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."