Residential Property In Germany Experiences Greater Volumes

Despite large-scale investment interest in German property, domestic buyers dominate the German market, according to new information released by real estate advisor Savills. Over 89,000 residential units have changed hands in the first two quarters of 2013.

Karsten Nemecek, Managing Director of Corporate Finance – Valuation at Savills, remarked: ‘compared to 2012 the residential portfolio market gained further ground: Firstly, significantly more deals were closed and secondly a considerably higher number of buyers appeared in the market than had been the case the previous year.’

However, while the number of transactions is up, the number of large transactions is down: in the first two quarters of 2012, Savills recorded four transactions of over 20, 000 units each. In the first two quarters of 2013, only one transaction that size was recorded. The number of transactions of over 1,000 residential units each nearly doubled, rising from nine in the first half of 2012 to 16 in the first half of 2013.

The number of property developments involved in transactions also increased significantly, with 13 developments sold to an end investor in the first half of 2013. Investment in this sector totalled over €450m. Over half of these development-based transactions are taking place in Berlin, Dusseldorf and Munich, following the trend for both investment and retail activity to be hotter in Germany’s major metropolitan areas.

In the past year, German buyers have dominated the German market, despite strong interest from overseas investors, particularly Asian ones. Domestic buyers’ share of transaction volume was about 75% in 2012 and rose slightly in 2013 to about 80%, while the majority of the remaining 19% was attributable to investors from other European countries. Part of the reason for this is thought to be higher prices; Mathias Pinks, responsible for research at Savills Germany, stated that ‘rising prices inherently come along with dropping numbers of potential buyers,’ pointing to the 20% year-in-year rise in per-unit price, which is now at an average €63,000.

The report from Savills stated that transaction activity is likely to remain buoyant throughout the second half of 2013. Demand remains strong and several portfolios of over €100m are either in the market or expected to be within the near future. Investment volume is likely to come in slightly lower than the 2012 figure, due to the reduced number of very large deals; nevertheless the market is thriving, with smaller-sized deals taking place at a greater rate than before. In any case the difference is likely to be significant but relatively minor: 2012’s total investment volume was €10.45bn while 2013’s is forecast to be about €10bn.

‘For the foreseeable future reasonable alternatives to real estate investments do not seem to be available to risk-averse investors and German residential property will remain a good choice despite higher prices,’ remarked Mr. Nemecek, pointing to the ‘safe haven’ status of property investment as a possible reason for increased transaction numbers. He suggested further than demand will continue strong beyond 2013, and that investors with intentions to sell their portfolios should take advantage of the current market environment, which combines strong demand with high prices.

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What we can learn from the Germans

A new BBC programme offers a British family the chance to live in Germany and experience their robust economy, superior quality of living and legendary efficiency. But a Teutonic life isn’t always rosy, finds recent expat Jeevan Vasagar

Cycling back from dropping my daughter off at nursery, the sun on my face, I was musing about the pleasures of commuting on Berlin’s elegantly laid-out cycle network when the burly man whizzing down the path towards me skidded to a stop and snapped: “Falsche Seite!”

As newcomers soon discover, Germany is a country with a stronger sense of communal welfare than Britain – you reap the benefits of that with cheap state-subsidised childcare, an insurance-funded healthcare scheme with some of the world’s lowest waiting times, and unemployment benefits that pay 60 per cent of your final net salary for your first year out of work. But there’s an equally strong notion of communal oversight. I should have been using the cycle lane on the opposite side of the road, and my fellow cyclist had no hesitation in telling me so.

I fell in love with Germany as a teenager. While others found the language difficult, I loved its crisp sound and orderly structure. Staying with my German penpal in Munich, I discovered wheat beer and the fairytale woodlands and mountains of Bavaria. When I visited Berlin for the first time, there were still artists squatting in ruined buildings in the city centre; it seemed the anarchic flipside of competitive London.

So when the Telegraph offered me an opportunity to re-locate to Berlin as the paper’s correspondent earlier this year, I seized it, even though it meant parting with friends and family – and, for my son, Roshan, now seven, giving up a place at a north London primary school that was rated ‘outstanding’. (continue reading here)

German Property Quiet Boom Attractive To Investors

Germany’s status as a safe haven for investors is well documented. But the forces that have generated a housing boom in the Eurozone’s most prosperous economy go beyond interest from investors anxious to squirrel their money away safely. The boom in German property has come as a result of low unemployment, rising construction rates and robust growth in rents, according to UK-based Knight Knox international.

Germany was recently voted Europe’s most attractive property market, in a survey held by property consultants CBRE. The result was backed up by statistics indicating that every sector of the German property market is flourishing. The rental sector alone is worth over £890 billion in a country where homeownership is low, at around 53%. German rental rates have grown by 15% over the last five years, while apartment prices have risen by 23% in the same period, according to BulweinGesa, Germany’s leading property indices.

But the growth of the German housing market is underpinned, not by foreign investment or speculation, but by genuine economic growth. Germany’s unemployment rate is near to its 2012 record low, representing the deepest cut in the jobless rate since reunification. The 2.943m Germans out of work make up 6.8% of the population, as against unemployment of 7.8% in the UK. There’s more though: part of the German employment boom is in the construction industry, where residential construction rates grew by 2.5% in the third quarter of 2012. Rather than a speculator-led bubble, though, the German property market is participating in a nationwide economic upswing.

And that’s being recognised by investors. Germany drew in over a fifth of the overall investment in Europe last year and international investors carried out 40% of 2012’s transaction volume. Investment in German real estate totalled €6.7bn in the first quarter of 2013, a 21% year-on-year increase, according to Savills.

Berlin, once a stoutly industrial city and then the home of the Wall separating the two Germanies, is now the home of a rocketing population – up by over 100,000 since 2007 – and increasing rents, which have risen by a third in the same period. Apartment prices have seen a 41% increase, according to online broker Immobilienen Scout.

Mitte, a city centre district of Berlin, has been a vital part of the city’s property boom, with apartment prices now nudging £6,700/m2 in the district. Comparable properties in Charlouttenburg-Wilmersdorf run to £4,700/m2, though the two districts are close; German property is governed by German perceptions of desirable neighbourhoods.

Germany’s boom has seen prices rise so sharply in Berlin that both Germans and foreigners have begun to look further afield. The German provincial cities are increasingly sites of investment as well as purchase for habitation, showing much lower prices but comparable rental demand. And the German economy, still Europe’s healthiest and the Eurozone’s pricipal creditor, underpins this strong housing growth, indicating bright days ahead for investors in German property.

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Hip, affordable Berlin is disappearing

Berliners are worried. For more than two decades, they have lived in the least expensive capital city in Western Europe and one that has been at the cutting edge of alternative culture.

Berlin’s “coolness” and bargain prices are not unrelated: With low prices for real estate, particularly in postcommunist East Berlin, came an influx of artists, bar owners and restaurateurs, and finally, cool kids, not only from other parts of Germany, but from around the world, who descended on the city to eat up its culture. Berlin’s relative homeliness, as compared with other European cities, became an advantage in an age of irony and nostalgia.

But the low prices that keep Berlin cool are rising. The European financial crisis has sent rents soaring. Last year, real estate prices jumped on average about 20 per cent in the city’s central neighbourhoods. That number is expected to climb, as the euro zone debt crisis has pushed foreign investors, such as Greeks and Italians, to put their money somewhere safe – namely, Berlin real estate. With property prices climbing, the price of goods, drinks and entertainment goes up with it. This year, may be the last chance to enjoy Berlin as a hip affordable European capital.

Mitte is where every visit to the city should begin and where Berlin’s tumultuous history from Prussia to Nazism to communism played out. But Berlin’s real treasures lay just outside the centre, where the city’s post-historical period unfolds.

I start my day in Prenzlauer Berg, the prettiest part of East Berlin and the first suburb to have gentrified. The gentrification was so swift that 80 per cent of preunification residents have been displaced since 1989 because of skyrocketing rents.

My first stop is the Barn, a charmingly pretentious coffee shop that has banned not only computers and tablets, but also baby strollers. If you happen to be in Prenzlauer Berg on Sunday, the farmer’s market at Kollwitzplatz has some of the best grilled mackerel to grace a picnic table. Alternatively, the Sunday brunch at the Russian restaurant Pasternak is luscious and a steal at €13 ($18) all-you-can-eat.

Sundays are also a perfect time to see the giant flea market at Mauerpark. A Berlin ritual, Mauerpark attracts thousands every Sunday to browse endless stalls, eat grilled sausages and listen to ear-piercing karaoke in the “bearpit.” The latter gets going around 3 p.m. and is the most bizarre but often rewarding free entertainment in the city.

Any other day of the week, I head to Neukolln, formerly part of West Berlin and not long ago considered one of the most dangerous and derelict parts of the city. Things have changed and the neighbourhood is now Berlin’s cutting edge of cool. Prices there are rising fast, though, and Neukolln’s reputation as the city’s hippest ’hood won’t last much longer. A remnant of the area’s heavy immigrant background is Rissani, a bustling Middle Eastern restaurant that serves towering plates of hummus, falafel, shawarma and delicious fried halloumi cheese for €5. Nearby, Huhnerhaus, a takeout shack for slow-roasted chickens, sells huge portions for tiny prices.

Take your plate of chicken to Gorlitzer Park just next door and picnic on a grassy knoll. Gorlitzer Park has been described as the “anti-park.” Despite the graffiti and lingering young men asking you suspiciously if “you’re okay?” the green space is a treat to relax and enjoy the sun or enjoy a drink on the terrace of Das Edelweiss.

I’ve recently come to love spending afternoons at the community gardens at Moritzplatz. Not only do they serve a shockingly cheap and delicious lunch – a few weeks ago I had smoky chocolate chili with vegetables for about €5 – but it’s also a great place to pull up to a table of strangers and join in a game of cards. The Prinzessinnengarten’s mission is sustainable food and urban improvement and it’s striking to see such an open community space free from development in the centre of a major European capital. While sipping fresh mint lemonade on a warm and sunny day in the garden, I couldn’t help but wonder when someone would decide that this prime land would make the perfect condominium tower.

To sample classic German food – apart from the ubiquitous but flavourless currywurst – Spatzle and Knodel in Friedrichshain is the closest thing you’re going to get. The gastropub serves spatzle – a kind of German mac and cheese – and an excellent wiener schnitzel for just over €10 – a bargain compared to what you pay in Vienna or other parts of Germany.

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Tenants told to lump neighbour peeing noise

Tenants have been told they have to put up with tinkling sounds coming through the walls from their neighbours’ toilet after a Berlin court rejected their complaint, telling them the noise of someone urinating was “socially acceptable.”

Residents in Berlin who withheld part of their rent on the grounds that they could hear their neighbours peeing while they were trying to get to sleep have lost their case, wrote the Süddeutsche Zeitung on Friday.

The noise was “socially acceptable” said the Berlin district court in its ruling. The group had demanded that their landlords do something about the thin walls in the property after they said they were unable to relax properly.

Legal questions around the required quality of sound insulation always depended on the age of the building, said the judges. In this case, the building dated from the 1950s, they said, when sound insulation was in general poorly regulated.