. Thanks to the KPIs you can measure the fulfilment: Number of errors and days of delivery after the 10th of the following month. Now you have to define the consequences of this non-compliance. This is done by attributing points to the various KPIs, say per error 10 points reduction and per day of delay another 20 points. If the amount of points reaches a certain level there will be fee-reductions. If it becomes unbearable you have measurable results as grounds for a contract termination, a very strong argument should there be a discussion or even legal action.

These service level agreements and key performance indicators are very powerful instruments for managing the performance of your property portfolio and services generally. They should not be seen and used as a means of fee reduction after signing a contract. Actually you want to pay the full fee agreed because then you know that everybody is performing as they should. The setting of the points for the KPIs requires some skill and a clear strategy of what you want to achieve. By giving certain areas like renting of sales support special weight you set the points high. This will be a strong motivator for your property manager or asset manager to perform especially well in these areas as there is a likely punishment for failure. This aligns the actions of your service providers with your goals.

Uwe Falkenberg, the author is a Berliner and active in the German property market for more than 25 years. Experienced as project manager, developer and head of the German Business for a UK based property consultancy he now owns and operates Berlin Portfolio Ltd His international background and local expertise is an ideal combination for an international investor.

He offers "Health Checks" and problem solving for non or not as good performing properties as promised at the outset. This includes "forensic" review of the information provided at the purchase and review of the performance of the property management - all in English!

For Property Search we recommend Properties in Germany.