Residential Property Investments Reach €6.8 Billion In Germany

Residential property investments are booming in Germany, with €6.8 Billion worth of transactions already made in the first half of FY 2014. Q1 of 2014 recorded investments of €4.9 Billion, €1.13 Billion more than the first quarter of last year. This was primarily due to the effect of three transactions, which include Vitus Group’s sale of 30,000 units to Deutsche Annington for €1.4 Billion, the purchase of 11,500 units of the Dewag Portfolio worth €1 billion, and Buwog’s (Immofinanz Group) purchase of the DGAG Portfolio worth €900 Million. These three investments amount to nearly half of the total investments made in the sector in the first half of 2014.

Prime markets lose sheen, show reduced investor activity

Investors are now targeting regional cities in Germany for residential investments over primary cities. The country’s top six metropolitan cities are Berlin, Hamburg, Cologne, Düsseldorf, Frankfurt and Munich, all of which seem to have become less attractive to residential property investors. 22 percent of the investments were made in Berlin, Dusseldorf and Munich. The largest volume of investments were recorded in Kiel (approx. 15,100 transacted units), Bremen (approx. 10,200 units) and Monchengladbach (approx. 6,100 units).

These figures imply that investors are now targeting regional cities which are lucrative alternatives to the major cities of the country. The trend can be attributed to rising levels of competition among investors. Markets in the larger cities of Germany have already stagnated and rising prices in these big cities are forcing investors to look for cheaper options that offer greater ROI. The government has also taken up an initiative to cap rental increases, which is likely to be implemented in prime cities as well.

Private equity firms boost transaction sales volume

As the prices increase, lack of investment opportunities in the main markets and changes in government policies are leading investors to smaller markets, private equity firms stand to benefit. Since moving into secondary markets means reduced risk aversion to gain more ROI, the firms are trying to become the most active set of sellers. Together, they accounted for €1.7 billion of the total transactions made, while REITs and listed property businesses were the largest purchasers – approx. €3.8 billion worth of transactions were made by them.

This can only mean two things, first that domestic buyers are looking to own much of the residential properties in Germany, and second that an increasing amount of stock in residential property investments is registered and can be traded on the stock exchange. Savills Germany believes the trend will continue throughout the year. Investment figures in terms of nationality were as follows, Germans stood as the largest investors, accounting for 75 percent and 33 percent of buying and selling respectively. Austrian buyers were 16 percent and UK and Swedish buyers both, were at two percent. The second most active sellers after the Germans were Americans, who were at 32 percent.

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Berlin travel guide: It is the perfect time to visit the German capital

In November the real partying starts as the city marks the 25th anniversary of the fall of the Berlin Wall which cut the German city in two for 28 years

The legroom was tight and the top speed of 40kph was never going to thrill. But my luminous Trabant was the coolest motor ever.

Once you’re in a car with a cerise pink roof and bright stripes, the stench is the last thing on your mind – just avoiding the giggling tourists taking pictures of you is enough.

The Trabant, or Trabi, was made from reinforced plastic with a lawnmower-like engine and became a stark, fume-belching symbol of the Eastern Block.

They were later banned because of pollution but tourists can still have a go on a hilarious 70-minute Trabi Safari ( , from £27pp, U15s free).

My sons Harvey, 13, and Max, 11, picked out the cerise-and-stripes number and our guide, Axel, gave me a quick lesson on the gearstick, a lever which you move up, down, back and forth, then led our convoy on an entertaining tour via a one-way radio.

The Trabi Safari is a novel way to experience Berlin’s uniqueness and the city’s sense of fun.

In November the real partying starts as the city marks the 25th anniversary of the fall of the Wall which cut the German city in two for 28 years.

As the Wall came down, I’d dashed over to join Berlin for the celebrations myself – and to chisel out my own bit of Communist concrete.

So my latest visit – with my husband and our two boys – was particularly poignant. We visited the remains of Checkpoint Charlie, once a main East-West crossing point.

Westerners used to be searched by East German guards before passing through – now mock guards demand tips for posing for pictures.

The boys enjoyed reading about East Berliners’ escape attempts, from hidden compartments in cars to underground tunnels, at Haus Am Checkpoint Charlie (adults £10, children £5.50).

Better still was the free Topography of Terror ( ), an open-air exhibition in what looks like a long bus shelter. It’s a simple crash course on the evils of Nazism.

But there’s more to Berlin than a mournful history……(read more here)

After decades of disappointment, Berlin’s economy looks up

It has taken a quarter of a century longer than hoped but Berlin is now glimpsing the prosperity that was supposed to land in its lap after the Wall came down in 1989 and it was restored as the jubilant capital of Germany.

Twenty five years after reunification, Berlin remains a work in progress: with higher unemployment and lower income than the likes of Frankfurt and Hamburg, it will take years to catch up.

But its economy is growing faster than the German average and there are signs that Berlin is no longer a basket-case whose welfare dependency, lack of industry, poor infrastructure, high debts and pride at being “poor but sexy” – as the current mayor once said – make other Germans roll their eyes in despair.

Berlin does not dominate decentralized, federal Germany the way London or Paris do in their own countries. Generating just 4 percent of output, it cannot rival Bavaria or Baden-Wuerttemburg in manufacturing or Frankfurt for finance. Nor is Berlin’s start-up scene likely to challenge Silicon Valley; but it can join the digital dots.

That chimes with Chancellor Angela Merkel’s vision of the German economy keeping ahead of competitors in future by what she calls a “fusion of classic industry with the digital world”.

“We won’t be making cars like Stuttgart or Wolfsburg – but the bases of the technology,” said the city’s economy minister, Cornelia Yzer, referring to the headquarters of the German auto giants Daimler and Volkswagen.

Berlin is not devoid of manufacturing: Siemens makes gas turbines here and BMW makes motorbikes. But it has no DAX-30 blue-chip of its own and industry makes up just a tenth of economic activity – half the national level.

The real business buzz is around its universities, whose scientific alumni include Albert Einstein and Max Planck.

Deutsche Telekom’s Innovation Laboratories set up at Berlin’s Technical University in 2005 now have offshoots in Silicon Valley and Israel. CEO Tim Hoettges, visiting the labs, called them “sensors” keeping Telekom up with new developments.

Since Berlin began focusing on the digital economy in 2005 its information and communication sector has grown 58 percent in gross added value, said Hertmut Mertens, chief economist at the Investitionsbank Berlin (IBB), which finances local business.

In the pharmaceuticals sector, Berlin-Chemie which is owned by Italy’s Menarini, cites the scientific talent for its latest expansion plans; General Electric, breaking ground on a new Berlin site last year, also cited the universities and R&D, plus the “proximity to the political decision-making”.


There is optimism in the air: shopping centers are going up on the former ‘no-mans land’ by the Wall to cater to the boom in tourism, the public transport network has made its first profit and the population is growing fast, though at 3.4 million it is still less than in the city’s early 20th century heyday.

“Berliners are benefiting from the persistently good economic situation, higher employment in the city and the rise in real wages,” said Frank Bach at the Berliner Sparkasse savings bank, reporting a rise in summer-holiday spending plans.

“We are definitely not as poor as we were in the past,” said Yzer, predicting 2 percent economic growth this year, after 1.7 percent in 2013 – when Germany overall grew 0.4 percent – and above-average growth repeatedly since 2005.

It has been a long road to recovery. Economic activity that survived Allied bombing or Soviet expropriation was subsidized during the Cold War on both sides of the Wall, to prop up the divided and isolated city for strategic reasons.

When the Wall fell, many companies collapsed in the face of competition or were bought out by westerners. “Half of the jobs in industry were destroyed,” said Yzer. Unemployment in Berlin soared to 19 percent by 2005; at 11 percent, it is still way above the national rate of 6.7 percent.

IT and biotech are no quick fix, employing graduates rather than the long-term unemployed. But the boom in population and tourism may help some of the 200,000 unemployed find work.

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Berlin’s Not as Cool as You Think

Cushy is encroaching on cool in Berlin.

From lobbyists and lawyers to shopping malls and luxury condominiums, signs are everywhere that Germany’s biggest city is developing into a mature capital from its post-Cold War adolescence. With plenty of neighborhoods still to be developed, the gentrification that’s prompted comparisons to London and New York still has legs.

The transformation isn’t driven by just artists, fashion designers and software programmers. Well-paid jobs spawned by the federal government have been increasing at an above-average pace. Add employers such as online retailer Zalando SE and affluence is in vogue.

“Take all those Internet startups -– these are people who want to make ideas work and turn them into money,” said Reinhard Messenboeck, 42, the head of Boston Consulting Group’s Berlin office. “That’s a new zeitgeist. It’s like investment banking, just more socially acceptable. It’s very different compared to three, four or five years ago.”

Mayor Klaus Wowereit coined the capital’s catchphrase in 2003 when he called Berlin “poor but sexy.” In the years that followed, the number of jobs in accounting, corporate consulting, public relations and advertising increased by 27 percent, more than double the growth in total employment, state data for 2006 to 2011 show.

Source: Archlab via Bloomberg

In March a 330-square-meter (3,550 square feet) penthouse in the high-end Lux apartment… Read More

It’s the latest shift for a city that went from Prussian backwater to Nazi capital in the 1930s, then languished as a divided, decimated haunt until the Berlin Wall came down 25 years ago. Its unique history and relatively low rents — 45 percent of the median in Munich — mean Berlin is still a draw.

Poor Is Past

“We’re doing what every other city does: trying to get high-end jobs,” said Cornelia Yzer, a former drug-industry lobbyist who heads the city’s economic development department. “Poor — that’s the past,” though Berlin “is still sexy.”

The nexus of government and business is a boon for Nicole Alexander, who edits Politik und Kommunikation, a glossy monthly founded in 2002 that tracks everything from campaign strategists and newly created public-affairs jobs to powerful lobbyists and the lives of legislative staffers. By the magazine’s count, the number of lobbying groups in Berlin doubled to 126 last year from 63 in 2004.

“Berlin had a lot of catching up to do,” Alexander says over coffee at Cafe Einstein, a hangout for politicians in formerly communist East Berlin. “It’ll never be like London or Paris — Germany is too federalized for that — but it’s heading in the direction of a real capital that attracts a lot of what comes with a federal government.”

Prenzlauer Berg

With 700 lawmakers, thousands of government employees and an estimated 5,000 lobbyists in town, that trend is pumping up incomes in eastern neighborhoods such as Prenzlauer Berg. A hipster area of rundown tenements in the 1990s, the district is now home to Deputy Labor Minister Joerg Asmussen, the former European Central Bank Executive Board member, and Christoph Heusgen, Chancellor Angela Merkel’s national security adviser.

A newly built apartment in Berlin is 60 percent cheaper on average than in London and one-third the cost of a similar place in Paris, according to CBRE Group Inc., a Los Angeles-based property company.

In the influence game, businesses that relied on trade groups are hiring in-house lobbyists, Alexander said. Microsoft Corp. (MSFT) and Google Inc. have set up offices on Unter den Linden, the boulevard that heads east from the Brandenburg Gate.

Lobbyist Action

Hans-Christian Maass, Volkswagen AG (VOW)’s representative in Berlin, says his job includes making sure the government hears the voice of the world’s second-biggest carmaker. A former spokesman for Christian Democratic cabinet ministers, he knows Merkel from her earliest days in politics after the fall of the Berlin Wall in 1989.

“If the Chinese president comes to Berlin, we have to be right there,” he said. “China is our most important foreign market. We sold more than 3 million vehicles there in 2013.”

Interest groups from the Association of German Discotheques and Dance Establishments to the Federation of German Industries, which represents 100,000 companies, also have steadily expanded.

“Clearly, a class of people with purchasing power has arrived,” Alexander said. “They get older, they have children. People are getting settled.”

That grates on residents who see the city of 3.5 million losing its soul as grassy squares make way for office buildings and dance clubs turn into tourist traps.

Gentrification’s Discontents

Andrej Holm, a sociologist at Berlin’s Humboldt University, channels dissent on his “gentrification blog,” which features video of a building demolition and protests evictions. He’s written a book called “Rent Insanity: Why Housing Gets Ever More Expensive and Who Profits.”

His antagonists are people such as Alberto Martinez, one of the developers behind the high-end Lux apartment complex three blocks from the Brandenburg Gate, where a 330-square-meter (3,550 square feet) penthouse sold for 3.4 million euros ($4.6 million) in March.

“Two years ago, people were telling me you could never sell an apartment at that price,” Martinez said. Now, buyers “want their bedroom to have its own bathroom. The way of living is getting closer to European standards.”

Real gross domestic product in Berlin, which is also a state, increased 6.2 percent between 2009 and 2013, compared with a national average of 3.3 percent, and job growth last year was the strongest of any German state, according to the Federal Statistics Office.

Job Growth

While that helped push unemployment to 20-year lows this year, the jobless rate was still 11 percent in June, compared with 6.5 percent nationally and 3.5 percent in Bavaria, home to companies such as Allianz AG (AGFSECS), Europe’s biggest insurer, and auto maker Bayerische Motoren Werke AG.

Fifteen years of government presence after East and West Germany reunited haven’t healed the loss of Berlin’s industrial base. Its biggest employer is government owned railroad Deutsche Bahn AG, according to the local IHK chamber of commerce, and the capital has the most welfare recipients among German states.

“We still need years of above-average growth to catch up with other parts of Germany,” said Yzer, the economic development official. “There’s nothing wrong with wanting your city to be prosperous.”

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Berlin Home-Price Gains Beat Rents as Demand Increases

Advertised prices for Berlin apartments rose more than twice as fast as rents in June as housing demand in Germany’s capital outpaced construction and low borrowing costs encouraged buyers.

An index measuring asking prices for apartments in the city in June rose 15.6 points from a year earlier to 161, while a rent index rose 7 points to 140.7, according to data compiled by online broker Immobilien Scout GmbH.

“It would be misleading to attribute this to the start of a bubble,” Michael Kiefer, Immobilien Scout’s chief analyst, said in a statement today. “Other factors, led by demand, play an important role.”

More people are buying homes in Berlin as the city attracts professionals with higher incomes and investors take advantage of low interest rates. At the same time, legislators plan to introduce new rules to keep rents in check.

Officials in cities including Hamburg, Berlin and Munich plan to make it unlawful to raise rents in certain neighborhoods by more than 15 percent over a three-year period, officials said last year.

Berlin posted the strongest price gain among Germany’s five biggest cities, followed by Munich, which had a 12.2-point increase. Across Germany, prices and rents rose more slowly, both measures gaining 5.3 points, Immobilien Scout said.

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German investment market for commercial property remains on a growth course

Growth on the German investment market for commercial property continued unabated in the second quarter of 2014, according to an analysis conducted by real estate consultancy NAI apollo group. “Due to a transaction volume of around €7.1 billion in the period from April to June, the result for the first half of the year amounts to €17.1 billion,” says Dr. Konrad Kanzler, Head of Research at the NAI apollo group. “This means that 32.3 % more capital was invested in commercial property compared to the first half of 2013.”

The office asset class accounted for a 41.4 % share of the total volume in the first half of the year, equating to €7.1 billion, which was 21.6 % higher year-on-year (H1 2013: €5.8 billion). The second most popular asset class, retail, registered investments of €5.0 billion (29.3 %), representing an increase of 15.7 % compared to the previous year. The strongest growth was again recorded in the warehouse / logistics property segment. “With a volume of €1.9 billion, this segment increased its share to 11.3 %, which represents a 67.9 % rise compared to the previous year. Thus within only the first six months of this year this segment has already surpassed the annual average volume of €1.4 billion for the last five years. This therefore opens up the prospect of a new record year,” says Kanzler. Property categorised under “other uses” accounted for around €3.0 billion or 18.0 %, of which almost half was generated by hotel properties.

Portfolio deals in particular contributed to the very good performance of the investment market. Their share increased from 25.1 % in the first half of 2013 to 35.7 %, with €6.1 billion (+88.2 %) being invested in portfolios. The largest transactions in the second quarter of 2014 included the sale of 67 German hotels to Accor for €420 million. In addition, Pramerica Real Estate Investors and the Third Swedish National Pension Fund (AP3) acquired 83 German retail properties in two packages for a total of €265 million. Because of the portfolio deals and the sales of large properties, deals that fell into the “€100 million-€500 million” category accounted for a volume of €6.4 billion (37.5 %), which was therefore 37.4 % higher in absolute terms compared to the previous year. Large deals (>€500 million) accounted for a share of 9.0 % or a volume of €1.5 billion.

German investors are the most active players on the commercial property investment market, accounting for 52.3 % of purchases and 54.8 % of sales. At the same time, the volume invested by domestic investors was almost unchanged at €9.0 billion (H1 2013: €8.8 billion). “The United States is in second place in terms of investor origin, with €2.7 billion or 15.8 % of the invested capital originating from here. British investors carried out investments with a volume of €1.2 billion,” says Lenny Lemler, Co-Head of Investment at NAI apollo group. French investors were named as the biggest net investors (around €685 million), in part because of the purchase of the hotel portfolio by Accor.

“Open ended funds / special funds” are responsible for the highest share of transactions after they increased their purchases by 47.2 % compared to last year to a total of €4.8 billion. “Private equity funds / opportunity funds” represent the second-strongest investor group, with a share of 16.4 % or €2.8 billion. These investors therefore more than doubled their invested capital compared to last year. As well as besides “open ended funds / special funds”, “project developers / building contractors” were active on the seller side and sold properties for €2.9 billion (17.0 % share). On balance, “private investors / family offices” also count among the biggest net buyers with around €910 million.

“On the German investment market for commercial property, strong demand caused a drop in the prime yield for the office asset class across all top 5 markets in the last three months,” says Lemler. Apart from Frankfurt am Main, where the yield declined by 5 basis points to 4.65 %, all markets registered a decline compression of 10 basis points (Berlin: 4.65 %; Düsseldorf: 4.70 %; Hamburg: 4.55 %; Munich: 4.30 %). In the retail segment, the yield declined by 5 basis points in Frankfurt and Düsseldorf to 4.20 % respectively, as well as in Berlin to 4.35 % (Hamburg: 4.15 %; Munich: 3.95 %). Berlin and Munich registered a reduction in the prime yield for logistics properties to 6.85 % and 6.40 % respectively (Frankfurt: 6.40 %; Düsseldorf: 6.70 %; Hamburg: 6.60 %).

“Throughout the rest of this year, demand is expected to remain high from “open ended funds / special funds” and “private equity funds / opportunity funds” that have to invest acquired capital promptly,” says Lemler. In addition, because of the sustained long-term period of low interest rates on the bond market “insurers / pension funds” will also invest more in property either directly or indirectly through special fund vehicles in order to achieve their target returns. Overall, the investment market is showing clear evidence of a stronger move towards secondary locations on one hand and core-plus properties on the other.

“The robust development of the German economy with projected GDP growth of 2.0 % in 2014 and 2.5 % in 2015, combined with the decision by the European Central Bank to reduce the base rate to 0.15 %, encourage the demand for property investments in Germany. Thus a further increase in investment activity is very much on the cards for the second half of the year,” says Kanzler. For the year as a whole, the NAI apollo group expects a transaction volume of up to €40 billion.

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Coming to stay: value investors in Germany

They are called Summit Germany, Dream Global or Thor Equities: international real estate investors with a long-term horizon who hold the German market in especially high esteem. We have looked for the reasons of this persisting trend.

Germany has weathered the crisis well
“Germany’s economy was less impacted by the financial crisis compared to other European countries”, the managers of Summit Germany told us. “In Germany’s six main real estate hubs – Berlin, Dusseldorf, Frankfurt am Main, Hamburg, Munich and Stuttgart – rental demand is rising. We expect to see a large surge in demand around mid-2014”, they added.

Investors’ search for value investments is becoming easier as many inner-city quarters of important German cities are currently in the stage of redevelopment. Dusseldorf’s city, for example, gets a whole new layout through the Kö-Bogen area, Frankfurt’s historic old city center is being renovated and in Cologne, new residential and office space is being built on the former grounds of the Gerling insurance company.

Institutional investors aim at increasing their real estate share
Additionally, many large institutional investors have a high backlog when it comes to real estate investment; many of them want to increase the real estate share in their portfolios. This includes large state-own funds, who also show a renewed interest in Germany, as the Norges Bank IM fund confirmed last month. This pumps enough liquidity into the market to manage also larger acquisitions.

BNP Paribas Real Estate lately highlighted the large increase in portfolio transactions in Germany, which also makes it possible to find buyers for large-volume objects such as many of the projects around Potsdamer Platz in the heart of Berlin. Potsdamer Platz has completely changed since the Berlin wall came down and is seen as one of the examples in Germany were sustainability, extraordinary architecture and an excellent work-life-balance have come together into one place.

“Berlin is a very diverse city with huge development potential”, said Matthias Leube, Regional Head of Asset Management Germany at AXA Real Estate. “However, ignoring location within Berlin can be even more of a problem than elsewhere in Germany, due to the availability of land in the city. As sectors we like office and retail in Berlin”, he added.

No new bubble in sight
Another important factor at the moment is the low risk of a bubble in the German real estate market. While the IMF is already warning of potential overheating in the housing markets of Belgium, Scandinavia or Australia, it definitely excluded markets such as Germany from its warning. Also the Bundebank and the Committee of German surveyors share the relatively relaxed view of the IMF.

“Although prices have been rising in the main cities, particularly in residential, in our view the commercial market is only just starting to recover due to new availability of finance”, the managers of Summit Germany confirmed. Also AXA Real Estate’s Matthias Leube cited the financing side as a positive factor: “The financing environment has significantly improved and obviously also helps the return side.”

Risk appetite is increasing again
Whereas large foreign investors still favor prime locations in Germany, as confirmed by their latest statements, smaller players and investors from Germany are already looking for non-prime locations. “Up until last year, investors were very much focused on prime investments”, confrims Matthias Leube. “This has slightly changed. Today, the need for safety is gradually becoming less of an issue – this was one of the main drivers for people investing in Germany in the wake of the crisis. Still, Germany is a defensive play, mostly due to macroeconomic reasons.”

Nevertheless, risk appetite has considerably increased, adds Leube: “We see a lot of investment activity in Germany at the moment – next to the security issue that some investors still have. People are now moving out of the standard three to the seven largest German cities – depending on their investment focus – to smaller locations and are generally going up the risk curve.”

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Welcome to Berlin’s Silicon Allee, Germany’s new startup hub

The low thrum of ambient electronica music pulses through a four-floor walkup in the hip central neighborhood of Prenzlauerberg as dozens of young programmers stick on nametags and swap stories.

Welcome to what locals are calling Germany’s Silicon Allee, where the code junkies have come for a Startup Grind event.

It’s a pretty typical meet-and-geek. Software code is the primary topic of conversation. One young man with a ponytail shouts on his cell phone as another in a hoodie furtively dives into a spread of canapes before the buffet table is officially open. There are only a handful of women.

The big news is that this kind of event is taking place in the German capital almost every night.

Despite cheap rents and a reputation as one of the world’s coolest cities, Berlin has so far failed to live up to its goal of becoming Europe’s startup hub. But that may finally be changing thanks to a rapid growth in funding, a new drive to attract foreign talent and a burst of interest from industry giants like Google, say insiders like Marco Brenner, who moved here a year ago to found a startup.

“We need to grow some meaningful businesses in Berlin,” he says confidently, looking more like a PR executive dressed in his blazer instead of the usual hoodies or T-shirts. “Then the money will follow.”

Berlin’s startup scene could create as many as 100,000 jobs by 2020, according to a recent report by the global consultancy McKinsey & Co.

Although the city still lags behind competitors like London when it comes to infrastructure — partly because Germany’s conservative investors have long made it difficult to raise capital — the city has some of the right ingredients, including a low cost base and a hip image that helps attract top talent.

Earlier this month, Google unveiled a mammoth new startup incubator known as “Factory,” where veterans from Google for Entrepreneurs and Twitter will mentor company founders.

A 16,000 square foot space carved out of an abandoned brewery that will eventually employ around 500 people, it represents a big vote of confidence from the world’s most successful internet company.

And while German venture capitalists remain more conservative than their counterparts in Silicon Valley, the amount of money available for startups has increased dramatically.

Over the past year, Berlin-based tech startups have raised over $650 million, more than three times the amount generated the previous year and more than six times the amount raised the year before that, according to venture capital database CB Insights.

Founders of some of the city’s more promising startups — such as the audiofile sharing service SoundCloud, the academic social networking company ResearchGate and collaborative video-editing software maker FlavourSys — say Berlin’s shortcomings can sometimes be advantages.

The city’s hip reputation attracts software engineers interested in the intersection of technology and creative projects at the heart of companies like SoundCloud. The lower level of activity here also makes it easier to afford and retain talented people than it would be in more advanced startup hubs.

Starting out here allowed FlavourSys to fly under the radar as the company developed collaborative software that enables television company video editors to work on files simultaneously from different locations.

Even though the company’s target market was always the US — which now accounts for 80 percent of its business — FlavourSys booked the National Geographic channel as its first customer before anyone in the software world had an inkling of what it was doing.

That happened at an industry convention in Las Vegas.

“It was amazing,” said FlavourSys co-founder Marco Stahl on the rooftop of the company’s converted-apartment headquarters. “There were crowds of people, 20, 30, 40 people standing there watching demos. Then National Geographic came along and said, ‘We want to buy this!’”

For a company that two weeks earlier had no website or printed business cards, that was a big deal.

ResearchGate co-founder and CEO Ijad Madisch has a similar story.

Billed somewhat dismissively as “Facebook for scientists,” the company aims to break traditional boundaries that often keep academic research cloistered in ivory towers and exclude scientists from the developing world. When Madisch first came up with the idea six years ago, he found the world-weary capital of academia Boston too jaded to bite.

Berlin was different. When Madisch moved ResearchGate here in 2010, fifteen years after Jeff Bezos had launched Amazon, copycats had attracted programmers and created a nascent ecosystem for e-commerce startups, but little else. However, Madisch says it created a hunger to do something more interesting.

As a result, it was comparatively easy for ResearchGate to attract top developers, doctors and scientists.

“Everyone here is hungry to work on something big,” Madisch says. “That puts Berlin at an advantage to Silicon Valley.”

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Chinese investing big in Berlin

New investors cautioned of complicated laws, taxation

Chinese companies are making big investments in Germany, eyeing the country’s advanced technology and management, a senior Chinese commerce official said.

“The value and the amount of Chinese investment in Germany are both rising quickly,” said Meng Fanzhuang, minister counselor for commerce at the Chinese embassy in Germany.

Embassy figures show that about 2,300 Chinese companies are investing in German industries – such as finance, aviation, telecommunication and machinery – with a total investment of more than $4 billion.

Apart from setting up traditional trading firms, manufacturing bases and service companies, more Chinese investors are building research and development centers, bolstered by Germany’s outstanding talent reserve and technologies, Meng said.

More Chinese investors are trying to make their ventures fit better into the local business environment. For instance, they dispatch a handful of executives to Germany for decision-making, financial management and other essential tasks, and employ local workers to prime the pump, he said.

Meng said the financial crisis that began in 2008 forced some German companies into difficulties – such as financing or finding the company’s successor – to sell out to or team up with foreign companies, including Chinese ones.

Cao Yi, a media officer with Germany Trade and Invest, a promotional agency set up by the German government, said the Chinese government’s support for companies’ outbound investment is an important catalyst for the steadily increasing Chinese investment in Germany.

Chinese enterprises are also eager to expand their turf and create brand-names in the international market, she said.

“Made-in-Germany is a good label for them,” Cao said, adding that Chinese investors also covet the well-trained German workforce.

Hong Gang, executive chairman of Greatview Aseptic Packaging, said the traditional high-caliber training system in Germany guarantees the quality of the labor pool.

“German workers are very prudent; they pay attention not only to the outcome, but also to the process,” he said.

Greatview opened a packaging base in Germany with an investment of 50 million euros ($68 million) in 2011 and added an investment of 33 million euros on a second production line in 2013.

Meng Fanzhuang, minister counselor for commerce at the Chinese embassy in Germany.

However, for newcomers to the country, Meng cautioned that there are always difficulties. He suggested companies fully assess the risks and integrate the investment operation with the company’s overall overseas strategy.

It is also noteworthy that Germany provides preferential policies for companies doing business in eastern Germany and other less-developed areas. Investors can benefit from subsidies through communication with local government, he said.

“I also suggest Chinese companies hire local consultants or law firms because German laws and the taxation system are very complicated and can be a major challenge,” Meng said.

Meanwhile, German direct investment in China, particularly automation, digitalization and environmental protection, has also been booming in recent years.

More than 8,200 German companies have invested an accumulated $20 billion in China, according to the embassy.

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Germany Portugal And Denmark The Eus Most Affordable Housing Markets

The third edition of the prestigious Deloitte Property Index Report recently revealed that Germany, Portugal and Denmark have been identified as the most affordable European residential property markets. The report also identified Israel, Russia, the UK and France as the least affordable markets. According to the report, although the housing prices in the urban areas seem to be increasing, they are following the downward trend in rural areas.

The report takes several factors that have an influence on the development of residential markets into account. Further, the residential property prices have also been compared across selected countries and cities. An international team of Deloitte professionals from the development, mortgage and real estate markets have been instrumental in preparing this comprehensive and informative report.

Property index reveals Europe’s most favorable markets

2013 has been a good year for the residential market in the European Union. Uniformly, all the countries delight in record low interest rates. However, the expenses involved in buying a property along with the housing costs, seems to differ drastically across countries. Taking all the fluctuating differences into account, the latest Property Index has found that Denmark, Germany and Portugal are the most favorable markets for residential investors.

To measure the affordability of housing in these cities and countries, the Deloitte Property Index compared both, the transaction prices of the property and the gross monthly salaries. As per the Property Index, the criterion is the number of the annual gross salaries (in years) required to buy a standard-sized house. Denmark was the most affordable with the least number of gross annual salaries at 2.1 years, while Israel was declared as the least affordable with 12.1 years.

Germany and Portugal follow Denmark as the most affordable markets, at the less than 3.6 years mark. Belgium, the Netherlands, Ireland, Spain and Austria, fall in the range of 3.6 years to 5.6 years and these values are considered standard and relatively affordable rates to own a house. The Czech Republic, Italy, Hungary and Poland fall in the range of 7.2 years upto 7.4 years, making these countries a little less affordable for investors. The highest number of gross annual salaries is needed in France with 7.9 years, the UK with 8.5 years, Russia with 10.4 years and Israel with the highest at 12.1 years.

Investors turn toward Germany, Portugal and Denmark

Residential investors are now turning towards Germany, Portugal and Denmark to invest. According to the report, post recovery of the economy, Germany seems to be the most stable residential market of the three, while Denmark, the least.

The residential market in Denmark has improved compared to 2012 when it hit rock bottom. The slight upturn is a result of the price appreciation in the urban cities of Denmark while the prices in rural areas of Denmark are stagnant or declining. Residential investors today prefer low-risk opportunities and so, investment in German property seems most attractive, given its stability. In the case of Portugal, The report claims that the banks still play a major role in the real estate market, with numerous properties in the balance sheet waiting to be sold.

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