Müggelstrasse in Berlin-Friedrichshain, not available on Street View

Müggelstrasse in Berlin-Friedrichshain, not available on Street View

Increase of dwellings completed in 2011: 14.6%

As reported by the Federal Statistical Office (Destatis), the construction of a total of 183,000 dwellings was completed in Germany during the year 2011. Compared with the year 2010, this is an increase of 14.6% or 23,000.

Detailed information in German: Destatis

The impact in the supply is still to small too cover the ever growing demand for suitable housing. The Berlin Housing Market Report 2012 demonstrates impressively the shortage through rising rents.

Increase of dwellings completed in 2011: 14.6%

Berlin Charlottenburg, High Profile Landmark Commercial Building off Kurfürstendamm

A rare opprotunity was brought to our attention and we are authorized to forward the offer to any serious investor:

Berlin Charlottenburg, just off Kurfürstendamm ( Ku'damm )

Twin Building with high profile retail units on the ground floor and offices above.

Registered Landmark Building , high quality fit out, 2 lifts per entrance   

        

Office     6.693 m²        

Retail     539 m²        

Basement/Storage     586 m²        

Residential     139 m²       

Total Space     7.957 m²        

Currently under rental offer, office 424,16 m² + storage 37 m².         

• Potential rent p.a.      €  1.551.369,00
        5,5%      gros yield
  
• Actual net rent p.a.      €  1.482.992,00
        5,3%      gros yield

           

Purchase price        28.000.000,00         

           

Commission     4% plus VAT paid by the buyer

                          

For detailed information please contact us through the contact facility on our wedsite

www.berlin-portfolio.com

Berlin Charlottenburg, High Profile Landmark Commercial Building off Kurfürstendamm

Purchase Cost for a Property in Berlin 2012

One of the most asked questions by investors new to Berlin is regarding the typical cost involved in making a real estate investment. Since we last published this overview in December 2007 the property sales tax has gone up to 4.5% and since April 1st of this year is at 5% where about half of the German states are.

The cost depends on the price of the property and the cost tables for the notary public and the land register. They are digressive, in other words, the higher the price, the lower the percentage of the cost.

For a property with a purchase price of € 1 million the cost would be roughly:

Notary Public	for the contract	6,965 €
	For an escrow account if required (based on $ 500k) 3,020 €
Land Register		4,280 €
Property Sales Tax	5% in Berlin	50,000 €
	(4.5 – 5% rest of Germany except Hesse, Bavaria and Saxony 3.5%)
Agent Commission	Between 5 and 6 % plus VAT 19%,
	(assume 5%)	59,500 €
	Total	120,745 €

For a property with a purchase price of € 2 million the cost would be roughly:

Notary Public	for the contract	13,660 €
	For an escrow account if required (based on € 1 mill.) 5,995 €
Land Register		8,410 €
Property Sales Tax	5% in Berlin	100,000 €
	(4.5 – 5% rest of Germany except Hesse, Bavaria and Saxony 3.5%))
Agent Commission	Between 5 and 6 % plus VAT,
	(assume 5%)	119,000 €
	Total	241,070 €

For the quoted size of investment as a rule of thumb it is safe to use 12 % purchase cost for an initial calculation, with higher values reducing the percentage slightly.

These figures also identify the items where savings can be achieved:
If it is a straight forward purchase an escrow account should be avoided as the saving can be quite substantial.

Traditionally in Berlin the commission for the property agent is paid by the buyer. For a long time 6% plus VAT was custom and practise. With the recent influx of international investors these margins have come under pressure, especially with the agents not assuming any responsibility for the information provided by them. On the other hand there are 5 or more interested buyers for any property coming to the market which is a difficult negotiating position. Please also read our post about the Double Commission Trap.

The cost of financing will depend on many factors like the amount of equity used etc.. There will be cost for Technical Due Diligence and valuation, "handling fee" between 0.25 and 1 % of the loan charged by the bank and entry of the loan into the deeds register. With the right approach and experience there is also a money saving way of doing this.

Naturally there are many more aspects to be considered before making a purchase: Review of the rental contracts, maintenance, ancillary cost to mention only a few of them. Language can be quite an obstacle because an investor cannot expect every property manager or care taker to speak English.

Businesses like Falkenberg Solutions – Real Estate Consultants. and their network of Real Estate Professionals from Notaries to Tax Consultants and Finance Brokers are specialised in assisting international investors in their investment decisions, providing a "home base" for their activities in Berlin -- before and after the purchase.

Purchase Cost for a Property in Berlin 2012

New Tenancy Law in Germany

 

Germany's government decided on an amendment to the tenancy law.

The most important changes:

• Landlords can invest in energy efficiency measures, even against the will of the tenants. In turn the tenant will have a special lease termination right. Any disturbances arising from construction work must be accepted for up to three months without any reduction in rent.
• The rent increase remains at 11% of the renovation costs per year, and examining the question of whether this represents an economic hardship for the tenant can no longer delay the start of work.
• If a switch to energy contracting is made to improve the property performance, the cost can be distributed to the tenants if it is not higher than the previous operating costs.
• Owners will now be able to more easily enforce the eviction of tenants in default.
• In case of disputes, the courts may order the tenant to deposit the disputed amount until the end of the procedure.
• Finally, the new law is to prevent the circumvention of protection against eviction (protection for three years against eviction due to future owner usage) in cases of apartment buildings’ being converted into condominiums.

These changes  make life for owners a lot easier and the rental market more balanced. They take away some of the uncertainty for international investors in Residential Property who see the legal regulations in the German Housing Market as very tenant-friendly.

New Tenancy Law in Germany

Ifo Business Climate Index Falls Sharply in May 2012

Results of the May 2012 Ifo Business Survey

The Ifo Business Climate Index for industry and trade in Germany fell significantly in May. Assessments of the current business situation deteriorated clearly. The business outlook nevertheless remains above the long-term average. Companies also expressed greater pessimism about their business outlook. The recent surge in uncertainty in the Eurozone is impacting the German economy.
The business climate index in manufacturing dropped sharply. This is primarily due to much poorer assessments of the current business situation. As far as the six-month business outlook is concerned, positive and negative expectations roughly balance each other out. The majority of manufacturers reported defensive recruitment plans for the first time in months. However, they expect further stimulus from exports.

The business climate clouded over significantly at both levels of trade. Assessments of the current business situation slumped in retailing and the majority of expectations are pessimistic. In wholesaling the downturn was relatively small. The wholesalers surveyed saw deterioration in their current business situation and are less optimistic about their six-month business outlook.
The business climate indicator also dropped in construction. While the current business situation showed a slight improvement, the constructors surveyed were less optimistic about future business developments.
Hans-Werner Sinn
President of the Ifo Institute

For detailed results 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

Ifo Business Climate Index Falls Sharply in May 2012

GSW Rental Income Improvement in Berlin

NEWSFLASH

Berlin based GSW which recently had a successful IPO boosted its rental income during the first quarter by 14.1% to €39.7mn (Q1 2011: €34.8mn). This was due to the purchase of 4,800 apartments in Berlin from Gagfah at the end of 2011 as well as to rent performance improvement and a reduction in vacancies.
Net profit for the quarter dropped from €33.2mn last year to €8.7mn. However, earnings in 2011 had been heavily influenced by the sale of the Media Haus GmbH (BMH) cable network in Berlin. Excluding this special effect, consolidated net income increased by 11.5%. The FFO I figure (without sales income) grew by 13.6% to €15.0mn. The company reaffirmed its forecast for the yearof an FFO I of approximately €59-63mn, excluding any purchases.

GSW Rental Income Improvement in Berlin