German consumer confidence up as economy brightens

A survey finds that German consumer confidence is solidifying as people’s expectations for the country’s economy brighten.

The GfK research institute said Wednesday its forward-looking confidence indicator edged up to 7.1 points for October from 7.0 in September — a reading that itself was revised up from the initial forecast of 6.9.

The finding comes a day after a closely watched index of business confidence in Germany, Europe’s biggest economy, rose for the fifth month in a row. Germany’s economy expanded 0.7 percent in the second quarter, but recent industrial production and retail sales figures raised some concerns over the strength of third-quarter growth.

GfK says consumers’ economic outlook dipped in August but improved in September. It says Germans’ willingness to buy is at its highest in nearly seven years.

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Berlin to Turn Cold-War Airlift Site Into 1,700 Affordable Homes

Berlin’s city government plans to build as many as 1,700 affordable homes at the Tempelhof airport complex that was used for the Allied airlift during the Cold War.

Development of the site that’s currently being used as a park will begin in 2016, according to a statement from the Berlin City Planning Office today. Once this project is complete, the city will add buildings including a library to three additional sites on the complex, using up about a quarter of the airfield.

The new properties will help meet rising demand for homes in the German capital, where new construction has lagged household growth, said Michael Mueller, the head of planning.

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“It’s in the interests of all Berlin that we create affordable housing in the city center,” Mueller said.

Tempelhof, whose stone-clad terminal built by the Nazis in the 1930s, was closed to air traffic in 2008 and its main building is used for events including an annual beer festival. The airfield, which has two runways, has been turned into parkland where visitors jog, roller-blade on the tarmac and barbecue.

Brandenburg Gate

The airfield, covering an area of 380 hectares (939 acres) and located about 7 kilometers (4 miles) south of Berlin’s Brandenburg Gate, is slightly bigger than London’s Hyde Park. About 230 hectares of the airfield will be left once all four projects are complete, according to today’s statement. Read More…

German Rents Fall in August Halting Rally

Advertised rents in three of Germany’s five largest cities fell in August, indicating extended rallies in the country’s urban areas may be stalling, according to online broker Immobilien Scout GmbH.

Offered rents in Hamburg dropped by 0.6 percent in August from July, and in Cologne they fell by 0.4 percent, the second-consecutive drop for both cities. Munich fell 0.3 percent, its third decline in a row, while rents in Frankfurt were unchanged. Berlin was the only city among Germany’s five largest where rents rose.

“Whether this trend turns into a lasting development remains to be seen,” Michael Kiefer, Immobilien Scout’s head of valuations, said in a statement. “There seems to be a change of direction in some of the big cities.”

Berlin’s offered rents rose 0.4 percent in August from July, bucking the trend because rents there are still low compared with other cities, Kiefer said.

Housing costs in Germany’s largest cities have jumped in the past five years as young people move to areas where jobs are easier to find and construction fails to keep up with demand. Legislators are tightening rent regulations and politicians are promising to introduce rules to keep rents and prices in check.

State governments in cities including Hamburg, Berlin and Munich plan to prohibit increasing rents by more than 15 percent in certain neighborhoods over a three-year period, officials said in April. The initiative follows passage of a national law in December that makes it easier for cities that face a housing shortage to cap rents.

Advertised rents in Germany’s five largest cities have gained about 12 percent in the past five years, according to Immobilien Scout.


Housing hot-button issue could tip scales in German election

Irish property analyst Charles Kingston had his first encounter with Germany’s most provocative election issue at a real-estate conference in Berlin last year.

“The hotel as well as our bus were besieged by anticapitalist protesters,” said Kingston, a Dubliner based in Frankfurt. “There were screaming attacks on the bus, we had a police escort, it was quite extraordinary.”

The protest ended in injuries and arrests and made front- page news out of what had until then been a creeping, anecdotal phenomenon in the German capital: rising rents and property prices combined with an increasing displacement of tenants from their inner-city neighbourhoods.

After years as Europe’s most affordable capital, Berlin is experiencing a squeeze.

“It’s very much on people’s minds,” said John Keogh, a property agent based in the city. “People are not moving because they know there is no way they would get an apartment in the same area for a similar rent any more.”

An index compiled by a leading property website suggests prices for new houses and apartments in Berlin rose 10 and 15 per cent respectively last year. It’s a similar story in Germany’s more expensive cities: second-hand houses in Cologne and Munich are up 9 and 14 per cent respectively in the last year, with further price rises forecast this year.

According to a public television poll, some 38 per cent of Germans say the housing squeeze is their greatest concern in the forthcoming election. The opposition Social Democrats and Greens have promised that if elected they will introduce a cap to prevent new rents rising more than 10 per cent above the existing area average.
Rent-cap bandwagon
Chancellor Angela Merkel’s ruling Christian Democratic Union, after abolishing upward limits on new rents last May, have also jumped on the rent-cap bandwagon.

Driving the rise in German property prices, analysts say, are the direct and indirect effects of the euro crisis. Wealthy foreign investors, particularly in southern crisis countries, have found German bricks and mortar a safe haven in uncertain economic times.

Historically low interest rates, a side-effect of the crisis, have also attracted not only German investors anxious to find a better deal for their savings but also people who now find the prospect of a fixed-rate mortgage more attractive than free-market rents.

The demand for property – and for returns on investment – has in turn sparked a visible wave of investment and gentrification of inner-city neighbourhoods.

Bundesbank executive board member Andreas Dombret said in a recent interview that “one cannot talk of a property bubble” in Germany, but he said the central bank was watching closely, and with concern, the effect of cheap money on urban property markets that have already seen an average 20 per cent jump in prices in just three years.

Charles Kingston, head of property consultancy Refire, says the spike is visible in Berlin and in a sweeping curve from Hamburg in the northwest, through the prosperous western Rhine-Ruhr cities such as Cologne and Düsseldorf, and down to Munich in the south.

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