Why Would I Divide My Apartment Block Into Separate Units, Condos?

Yesterday's post created many responses regarding the question: Why would or should I divide my property into separate units?

At the outset I would like to stress two big words: IT DEPENDS or as we like to say "How Long Is A Piece Of String".

List of possible reasons:

• sharing out a property between investment partners wanting to go separate ways
• sharing out a property between heirs wanting to go separate ways
• selling off a property in single units at a higher price per m² in single units
• increasing value for potential buyers
• increasing LTV for mortgaging as banks like divided properties very much
• ...

Areas of Concern

• Many of the angles have tax implications totally destroying the intent, for international investors possibly a double taxation issue.
• Is your property in an area where the division might be blocked by local authorities for fear of "gentrification" or is it already in a protected area.
• What is your investment goal?

One of the key variables in deciding on a strategy for your property is the time horizon you have set for yourselves. If you are looking for the long game, blocked areas are still feasible for a division, as long as you don't plan to sell within the next 7 years. So one investor's concern is no problem to the next.

One item everybody shares in this process is the cost as it does not depend on the intent, this is what yesterday's post was about. Developing a strategy for your property or portfolio based on the intentions of the owner(s) and the individual properties is one of the specialties required. So the main question is:

How Long Is A Piece Of String?

Which summarizes strategy if not approached deliberately. Are you an investor wanting annual income from your investment or are you investing in value gain and see what happened after 10 years? Both strategies are valid but need different approaches.

If you are interested in a cost estimate for dividing a 20 apartment "average" building have a look at yesterdays post on this block.

http://germanproperties.blogspot.com/2018/06/how-much-does-it-cost-to-split-my.html

If you want a cost estimate for your specific situation please contact an expert.

Why Would I Divide My Apartment Block Into Separate Units, Condos?

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

Let's Meet at Expo Real 2012

Today we have some information in our own interest:

Let's meet at Expo Real 2012 to discuss the optimisation of the operation of your properties.

What you measure is what you get!

We have proven concepts for performance management using Service Level Agreements (SLA) and Key Performance Indicators (KPI) in the fields of Facility Management and Property Management.
If this sounds interesting to you and you happen to be at the Expo Real in Munich this year why don't we get in contact and meet up to discuss the next steps?

Uwe Falkenberg

Falkenberg Solutions
Real Estate Consultants

(view my profile)

info@falkenberg-solutions.com
Website: www.berlin-portfolio.com
Twitter @property2010

Let's Meet at Expo Real 2012

Germany: Further Improvement in the Ifo Business Climate

Results of the January 2011 Ifo Business Survey

The Ifo Business Climate Index for German industry and trade rose further in January. The business climate has thus continued the positive development of the past year. The firms are just as satisfied with their current business as they were in December, and they have given more favourable assessments of their business prospects for the coming half year. The German economy has started the year with great vigour.
In manufacturing the business climate has clearly improved, having clouded over somewhat in the previous month. The manufacturing firms report an improved business situation and once again have given more favourable appraisals of their business outlook. Especially in exports, the survey participants see much greater opportunities. The firms have further increased the utilisation of their machines and equipment, and now capacity utilisation in manufacturing is above average. They also plan to increase the number of their staff.

The business climate in retailing and wholesaling has cooled off somewhat, following a significant improvement in both distributive sectors in December. Both retailers and wholesalers no longer assess their current business situation quite as favourably as in the past month. With regard to the six-month business outlook, their optimism has also weakened somewhat.

In construction the business climate index has risen once again. The surveyed contractors are more satisfied with their present business situation and also anticipate a clear improvement in business in the coming months.


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

For more detailed information:
Further Improvement in the Ifo Business Climate 

For local support and research for property investments please refer to www.berlin-portfolio.com

Germany: Further Improvement in the Ifo Business Climate

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

German Business Climate Again Brighter Than Previous Month

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

Rising residential rents in Germany

According to official statistics the number of new building permits has declined dramatically in 2007. In Bavaria e.g. by 40%. This is related to reduction in tax incentives for newly built property and modernisation on properties.
Property market experts already see significant rises in rents for residential real estate, in some regions by 5% compared to the previous year. Over the next years a 10% rise is deemed to be likely.

Commentary:
The positive outlook for investors is self evident. However the raise of the general rent level does not mean automatic increase in income. The opportunities and best approach need to be assessed and appropriately managed to receive the most drive on the value of the property. An effective Asset Management Strategy is key to get the most benefit out of this opportunity.

Rising residential rents in Germany

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





This work is licenced under a
Creative Commons Licence.

Property Tools and Checklists

Berlin Real Estate Market Sees Ongoing Influx of International Investors

Stenham has announced further investment in Residential Property Portfolio in Berlin. The Press release confirms their confidence in the market and demonstrates that the Berlin Real Estate Market is for both "Income Investors" and "Capital Investors" making biggest part of their profit after capital appreciation.

Stenham Press Release

Berlin Real Estate Market Sees Ongoing Influx of International Investors

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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Creative Commons Licence.

Real Estate Investment in Berlin

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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Creative Commons Licence.

Performance Measurement in Real Estate Operation

Why Property Investment in Germany

Economic developments

A robust development in the global economy, strong growth in the Eurozone are indicative of the current macro environment and are the driving forces behind a boom situation that Germany's economy has been waiting for years. Towards the end of 2006, the German economy experienced its strongest upturn since the New Economy boom in 1999/2000. All significant economic indicators point to a positive growth outlook for 2007 and suggest a sustained economic revival that will not lose its impetus during the following year.
In 2006, the German economy regained its role as the power behind growth in the Eurozone, the vitality of this upturn exceeded all expectations.

The German Property Market is Europe's biggest with record transactions in 2006. Figures for the first half of 2007 show no slackening in volume.

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.

Germany is still currently one of the few major economies where an investor can expect a positive cash flow from property investments.

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. 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 wrong.

There is only one solution to this situation - alliances with trustworthy partners already present in the market with access to off market properties and know-how in their purchase and operation.

What is the best strategy?

Developing the right strategy for the way in and the way out again is key to any investment. The properties need to be selected for the investment period envisaged. The exit strategy has to be clear and the business plan developed accordingly. Whether sale as condominiums or 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 more detailed information please visit the website of Berlin Portfolio Ltd or contact the author by clicking on this link:E-Mail

This work is licenced under a
Creative Commons Licence.

Why Property Investment in Germany

Foreign Investors are looking for German Compentencies

Especially foreign investors are currently looking for a "Home Base" in Germany. They do not have their own offices here but bought substantial property portfolios throughout the last months. Just Property Management does not achieve the investment objectives of stable development of the portfolio value. A growing number of Investors are looking for experienced partners in Germany.

The German market is reacting by establishing the service providers to meet the growing needs. Just renaming a property management will not do the trick!

Foreign Investors are looking for German Compentencies