Berlin Housing Market 2013 - What's up?

During the last few weeks there were some significant changes in the Berlin Housing Market.

Berlin Rent Table 2013

The new Berlin Rent Table 2013 (Mietspiegel 2013) was published and showed significant rises (20+ %) in some areas and hardly any changes in others compared to the 2011 rent table.

Location Grading Map of the Berlin Rent Table 2013

Reminder:

The official rent table determines the limit to which rents for existing contracts can be raised. Other regulations apply as well, (see below). The table does not apply to new rental contracts, even though tenants looking for apartments will tend to take their information from there.

New Cut Off Rate for Rent Increases

A change in the tenant law by the federal government allows the local governments at state level to reduce the cut off rate for rent increases in existing contracts from 20% over a period of 3 years to 15%. Two of the states, Bavaria and Berlin were very quick in applying this option and have issued regulations for Munich and Berlin respectively, meaning that as of March 2013 this new limitation applies. By the way,  both states have elections coming up this year as there will be elections at the federal level.

Setting up the right strategy

First of all - do not have your property manager send out a rent increase to all tenants at the same time, you might find yourself with more simultaneous vacancies than you would like. This really does happen!

Before applying the possible increases of the the rent table draw a development plan for your property. This does not necessarily mean spending extra money but have a guideline for you property manager where you want to be in 5 or 10 years. Some examples:

• Use repairs and tenant changes for upgrades if this is what gets you into a better bracket within your location.
• Groom some tenants that you would like to keep and take it easier on increases, engage them into a dialogue.
• Take good care of the first impression of your property. If you want to attract tenants that are prepared to pay higher rents you have to do just that, attract them.

Falkenberg Solutions - Real Estate Consultants have supported the development of such plans. Good property managers should be able to help you but are often to involved in the property to take a step back for the assessment. Sometimes they would have to ask themselves why they have not done x or y long ago but this lies in the nature of being tied down in day-to-day business. A fresh look from a third party is often the best way. Click here to find out more about the services and/or contact us.

Berlin Housing Market Report 2013

Shortly we will send out the 2013 Berlin Housing Market Report with the latest developments for the different regions of Berlin. If you requested the 2011 report from us you will receive the update automatically. If you have not requested it, you could sign up for the 2012 Report here on this blog by using this link:
http://germanproperties.blogspot.de/2012/04/berlin-residential-market-report-2012.html
or you come back here as it will be announced soon. There is also a sign up box on our website http://www.berlin-portfolio.com.

Berlin Housing Market 2013 - What's up?

Sharp Rise in German Business Climate Index

The Ifo Business Climate Index for German industry and trade rose significantly by over three points in February. This represents its greatest increase since July 2010. Satisfaction with the current business situation continued to grow. Survey participants also expressed greater optimism about their future business perspectives. The German economy is regaining momentum.

In manufacturing the business climate indicator rose sharply. This was specifically due to a considerably more optimistic business outlook. Manufacturers also expressed greater satisfaction with their current business situation. Export expectations increased and are now above their long-term average once again.
In wholesaling the business climate also improved clearly after deteriorating last month. Wholesalers are more satisfied with their current business situation and less pessimistic about future business developments. In retailing, on the other hand, the business climate remained unchanged. Assessments of the current business situation were more positive than last month, but retailers were slightly more sceptical about their future business developments.
In construction the business climate index continued to rise sharply, primarily due to a far more optimistic business outlook. The business outlook reached its highest level since German reunification. Satisfaction with the current business situation also continued to grow.
Hans-Werner Sinn
President of the Ifo Institute

Press Release with details click here.

"The fact that the German economy suffered a setback towards the end of 2012. As the Federal Statistical Office (Destatis) already reported in its first release of 14 February 2013, the gross domestic product (GDP) decreased by 0.6% - upon price, seasonal and calendar adjustment - in the fourth quarter of 2012 compared with the previous quarter. The result for the entire year of 2012 remained unchanged at +0.7% (calendar-adjusted: +0.9%)." (Source: Destatis Press release)

Despite this setback all indicators point to a strong recovery of the German Economy as stated by the German Chamber of Commerce and other sources. The property market has seen price increases on all fronts including rent.

For more information keep visiting this blog or sign up for updates. For information on the German Property Market visit www.berlin-portfolio.com.

Sharp Rise in German Business Climate Index

Public Projects Never on Time and Budget 2

Berlin: Senate seeks new project manager for Opera-remediation
The Berlin Senate has terminated the contract with Drees & Sommer as project manager of the renovation of the Staatsoper Unter den Linden. Corresponding media reports confirmed a spokeswoman for the Senate Department for Urban Development. According to reports, the separation is "by mutual consent", but with "different ideas as to the construction project going on" in the background. With a temporary project manager in place the Berlin Senate wants to re-tender the service. The opening date is held. This was postponed to the spring of 2015, allegedly because in 17 m depth "surprisingly" old wooden posts were found. The renovation costs of the lately 250 million euros will not rise, but this is doubtful in view of a possible further time delays due to the re-tender.

Is this the BER Berlin Brandenburg Airport all over again?

Public Projects Never on Time and Budget 2

Public Projects Never on Time and Budget 1

Potsdam: Further delay in Landtagsbau because companies go bankrupt?
During the construction of the Brandenburg state parliament in the center of Potsdam new trouble threatens: The Saxon Sandsteinwerke GmbH, based in Pirna, on 1 November at the Dresden district court filed for bankruptcy. The company was previously supplier for the cladding for the city castle replica. The works of the company at the site have been set. The bankruptcy of Sandsteinwerke their lawyer reported claims outstanding more than 1.9 million euros to the BAM Germany, which builds the project in PPP. BAM itself is currently in dispute with the state over increased construction costs and a later completion date. Completion is still planned for end of next year. The costs are still with approx. EUR 120 million budgeted.

Public Projects Never on Time and Budget 1

Ifo Business Climate Continues to Deteriorate for the sixth consecutive month

The Ifo Business Climate Index for German industry and trade fell in October for the sixth time in succession. Companies again expressed growing dissatisfaction with their current business situation. The business outlook nevertheless remained unchanged at last month’s low level. The clouds over the German economy are darkening.

In manufacturing last month’s deterioration in the business climate continued in October. Assessments of the current business situation were significantly poorer and now approximately correspond to the long-term average value. Business expectations recovered slightly for the first time in six months and are less pessimistic. According to manufacturers’ reports capacity utilization rates were considerably lower than in the previous quarter. This marks the third drop in succession.
After staging a recovery last month, the business climate index in both retailing and wholesaling dropped this month. The retailers surveyed were much more satisfied with their current business situation, but expressed far greater pessimism about their six-month business outlook. Wholesalers reported slightly improved expectations, but their assessments of the current business situation cooled down significantly.
In construction the business climate indicator fell further. Although the construction companies surveyed expressed less pessimism about their six-month business outlook, they were far less satisfied with their current business situation.
Hans-Werner Sinn
President of the Ifo Institute

Expo Real 2012, the international real estate conference at the beginning of October in Munich has shown that the demand for property investment opportunities in Germany however is unwavering. The yields are under pressure due to the international influx of investors. Especially properties in Berlin are in high demand because of the relative undervaluation compared to other European capitals and the recent rent increases.

Uwe Falkenberg, owner of
Falkenberg Solutions
Real Estate Consultants

Ifo Business Climate Continues to Deteriorate for the sixth consecutive month

Office Investments in Germany Q3 2012

Investors spent more on office properties in Germany through September than in the same nine-months period during the last five years, buying more than twice as much in Berlin (172%) and Munich (138%) than the same period last year while other cities of the German "big six" like Hamburg or Dusseldorf had a slight decline.

Office properties valued at 6.27 billion euros ($8.22 billion) were sold in the first nine months of 2012, a 50 percent increase from 2011, according to data compiled by BNP Paribas (BNP) SA’s German real estate unit.

“Safety-oriented investors see good conditions here due to the relatively stable economic and employment situation,” Sven Stricker, head of investment at BNP Paribas Real Estate GmbH, said in a statement today. “Office investments have a good medium-term outlook, assuming the euro crisis doesn’t escalate.” For the full report in German click here.

Demand for German property in all property sectors has significantly increased this year as investors are seeking a safe place to put their money amid the risk scenarios of the euro zone’s sovereign-debt crisis. Germany’s economy, Europe’s largest, is forecast to grow 0.8 percent this year, according to the government and 1.0 percent for 2013. The economies of the 17 nations that share the euro are together forecast to contract 0.4 percent, according to the European Central Bank.

The demand for property investment opportunities in Germany is unwavering. The yields are under pressure due to the international influx of investors. Especially properties in Berlin are in high demand because of the relative undervaluation compared to other European capitals and the recent rent increases.



Come back regularly as we will provide information on other market sectors shortly.


Uwe Falkenberg, owner of
Falkenberg Solutions
Real Estate Consultants

Office Investments in Germany Q3 2012

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