Friday 30 October 2015

Residential Investment Opportunities and Risks in 50 German Cities

The German business journal Wirtschafts Woche has published an article "Wo Vermieter noch gut verdienen" comparing cities and regions assessing the risks and opportunities of investing in residential properties.
The article is in German and cotains a table that compares investment data for the 50 biggest German cities. The survey contains these data sets:
  • Gross starting yield
  • Average Purchase Price per m²
  • Net rent per m² per month
  • Price development
  • Price prognosis
  • Net Rent Development
  • Share of properties with more than 5% yield
  • Vacancy in %
  • Vacancy prognosis
Wirtschafts Woche comes to the conclusion that in the chase for better yields some investors are taking bigger risks, some without actual knowledge of the facts.
This table contains the above data with a color coded ranking for each criterion.

Larger View of Table
Click the table for a larger view

For property assessments of planned or existing investments feel free to contact me.


Sunday 25 October 2015

German Property Performance Survey – International Investors

The challenge for every provider of services is to understand what the ever changing needs of their clients are. In the Real Estate Consultancy business in Germany, the needs have changed dramatically with the arrival of more international investors on the scene. It was only after the German re-unification and a consolidation period that Germany became relevant for international investors. They soon realized that compared with other major economies, properties were largely undervalued. This was especially true for Berlin and ex East Germany. There were headlines like “In Berlin you can buy an apartment block for the price of a London parking garage space”!

As the word spread more and more private investors jumped on the plane and since about 2005 many have bought apartment blocks in Berlin, Leipzig and other places. The purchase process was foreign but most put their trust in what was considered German efficiency. The actual management of their property after the purchase, which had to deliver the promised yield, was hardly a big concern. So many investors just left the properties with the Property Management Company (PMC) of the previous owner and inherited all previously existing quarrels and issues.

Most property agents quickly adapted to the new situation and made sure their information was available in English including English speaking personnel. This was easy for them because of high commissions, significantly bigger than property management fees. PMCs did not have that luxury and could not keep up with the shift. And this is only one of the causes for friction and frustration between international investors and German PMCs, even though a very fundamental one.

Experiencing the disappointment and frustration of investors almost every day we produced a survey to find out more about the background, motivation and current issues of international investors engaged in the German Property Market. There were some expected but also some surprising results. We asked our clients, subscribers to our blog (which is this one you are reading right now) and visitors to our website

Here are some of the results:

About 43 % of property owners do not get their reporting in English even when the request was made. How can you monitor your property’s performance if you cannot understand what is happening? The only clear information is the bank account and that does not tell why something went wrong if this is the case and what should be done to improve things.

The burning issue for 50% of the respondents was the rent level of their property, they were not confident that it was at the optimum. This was followed by the readiness to sell. Both answers correspond with our observations in our daily business of consulting property owners regarding the performance improvement of their property.

On the second important issue the “Maintenance and repair cost” have it at 35.71 % followed by “Readiness to sell” and “Rent level” each at 21.43%. The overlap of first and second issues of the properties shows that the “Rent level” is the main concern then “Maintenance and repair cost” closely followed by “Readiness to sell”. The relatively low focus on the “Vacancy level” as first or second choice reflects the current market situation of high demand.

For the time and effort invested by the respondants we offered a free property health check and the choice of the specific health checks coresponded with the issues stated as being the most impotant ones in the survey. But then came the surprise: In order to perform the service we need some basic information about the properties. Only ca. 25% of the respondants provided the data necessary to perform the Property Health Check and were able to take measures for improvements. We can only speculate about the other 75% but our suspicion is that not even the basic data needed was readily available for them.

Next Steps

We are currently working with some of the respondents to either improve the performance of their properties and/or get them ready for sale. Some of the findings after a deeper involvement are shocking, e.g. in one case a claim of ca. 50,000 € against the PMC for not raising the rent in 50% of the apartments for eight years.

The survey is still open and if you own an apartment block in Germany we can only encourage you to participate and take advantage of the absolutely free Property Health Check we are offering. Here is the link to get started:
The survey is now closed


Friday 23 October 2015

Germany City Ranking 2015: Munich 1, Berlin 2, Leipzig 3 and Frankfurt 4

The HWWI/Berenberg City Ranking 2015 is out. Some major shifts have occurred. For the first time Munich beat always first Frankfurt for No.1. Seven years ago when the first study was published Berlin was at No. 24 it has now reach No.2. No.3 is still not Frankfurt, it is Leipzig which has constantly made its way up the ladder from No.12 last year. Only then ranking at 4 is Frankfurt.

The ranking is determined by economic strength, demographic and other factors. One of the focus points for future developments is the positioning towards highly qualified workforce.

For the other positions of the 30 largest German cities please refer to the graph below and the full report in German at

HWWI-Berenberg City Ranking 2015 Summary Index