No Price Bubble in The German Housing Market 2012

The Association of German Pfanbrief Banks (vdp) does not see any indicators for a price bubble in the German Housing Market. The positive climate with moderately rising prices started three years ago and continues at steady pace.
Owner occupied apartments saw price increases of 1% to 3% with exceptions in big cities like Berlin (8.6%), Hamburg (8.1%) and Munich (8.7%) where the price increase exceeded 8%. With a Consumer Price Index increase of 2.3% for the same period the German Housing Market is far away from a price bubble. The Bundesverband der Deutschen Volksbanken und Raiffeisenbanken (BVR) comes to he same conclusion.

For data details in German please visit this link.

Especially the Berlin Housing Market is still undervalued compared to other metropoles and also still catching up on rent levels. The demand for investment properties by international investors is very apparent in the market and will increase the pressure in yields.

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For support in the identification of the right real estate investment targets in the German Property Market please visit our website at www.berlin-portfolio.com. Especially for international Private Investors and Property Funds we provide a task force service for quick reaction to interesting opportunities.

We provide independent support for the property search including foreclosure or auction properties and their valuation or appraisal. (Also see our free property market Research Service)

Please use this link to the contact facilities provided there to place any requests .

Uwe Falkenberg

No Price Bubble in The German Housing Market 2012

Unemployment in Germany below 3 Million again

The unemployment figure for Germany went below 3 Million again to where is was last December. The rate is now at 7.0% after 7.2% in March 2012.

The head of the unemployment agency is quoted "The positive basic trend in the labour market is still there but has lost some of its momentum."

The decline is partially caused by seasonal effects. With these neutralised the unemployment actually rose by 19,000 but even then the standardised unemployment rate without seasonal effects for April 2012 is now set at 6.8%.

Germany remains the big exception in the European Labour Market.

Unemployment in Germany below 3 Million again

German Property Market: Prices for Condos up by 3.9% and rents more than 5%

Every quarter empirica publish their research results for the German Property Market. The empirica-Index for the first quarter 2012 indicates rising prices for Condos and rents and a further shift in the ranking of the big cities in the German Property Market. Especially the rise of the ranking for Berlin Properties shows an interesting development.

	Purchase Prices (Condos from 2000 onwards, 60-80 sqm, high standard)
	Euro per sqm			Ranking
City	Q1/07	Q1/11	Q1/12	Q1/07	Q1/11	Q1/12
München	3.238	3.903	4.351	1	1	1
Freiburg	2.630	2.867	3.595	7	4	2
Hamburg	2.699	3.062	3.396	5	2	3
Regensburg	2.812	2.836	3.044	2	5	4
Erlangen	2.287	2.567	3.032	18	13	5
Bamberg	2.209	2.642	3.012	26	10	6
Ingolstadt	2.489	2.687	2.940	9	9	7
Stuttgart	2.637	2.800	2.908	6	6	8
Frankfurt a.M.	2.468	3.002	2.898	10	3	9
Ulm	2.229	2.460	2.836	24	18	10
Baden-Baden	2.720	2.737	2.816	3	7	11
Flensburg	2.323	2.477	2.790	14	17	12
Düsseldorf	2.384	2.640	2.723	12	11	13
Heidelberg	2.699	2.695	2.704	4	8	14
Lübeck	2.283	2.304	2.675	20	27	15
Landshut	2.322	2.564	2.673	15	14	16
Potsdam	2.223	2.547	2.662	25	15	17
Bonn	2.241	2.446	2.644	22	20	18
Berlin	2.058	2.444	2.634	37	21	19

	Residential Rent (from 2000 onward, 60-80 sqm, high quality standard)
	Euro per sqm			Ranking
City	Q1/07	Q1/11	Q1/12	Q1/07	Q1/11	Q1/12
München	11,27	12,45	13,28	1	1	1
Frankfurt a.M.	10,26	11,50	11,94	2	2	2
Hamburg	9,08	11,09	11,35	8	3	3
Heidelberg	10,22	11,02	10,93	3	4	4
Stuttgart	9,42	10,33	10,61	4	5	5
Düsseldorf	8,98	10,12	10,44	9	7	6
Freiburg	9,31	9,90	10,32	5	8	7
Wiesbaden	9,29	10,14	10,15	6	6	8
Darmstadt	8,75	9,88	9,97	11	9	9
Mainz	8,94	9,74	9,85	10	10	10
Köln	9,12	9,50	9,71	7	11	11
Ingolstadt	7,77	9,30	9,65	26	12	12
Karlsruhe	8,40	9,09	9,60	14	14	13
Baden-Baden	8,52	9,03	9,58	12	15	14
Ulm	8,01	8,95	9,52	22	16	15
Bonn	8,07	8,73	9,33	19	20	16
Münster	8,37	9,24	9,30	15	13	17
Nürnberg	8,09	8,85	9,21	18	18	18
Regensburg	8,41	8,91	9,13	13	17	19
Erlangen	7,67	8,79	9,12	28	19	20
Berlin	6,69	8,52	9,11	61	24	21

Source: IDN-Immodaten GmbH

Brief company profile of empirica

empirica is an independent economic and social science consultancy. The business was founded in 1990. Today it consists of three closely co-operating offices based in Berlin, Bonn and Leipzig. empirica provides services to public and private clients in various different sectors. Their clients include banks, building societies, insurance companies, building contractors, property investors, local authorities, local government associations, regional and federal ministries and foundations.

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For support in the identification of the right real estate investment targets in the German Property Market please visit our website at www.berlin-portfolio.com. Especially for international Private Investors and Property Funds we provide a task force service for quick reaction to interesting opportunities.

We provide independent support for the property search including foreclosure or auction properties and their valuation or appraisal. (Also see our free property market Research Service)

Please use this link to the contact facilities provided there to place any requests .

Uwe Falkenberg

German Property Market: Prices for Condos up by 3.9% and rents more than 5%

High petrol prices are affecting the consumer

Findings of the GfK consumer climate study for Germany for April 2012

Consumer sentiment in Germany was divided in April. While the overall economic outlook was viewed more optimistically, the high level of income expectations dropped slightly, and willingness to buy saw significant losses. Following a revised value of 5.8 points in April, the overall indicator is forecasting a value of 5.6 points for May.


Consumers are evidently coming to the realization that a recession in Germany can be prevented, and the forces which boost the domestic economy are increasingly gaining the upper hand. As a result, the economic expectations have risen for the second time in a row. In contrast to this, increasing concerns about inflation are weakening consumer optimism, as shown by the decrease in willingness to buy. Consumers see their buying power as being primarily affected by the increase in energy prices. This is shown by the slight drop in income expectations.

GfK SE, Corporate Communications

Nordwestring 101
90419 Nuremberg

Full GfK Press Release .

Once again Germany and especially Berlin has become a prime investment target for Investment in the German Property Market by Private Investors and Property Funds. Property Financing has become more readily available again but much more restrictive than during the last investment cycle 2005 to 2008.

This development is supported by a constant flow of positive news from the German economy which is also provided in this blog.

Uwe Falkenberg

High petrol prices are affecting the consumer

How to get a Mortgage for Your Property Investment in Berlin 2012

Even for a local professional, the Property Financing for international investors is an ever changing picture. Going back to a bank where we had previously successful arranged financing for an apartment for an English investor we had to find out: “We don’t do apartments for foreign investors anymore, only multi-tenanted apartment blocks”. So a permanent scan of the usual suspects is necessary to be able to come up with the financing in good time when a good investment opportunity is found. At the current market situation these opportunities wait for no man.

Living far away does not make it easier to find the right financing and going with the friendly recommendation of your agent who brought the property to you does not necessarily mean the best deal for you. So getting someone independent to support your purchase and financing process is not a luxury but common sense.

How high can I expect my mortgage to be?

This is a bit like asking: “How long is a piece of string?” The answer is: “It depends”. Here are some key factors that apply to any lender. There will be a “Loan to Value” (LTV) rate set, which will say: “We will finance up to 60%...70%...80% of the collateral or loan value”. This value is not to be confused with the purchase price. It is determined by the technical state of the building (state of repair) assessed by a building surveyor instructed by the bank at the buyers cost.

The next factor naturally is the rental income of the property. In the case of a foreign investor this is the source the bank will focus on to get the interest payments from and ultimately their mortgage. The rental income will be discounted by 20-25% for repairs, vacancy risk and other operational cost. The remaining 75-80% of the rental income sets the maximum loan as it is the amount the bank can expect to be available for mortgage payments. These mortgage payments again are determined by the interest rate in the mortgage offer. For Updated Reference Interest Rate click here.

Will I be personally liable?

In most cases: YES. There are hardly any banks around anymore that will do a “non-recourse” financing where all security comes from the property. So make sure you have a good look at the performance of the building you are about to buy. A good but well supervised property management will have to ensure that the performance of your investment is constantly improved and your personal liability never becomes an issue. We recommend a local expert to have an eye on the property management from time to time and agree goals and measures for the development of the performance of your property.

What else should I look out for in my financing?

In some cases you will decide knowingly to buy a property with a repairs backlog because you negotiated a good discount on the price for that reason. Most likely the bank will require that this backlog is fixed in an agreed time span and will hold back part of your mortgage in a low interest security account. This is ok but make sure that you agree that this money can be used to pay the repairs and that the bank is bound to set criteria as to when to pay out, never at their own discretion. We have seen cases where banks still sit on money in this security account with an interest rate of 0.5% while at the same time 5% is paid for the mortgage.

There are obviously other important issues which cannot all be mentioned here. A professional advisor will help you to avoid these traps and should be a worthwhile and cost effective investment.

To find out more about our services during the Purchase Phase, the Operational Phase and Property Performance Improvement please visit our website www.berlin-portfolio.com.

How to get a Mortgage for Your Property Investment in Berlin 2012

April 2012 Ifo Business Climate Index for Germany still on the Rise

Results of the April 2012 Ifo Business Survey

The Ifo Business Climate Index for industry and trade in Germany rose once more in April. Companies’ assessment of their current business situation improved somewhat on a high level, while their six-month business outlook remained unchanged from last month. The German economy is proving resilient.
The business climate in manufacturing improved again on the previous month. The manufacturers surveyed see both their current business situation and their business outlook as significantly more positive. Manufacturers are increasing their capacity utilization. Their recruitment plans are slightly more conservative than last month.
The business climate developed differently at both levels of trade. While the business climate indicator increased minimally in retailing, it fell slightly in wholesaling. Climate components also developed in opposite directions. Retailers report some deterioration in their business situation and an improvement in their business outlook. A greater number of wholesalers, on the other hand, are satisfied with their current business situation, while their expectations clouded over slightly.
In construction the business climate was bleaker. The constructors surveyed report a slightly deterioration in their current business situation. They are also no longer as optimistic about their future business development as last month.
Hans-Werner Sinn
President of the Ifo Institute

For Detailed Data click here

 For support in the identification of the right real estate investment targets please visit our website at www.berlin-portfolio.com. Especially for international Private Investors and Property Funds we provide a task force service for quick reaction to interesting opportunities.

We provide independent support for the property search including foreclosure or auction properties and their valuation or appraisal. (Also see our free property market Research Service)

Please use this link to the contact facilities provided there to place any requests .

Uwe Falkenberg

April 2012 Ifo Business Climate Index for Germany still on the Rise

Berlin Residential Market Report 2012

GSW / CBRE have published their 2012 Annual Housing Market Report for Berlin.

Main conclusions

• Rents: Expensive rents get more expensive and moderate rents remain affordable.
• Rent Burden: The average share of spendable income to be assigned to rent dropped slightly from 24.4% in 2009 to 24.2%.
• Comparison: The Berlin Residential market still offers more for less than other German cities.
• Scoring: Pankow, Friedrichhain-Kreuzberg and Treptow-Köpenick are in high demand with investors and in advanced positions on the investment cycle.
• New building activities mainly in popular locations for high value customers.

For new contracts average net rents have risen by 7.8% from € 6.11 in 2010 to € 6.59 in 2011. The increase has varied and mostly took place in the higher value market segments to € 12.04 on average.
Least affected were the lower rents which increased by 4.6% to € 4.50 per sqm per month. There is still sufficient supply of affordeable apartments with a tightening of the market within the inner S-Bahn ring line.

For support in the identification of the right real estate investment targets please visit our website at www.berlin-portfolio.com. Especially for international Private Investors and Property Funds we provide a task force service for quick reaction to interesting opportunities.

We provide independent support for the property search including foreclosure or auction properties and their valuation or appraisal. (Also see our free property market Research Service)

Please use this link to the contact facilities provided there to place any requests .

Uwe Falkenberg

Berlin Residential Market Report 2012