Germany slips in world business rankings

Germany may be Europe’s biggest economy but it is only the continent’s eighth best place to do business. It’s easier to start a firm in Iran or Tajikistan than Germany, according to the World Bank.

The Doing Business 2015 report placed Germany at 14th in the world for ease of doing business, a fall of one place from its rank last year.

Germany was easily outstripped by northern neighbour Denmark, which placed fourth in the table to become the best-performing country in Europe.

The top three spots were taken by Singapore, New Zealand and Hong Kong respectively.

Other top-ten European countries were Norway, the UK and Finland in places six, eight and nine respectively.

The World Bank report analyzed how easy or difficult it was to carry out different tasks needed to start or operate a business.

They included registering a new company and buying property, construction, energy costs, availability of credit, paying tax, enforcing contract law and trading across borders.

Germany was dragged down by poor scores in certain areas. Out of the 189 countries ranked, it was placed 114th for ease of starting a business, a fall of 11 places against the previous year.

The analysts found that it took two weeks to go through all the bureaucracy needed to found a company.

That compared badly with an average of just nine days in the club of advanced economies which form the the Organization for Economic Co-operation and Development (OECD).

The costs for starting up a business in Germany were also more than double the OECD average.

And the country was in 89th position for registering property, having slipped nine places since 2013.

It took 40 days to register a German property, compared with 24 days across the OECD, while the cost in taxes and fees was 2.5 percentage points higher than the average at 6.7 percent of the property’s value.

World Bank officials put Germany in 68th place for ease of paying taxes, finding that it took companies an average of 218 hours per year to deal with taxes and that the government took in an average of 48.8 percent of profits.

The news came on the same day that researchers at the Centre for European Economic Research in Mannheim published their 2014 Innovation Index, finding that Germany remained in sixth place overall.

But the country lost ground in the ranking of economic innovation, in which it slipped from third to fifth place…..(READ  FULL ARTICLE HERE)

Location Is of Prime Importance When You Consider Berlin Real Estate

Location matters when it comes to buying property in Berlin or investing in it. This can be gauged from news item about the Berlin Wall and the area once occupied by it. Ever since the Wall came down, the area known infamously as the “death strip” is where people are ready to pay high prices for property. There is history here on this strip and memories that go back a long way.

Berlin is about a rich past, a culture all its own and a lifestyle that sets it apart from other metros, which is why locations matter so much. If development along with Wall areas is of recent origin and attracts a premium then there are other properties in specific locations that predate the War and have an old world charm. These properties in Mitte or Charlottenburg-Wilmersdorf as well as Grunewald are the cream of Berlin real estate because they are becoming increasingly difficult to purchase and buyers are ready to pay higher than market prices. Grunewald, Mitte, Friedrichshain-Kreuzberg, Prenzlauer Berg and Charlottenburg-Wilmersdorf are locations where property attracts high prices. Areas such as Lichtenberg, Reinickendorf, Spandau, and Marzahn-Hellersdorf cost half as much. Properties in Pankow and Steglitz-Zehlendorf sit in the middle.

It is not just history and the past that impact property prices. Frtiz Lang filed properties in Metropol Park for his movie Metropolis. These properties are much sought after by film aficionados who are willing to pay higher than current market prices for a piece of nostalgia. The same building served as the Karl Marx Academy.

These are special cases. In general investors wishing to invest in premium properties would do well to head south of Torstrasse and look for properties around Hackescher Markt and Spandauer Vorstadt. When people talk of upmarket areas of Berlin Mitte invariably turns up in the conversation and in Mitte itself Rosenthaler Vorstadt and Oranienburger Vorstadt, though not in Torstrasse, still command good prices. Arkona Platz, Bergstrasse, Ackerstrasse and Gartenstrasse are some of the sought after residential locations in Mitte. Mitte blends in with Prenzlauer Berg around the Teuteborger Platz and this is another area investors can target. In Prenzlauer Berg itself Helholtz Platz, Anton Platz and Kollwitz Platz are considered worthwhile investment areas. Move off to Friedrichshain and the specific locations here are Rummelsburg Bucht, Boxhagener Platz and Simondach Kiez. Treptow East offers Karl Kunger Kiez as a property investment target. Charlottenburg claims Savigny Platz, Friedbergstrasse, the most famous Ku’damm and Westend as worthy locations.

These are but a few of the most worthwhile locations that command high prices whether investors wish to buy now or sell off at some point in the future. Prices of berlin real estate are high but are yet to level off in comparison to prices prevailing in Munich, Frankfurt, Rome and London. Getting hold of property in any of the above areas is not an easy task and investors must also consider future returns so it takes insights to make a considered decision. This is where a Berlin realtor helps.

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Munich and Hamburg head German apartment returns

In the first six months of the year, Munich and Hamburg apartments fetched the highest prices at up to €16,000 per square metre, closely followed by Berlin, at €15,000, says top agent, Engel & Völkers

Apartments in prime areas of Munich and Hamburg have reached the highest value per square metre in Germany, just ahead of Berlin, where prices are set to rise further, boosted by international demand, says a leading global agent.

Unique homes in sought-after areas can command even more, according to the Market Report on Residential Property in Germany 2014/2015 from Engel & Völkers.

Board Member, Kai Enders, says, “We are witnessing the highest prices for apartments in the cities of Munich, Hamburg, Berlin, Frankfurt, Cologne, Stuttgart and Düsseldorf.”

From January-June 2014, up to €16,000 per square metre were paid for freehold apartments at prime addresses in Munich and Hamburg, closely followed by Berlin at €15,000 per square metre, although the capital had the highest Top 10 revenue growth at 16.4%.

Detached and semi-detached properties are commanding up to €13million in prime areas of Munich. In the smaller city of Starnberg, the high is at €10million, Baden-Baden €5.5million and Bad Homburg €5million.

“In all locations surveyed, unique homes in the most sought-after premises were sold for sums far in excess of the price highs quoted.”

The growing number of households and the influx of new residents in German cities will result in a continuing rise in demand in the medium term for luxury properties and holiday homes.

A further rise in sale prices for residential properties is expected in more than half of the locations surveyed. “This will not be as strong as in previous years however. We are anticipating a rise in prices in the rental segment, in university towns and cities such as Aachen, Nuremberg, Leipzig and Jena in particular,” says Mr Enders.

“In Berlin too, the top of the market has not yet been reached, with prices still relatively moderate in comparison to Munich and Hamburg.

“This is attracting international investors, in particular, to the capital. The demand for residential property in Berlin is high, especially in the premium segment. There’s also potential for price rises here.”

The demand for residential property in Germany remains high in many of the major cities and university towns, as well as in smaller affluent locations with a high level of purchasing power and desirable holiday destinations.

The report, which is written in German, provides a comprehensive overview of the current market and prices for detached and semi-detached homes, freehold apartments and rental properties in 60 different locations.

The top position, as in the previous year’s ranking, was achieved by Hamburg at €1.315billion, followed by Berlin at €1.159billion.

The high prices for residential property in smaller, prosperous locations are reflected in the relatively high positions for these towns in the ranking list for transaction volume in 2013.

For detached and semi-detached properties values, Bad Homburg reached 26th place with €107.9million, ahead of major cities including Dresden and Leipzig. Baden-Baden is in 34th at €60.8million with Starnberg, the smallest location surveyed with around 23,000 residents, coming 38th at €53.9million.

The decreasing size of households and the growing need for residential property at central addresses is ensuring that demand remains high. This is being reinforced by the low-interest policies pursued by the European Central Bank, says Engel & Völkers.

Whilst the number of building permits granted has been declining, the construction of some 266,000 apartments was granted in 2013 – marking a 10-year high.

“This rise in building activity in sought-after locations will not, however, result in any noticeable alleviation on the housing market in the short term, in view of growing population numbers,” says Mr  Enders.

The strong demand for prime property and limited options is having a knock-on good and average residential addresses, as buyers turn to them as investment alternatives.

In the city of Essen, for example, the lowest end of the price bracket for detached and semidetached homes at good addresses has risen.

University towns and cities, including Kassel and Mainz, are represented in particularly high numbers among the up-and-coming locations in the market report. Engel & Völkers also sees a potential in the cities of Dresden, Leipzig and Jena, in eastern Germany. This is due to population growth and a lack of supply of prime property.

Nuremberg and Hanover are also witnessing an increasing shortage in available homes and rising prices.

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Berlin gets a less glamorous mayor with focus on economy

The German capital will replace its party-loving mayor Klaus Wowereit with little-known politician Michael Mueller, the city’s Social Democrats (SPD) decided in a vote on Saturday.

Wowereit, famous for describing Berlin as “poor but sexy”, announced in August that he would quit in December, two years before the end of his term. Since then three SPD candidates have been jostling for support.

In a vote of Berlin’s Social Democrats, Mueller, won 59.1 percent, unexpectedly avoiding a run-off vote. The conservative Christian Democrats (CDU), who share power with the SPD in the city state, have said they will back the winner of the SPD vote.

The city, which was until 1989 the frontline of the Cold War, has plenty of challenges awaiting the 49-year-old bespectacled senator for development and environment.

A top priority will be finishing the new international airport, he has said. The project is five years behind schedule and is running at twice the original budget. The delays and cost overruns have hurt Germany’s reputation for efficiency.

SPD Chairman Sigmar Gabriel said Mueller would continue the work of Wowereit, who championed tolerance, while setting his own tone.

“Under his leadership social justice and economic growth will be measures of political action,” said Gabriel.

Mueller, who was born in Berlin and is a printer by profession, has a reputation within his party for being something of a dry politician.

He acknowledged as much himself in a light-hearted way during the campaign for mayor, saying: “I know there is room for improvement in the glamour factor.”

Mueller has vowed to continue efforts to cut the city’s debt which is almost twice the national average on a per head basis.

Almost 25 years since the Berlin Wall fell, many parts of the city still look like a building site. Its schools ranked bottom in a recent federal table and some 17 percent of residents live on welfare.

It generates just 4 percent of German output but Berlin’s economy is growing faster than the German average. It has experienced a property boom in the last few years and has a lively Internet start-up scene.

Senior Berlin SPD members Jan Stoess and Raed Saleh had stood against Mueller but won only 20.9 percent and 18.7 percent of the vote respectively.

Wowereit became a national celebrity by coming out as gay during his first mayoral election. He was popular in the capital and was once seen as a possible leader of the SPD or candidate for chancellor. But a perceived lack of gravitas and the airport scandal put paid to any such ambitions.

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German Property Bubble Inflates in Cities

Germany, the Eurozone’s economic powerhouse has seen a massive increase in Germans from rural settings and foreign investors flocking to the cities for property bargains.

The financial capital of Frankfurt; Munich with its famous beer gardens and proximity to the Alps and Stuttgart, the home of Mercedes and Porsche are becoming increasingly attractive as places to live and work.

Property prices have responded to the huge increase in demand and have begun to spiral, driven largely by foreign investors searching for attractive rental yields.

Patrick Armstrong from Plurimi Global Macro Fund said, “Near zero interest rates in the Eurozone make sense for the region but not for Germany. The economy has been relatively strong and the interest rate policy is disjointed from economic reality“.

With 10-year Bund yields at 1%, free money will have to flow towards property at some point. Rental yields of 4% to 5% are attractive with current interest rates and German property is the least expensive per square meter in Western Europe.

According to research, the most expensive properties in Germany are found in Munich (an average €4,800m2). Berlin is relatively cheap at an average cost of €2,930m2, while Frankfurt properties will set you back an average €3,400m2.

Compare that with the average square meter price of £8,900 (€11,120) in London’s Westminster and Germany is a definite bargain.

However, it is Germany’s capital that is showing the highest growth in values. Prices of apartments in the trendiest part of Berlin have seen a 40% increase since 2007, while they have grown by an equally impressive 25% to 30% in popular cities like Munich, Hamburg and Frankfurt.

Germany’s Bundesbank has recently voiced concern over the health of Germany’s property market saying that “there is an increasing risk of a housing bubble in Germany”. It also warned that certain cities showed prices that were overvalued by up to 25%.

The stability of Germany’s economy provides attractive support to foreign investors in its property market. In terms of the rental market, Germans famously favours tenancy over home-ownership and the combination of a stable employment market together with rising incomes ensures consistent demand for centrally located rental properties.

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Germany takes aim at estate agents as rents rise

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A German government seeking to address mounting public concern about rising rents has taken aim at a popular villain: estate agents.

For decades, the nation’s tenants have had the dubious privilege of paying estate agents’ commissions that can amount to as much as 10 weeks of their rent. But on Wednesday, Chancellor Angela Merkel’s government did away with the widely criticised practice by introducing a law that will oblige the party hiring the agents – typically the landlord – to foot the bill….(Full Story)