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.

International Property Handbook - Trends 2017

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.

Turkish property sales to foreigners temporarily halted

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 www.properties-in-germany.de

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

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

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

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 10^th 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 10^th 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.

Service Level Agreements in Real Estate Asset Management

Real Estate Investment, Pre Acquisition Phase

The first article of the series is about to be published:

Information Gathering (Part1)

The Pre-Acquisition Phase in a Real Estate Investment is most likely the most difficult phase with far reaching impact on the entire outcome of a Property Investment. Your Investment Philosophy is set, the Property Market Research and the pre-selection are done. There is not all the money in the world to be paid on the elimination process and the vendors and agents will push for a decision because other investors are interested. Who knows, they might even exist and snatch the best property you have seen in years from under your nose. So there is the other factor next to money: Time - or more precisely speed. I will show which processes will need to be applied to make an informed judgement.

To receive the article and not miss the following parts we recommend to register here:
Real Estate Investment Research.

Real Estate Investment, Pre Acquisition Phase

Property as subsidised Pension Plan in Germany adopted by the cabinet

The cabinet of the German Federal Government has adopted a draft which allows up to 75% of a subsidised pension scheme to be used for the purchase of a property for own use.

With Germany having a high quota of rented accommodation, in Berlin ca. 85%, this option will open a vast market as exit strategy for real estate investors. Details, especially taxation are still to be finalised.

Property as subsidised Pension Plan in Germany adopted by the cabinet

Property Tools and Checklists

A new series of articles on The Do and The Don't of Property Investment in Germany is coming to the real estate market after years of market research and experience.
The articles will provide nuggets of tips and information for all phases of the property cycle:

• Investment Philosophy - Setting up the right Search Profile;
• Market Research - Finding Property;
  
• Pre Acquisition - Information gathering and evaluation;
• Purchase Process - Clever contracts;
• Financing - Providing the right Information to get the Best Deal;
• Taking Possession - Making sure all information is handed over;
• Managing the Investment - Finding the right Service Providers;
• Driving Value - Setting a Successful Asset Strategy;
• Best Results - Preparing a Property for the Sale.

There will also be Specials on items like Subsidised Property in Berlin. More comprehensive information will be available as an E-Book beginning of 2008.

So stay tuned to this blog: http://germanproperties.blogspot.com/ for more information about the upcoming article series and the E-Book.

Yours

Uwe Falkenberg





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Property Tools and Checklists

German Property Terminology and Abbriviations - Glossary and English Translation

If you are at Rome live in the Roman style; if you are elsewhere live as they live elsewhere. [Lat., Si fueris Romae, Romano vivito more; Si fueris alibi, vivito sicut ibi.]
Author: Saint Ambrose

It is our policy that we provide information as much as we can in the English language. However our clients will obtain information and property offers from other sources. To help them to understand the main parts of that information we have provided a German-English Property Glossary which also includes abbreviations commonly used in German property ads and rental ads.

The following list is a short example, the full list has over 100 items. Getting the free German English Property Glossary will be a useful action for those that have already invested in Germany property and even more for those planning to make this exciting move. You will find the access to the complete German English Property Glossary on our website. All you need is register to get your copy by e-mail. Also staying registered will give you the benefit of getting updates.

Abbrev.	German term	English term
AB	Altbau	Period property
	Aufzug	Lift
Kfz	Autostellplatz	Car parking space
Bd	Bad	Bathroom
Bk	Balkon	Balcony
Bj.	Baujahr	Year of construction
BeK	Betriebskosten	Operating cost
BEZ	Bezirk	Borough, City District
	Brutto-Kaltmiete	Gross Rent without heating expenses
DG	Dachgeschoss	Penthouse apartment

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German Property Terminology and Abbriviations - Glossary and English Translation

Real Estate Investment in Berlin

Executive Summary
Berlin has been the Europe's Real Estate Hotspot for over two years now. Is it not too late to jump on the train? No, it is not too late! Attractive real estate, even at entry level is still coming into the market, with positive cash flow and a realistic expectation for capital appreciation. Careful research is required to make sure the information provided is met by the reality after the purchase. Local support is recommended.

Berlin is a Real Estate Market for professionals and starters. It offers capital growth for investors with plenty of income who want to make a good profit long term as well as novice investors who are relying on their investment to generate immediate income. Both types of investments are available in Berlin and many provide both.


Economic developments
A strong development in the global economy and a robust growth in the EU are indicative of the current macro environment and are the driving forces behind a boom situation that after years of downturn finally has reached Germany's economy. For the third quarter of 2007 the German economy experienced its strongest upturn since the re-unification boom in the early 90's and for the first time in years the growth was led by consumer spending. Despite the "sub prime" irritations in the US financial markets the OECD Outlook for economic growth in Germany for 2007 is 2.6% and for 2008 2.0%.

German Property Market
The German Property Market is Europe's biggest with record transactions in 2006. Figures for the first half of 2007 show no decrease in volume. Except for the mega portfolio deals the German market has seen in that period the focus points were Berlin followed by Dresden and Leipzig.

Germany is still currently one of the few major economies where an investor can expect a positive cash flow from property investments. Despite the high demand prices are still low in comparison to international markets, even the Eastern European ones. The potential for property appreciation is strong.

The rent level is still low and trailing behind the economic development. So buying now offers an upside on the cash flow as a good management can capitalise on the catch-up to follow.

Berlin Property Market
The Berlin property market still shows traces of the rent regulations in ex East Berlin because of the political system and ex West Berlin because of the highly subsidised status of the rental market. The rent level is relatively low and trailing behind the economic development. So buying now offers an upside on the cash flow as a good management can capitalise on the catch-up to follow.

Why now?
Global property players have been in the market for over two years now and have tied a great deal of their equity. This is where the chance lies for new arrivals in the market. They are not absorbing new opportunities coming to the market. Good investment opportunities require speedy decisions and ready available equity. These factors create a competitive advantage in the market. Equity is the easy part for a new arrival in the market but speedy decisions require market information and knowledge if they are not to turn out as risky or maybe totally wrong.
There is only one solution to this situation - local partners, already present in the market with access to off market properties and know-how in the execution of their purchase, development and operation.

The best strategy
The right strategy for the way in and the way out again is vital to any successful investment.
Properties need to be selected to match the investment period planned. If upgrading is planned it will take longer to get the full benefit of increased rents with increased property value than just adjusting the rent on a previously poorly managed property.

The exit strategy has to be clear and the business plan developed accordingly. Whether the sale as condominiums or as a block of rented apartments, market knowledge of the respective markets is vital for the right purchase decision and the business plan. With the right partners at the starting point a successful and profitable exit after 3 to 7 years, depending on the strategy, is easily achievable.

For investors new to the market the purchase of a rented apartment with secured cash flow is the best way to get to know the players and the procedures in a new investment environment. Find examples here: Rented apartments in Berlin.

For more detailed information please visit the website of Berlin Portfolio Ltd. or contact the author by clicking on this link:E-Mail



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Real Estate Investment in Berlin

London Stock Exchange: Rental market in Germany is "very big"

An expert has suggested that there is a large market for private rented property in Germany. More Information on London Stock Exchange

London Stock Exchange: Rental market in Germany is "very big"

Performance Measurement in Real Estate Operation

Measuring the performance of single properties, portfolios or service providers like property managers are vital to any sound management decision: "What you measure is what you get!"

Depending on the depth and size of the organisation the measurement can take place at various levels and can then be aggregated upwards. From property to location to portfolio etc..
It is also important to measure the performance of service providers influencing the performance of the property: Asset Manager, Property Manager, Facility Manager or the own internal organisational units.

In order to establish measurements as management tools the "philosophy" of the property or the portfolio needs to be defined and broken down into targets to be fulfilled to meet the philosophy. What does that mean? Ambitious but somewhat achievable targets for rent and value development have to be set and determined which are the immediate factors determining their development. This process is best done by looking at historic data, available data from comparable (good performing) properties and/or property benchmarks. The measurement then includes the targets against their set values and the defined factors like tenant turnover, payment backlog etc. It is of great importance that these factors reflect not only what has happened, like already occurred payment backlog but also warning indicators like tenant turnover or late payments.

All of these performance indicators are then mapped against their targets in a graph which will show the decision maker at one glance where the performance is as expected or better and where attention is required. These graphs are produce at every level where measurement takes place and can be aggregated upwards: A graph for each property, each location, each manager or the entire portfolio.

When applied in the right manner, this can be one of the most powerful tools for managing a property portfolio.



The performance indicators are based on the Balanced Score Card philosophy. Decisions based purely on financial data can only be reactive whereas the consideration of average contract durations, tenant turnover, payment moral etc., are early warning signs for developments and provide a guideline for areas to focus on.


For more detailed information please also visit the website of Berlin Portfolio Ltd or contact the author by clicking on this link: E-Mail





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Performance Measurement in Real Estate Operation

Asset Management for Properties

1. Asset Management

As Asset Managers we look at the entire existing portfolio with regard to any planned portfolio changes.

1.1 Operational Cost and Income Structure
We investigate the cost and income structure to identify opportunities for improvement. This can be active Supply Chain Management, combining the entire portfolio and in the next step bundling the buying power of different portfolios we manage in negotiations with suppliers.

1.2. Capital Expenses Based on the results of the Due Diligence
We establish a rolling Capex Budget Plan which is kept up to date with the actual needs. We identify those investments that might bring a quick win through improvement of the rental situation.

1.3. Organising and Supervising the Property Management
Based on a detailed scope of works we develop based on the investment philosophy of the investor, we help to identify and contract appropriate service providers for Property Management.

Main tasks for the Property Manager is rent collection, dealing with tenants and service providers, maintenance and repairs within the framework set by the owner or his Asset Manager.

1.4. Performance Measurement is key to our service philosophy:

What you measure is what you get!

We have developed a system of Service Level Agreements with Key Performance Indicators for Property Management including performance reviews and evaluations. We always incorporate a performance based element into any management fee, including our own.

There is also the aspect of measuring the performance of each property in a portfolio and the entire portfolio against the business plan at the outset. This aspect is reflected in our performance focussed reporting. A separate posting for Performance Measurement will follow.

1.5. Reporting in compliance with the needs of the investor/owner
We develop a reporting structure and make this part of any contract with Property Managers and/or Facility Managers. It defines time and contents of any regular or ad hoc reports. A summary report by the Asset Manager is available to the owner on an internet based Client Portal and is the Executive Dashboard.

Applying the Balanced Score Card philosophy this report contains the actual data and performance against agreed targets. Besides the obvious like rental income, this might include tenant turnover (as a measurement of the customer care by the Property Manager), the meeting of reporting deadlines and financial management and other goals that are important to the investor.
Operational reporting is also of growing importance for lenders. Not only in cases of securisations extensive quarterly reports are required. If you are interested to find out more about our reporting tools please check back weekly.

1.6. Risk Management Because financial institutions have to perform a risk assessment before any lending, if the investor can show that he has his own risk management in place it will influence the interest rate positively. We establish and agree a risk matrix with the owner and actively manage it during the operational phase.

1.7. Outline Proposal as a guideline we have prepared a generic Outline Proposal which will be detailed in each case for each investor and Property.

For more information about Asset Management and the Outline Proposal please make visit our website www.berlin-portfolio.com your request through the Feedback page.

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Asset Management for Properties