Record number of visitors in Berlin

Tourism keeps booming in Berlin. With 28.7 million overnight stays and 11.9 million visitors in 2014, the numbers have significantly increased compared to the previous year.

Berlin East Side GalleryBerlin East Side Gallery, one of the most popular tourist attractions

The number of overnight stays topped the 28-million mark for the first time, increasing by 6.5 percent compared to 2013. Berlin’s Socail Democrat mayor Michael Müller said at a press conference that 2014 was a record year for the city’s tourism and congress industries. The celebration of the 25th anniversary of the fall of the Berlin Wall attracted many tourists. The reception for the soccer world champions, the “Karneval der Kulturen” urban festival, the Berlin International Film Festival and the Berlin marathon were also major events contributing to the city’s popularity. “Many visitors come to Berlin from Great Britain, Italy and the Netherlands,” said the mayor. Most of the overseas visitors are from the United States – over a million Americans came last year. Müller hopes to reach over 30 million overnight stays this year.

The number of foreign visitors in the German capital has increased sixfold since the beginning of the 1990s. As one of the fastest growing international cities, Berlin has established itself among the three most popular destinations in Europe.

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Germans Give Up Savings Accounts, Invest Into Real Property

Low interest rates are driving Germans to rethink their investments and put their money into real property or future retirement funds.

A new survey revealed that Germans viewed savings accounts as less attractive to increase capital and preferred to invest their money into private houses or future pensions, according to the German “Der Spiegel” magazine.

Only 10% percent of respondents considered savings accounts attractive in comparison to 24% in 2011. 70% of Germans found saving-bank books unattractive, while a half of them completely opposed this way of investment.

The respondents also showed a tendency to put money into riskier forms of investment, such as shares and funds.However, the survey revealed that Germans are far from becoming speculators. 15 percent of respondents prefer to keep their money at home, with majority of respondents willing to invest into real property and pensions.

Germans are not alone in their desire to invest into real assets. Most of 6000 respondents from France, Spain, the UK and the US prefer such type of investment to any others and put their money into private houses and flats.

It is no surprise either, Central Banks in Europe have destroyed any incentive for savers. Zero interest rates provide no capital accumulation, forcing investors into riskier assets.

German portfolio investment volumes reach €26 billion in 2014

Savills latest research on portfolio investment finds that more than €26 billion was invested in German residential and commercial property portfolios during the 12 months from December 2013 to December 2014, 2% higher than that invested in single assets during the same period.

Savills reports that the residential portfolio market has enjoyed the greatest momentum, with the transaction volume growing almost five-fold from approximately €3 billion in 2009 to circa €15 billion last year. The commercial property sector has also seen significant growth in recent months, particularly with regard to office, hotel and logistics property portfolios. Transactions for office portfolios specifically has almost doubled compared to 2013 from €2.5 billion to approximately €4.8 billion.

Property companies and REITs were the most active investor in 2014, accounting for 31% of the overall portfolio transaction volume, followed by private equity funds at 13%. Both groups favoured portfolios last year, investing only 6% and 3% respectively in the single asset market.

Karsten Nemecek, managing director for corporate finance and valuation at Savills, comments: „Private equity investment activity in Germany has been particularly interesting and we have identified three key patterns. First, investment tends to follow more pronounced cycles than the portfolio market as a whole and cycles are shorter. We have also seen that activity tends to be counter-cycle. Recently this has been particularly apparent in the residential sector where funds were active purchasers between 2009 to 2012 and active vendors since that period, opposite to other investors in the market. Lastly, the sector does not appear to be of decisive importance for private equity funds. They do not invest in anyone sector exclusively but rather in all when the time is right.“

Marcus Lemli, head of European investment at Savills, adds: „We have seen strong interest from international investors in portfolio assets accounting for circa 44% since 2009 compared with just 31% in the single-asset market during the same period. One reason for this differential is that portfolio acquisitions allow investors to rapidly secure a significant share of a regional market or to obtain a certain amount of exposure to a national economy.“

Savills notes that there has been a significantly lower average sale price per square meter; €1,700 in 2014 compared to €2,100 in 2013. The firm attributes this to more non-core assets being included as part of the portfolios.

Matthias Pink, associate director of research at Savills, explains: „Since opportunistic investors such as private equity funds are significantly more active in the portfolio segment than in the single-asset market, the proportion of non-core assets changing hands is also significantly higher. The average sale price has fallen consistently since 2011 and particularly during the current year. This indicates that the risk tolerance of investors has continuously risen – a trend that is likely to continue in 2015.“ (SOURCE)

Recovering European real estate markets set to be magnet for investors in 2015

Berlin is expected to be the top European real estate investment market in 2015, followed by Dublin, Madrid, Hamburg and Athens.

Recovering markets like Dublin, Madrid and Athens which were hit by the economic downturn are regarded as being fertile grounds for property investors, according to the latest annual emerging trends report from the Urban Land Institute and PwC.

The report points out that competition for prime assets in Europe’s major real estate markets is leading property investors to continue their move into secondary assets and recovering markets.

It highlights a surge in popularity for real estate investment opportunities in a number of cities that were hit particularly hard during the last market downturn, with dramatic rises in this year’s city rankings for Madrid, up 16 position, Athens up 23 positions, Birmingham up 14 positions, Amsterdam up 17 positions and Lisbon up 17 positions.

Berlin has moved up the rankings from last year, knocking Munich off the top spot for investment prospects in 2015. Historically dominated by domestic buyers, Berlin’s investment climate has now changed as international investors pour capital into the city, the report says. The city is described as a hotspot for media and technology and its young population has helped boost the investment appeal of its residential sector.

Ranked again in second place, Dublin has had another strong year in which investors have jostled for opportunities. There was strong rental growth based on low supply, employment growth and an improving economy. Office rents and values are recovering strongly but still have some way to go before they reach their pre-crisis peak.

Madrid has shot up the rankings for investment prospects and many overseas investors are targeting the city. But whether Spain offers solid, long term business prospects is hotly debated among opportunistic investors, the report points out.

Hamburg has slipped by one place this year, but this is mainly due to investors looking to smaller, less established markets rather than any real decline in the city’s fundamentals, the report explains. International investors are flooding into Hamburg, accounting for half of the €2.4 billion of deals in the first three quarters of 2014. Its growing population means the residential sector is thriving. (Read more….)