Berlin ready to overtake London as Europe’s tech hub

London-based start-ups have achieved a record-high 75% of the $2.2bn raised by UK firms since the beginning of the year, based on data by London & Partners, the Mayor of London’s inward investment company.

This finding follows a significant increase in VC investment in London tech companies, with the number of businesses forecasted to raise to 51,500 by 2025, according to Oxford Economics. Alongside VC investment into early-stage businesses it is important to equally recognise the investments into later-stage start-ups, which highlight the scalability and growth achievable in the London tech industry.

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Real Estate in Germany Growing as Wave of Mergers and Acquisitions Rise

German real estate is seeing a wave of mergers and acquisitions rise with low interest rates offering investors an open window for growth.

Mergers and acquisitions are on the rise in Germany’s real estate segment as industry players look to capitalize on low interest rates and a virtual standstill in property prices. Unlike neighboring countries who are experiencing unsteady growth rates. In a report by Gulf News, Vonivia, the top dog of real estate joined the fray and revealed plans of offering €14 billion or $16 billion for its nemesis Deutsche Wohnen after its failed bid to acquire LEG Immobilien.

German real estate market in takeover surge

Germany’s real estate sector is riding a wave of mergers and acquisitions, as market players seek to take advantage of low interest rates and the relative lag in property prices compared with those in neighbouring countries.This week, the sector’s number one Vonovia threw its hat into the ring, announcing it was prepared to stump up as much as 14 billion euros ($16 billion) for rival Deutsche Wohnen (Other OTC: DWHHF – news) if it failed to tie the knot with the number three, LEG Immobilien (Xetra: LEG111 – news) .

Deutsche Wohnen dismissed Vonovia’s advances as “uninteresting and inappropriate”, adamant that its five-billion-euro merger with LEG would go ahead.

But the deal still needs to be approved by the shareholders of Deutsche Wohnen and some of them appear to believe the price is too high. (Continue reading)

Berlin Condo Market Enjoying Strong Growth in Luxury Segment

According to a new report by Ziegert, Berlin – Germany’s largest housing market – states that condominium prices will keep seeing sustainable growth in the coming years, driven by both growing domestic and foreign buyer demand, mainly in the luxury price tiers.
“For condominiums in the Mitte district, we predict a continued growth in the double-digit range,” said Nikolaus Ziegert, Managing Partner of Ziegert – Bank und Immobilienconsulting GmbH. “Within five years, we will achieve a price level of 10,000 euros in the high-end segment.” At 4,500 to 6,000 euros per square meter, the district’s current level matches that of other downtown districts. 

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After bright year for German property deals, some see clouds

By Kathrin JonesMUNICH, Germany (Reuters) – Germany’s once staid property market is celebrating a banner year of surging investment and billion euro deals but some voices at the sector’s annual Expo Real meeting in Munich warn the good times won’t last.

Rock bottom interest rates have driven investors to seek higher yields in real estate. They are increasingly competing for a limited supply of properties in top locations, driving up prices and trimming returns.

Office and retail space in Frankfurt, Munich and Berlin is especially sought after. Rising prices for prime locations are tempting many to risk investment in cheaper properties with higher vacancy rates or in smaller cities.

The trend is reminiscent of 2007 before the financial crisis, officials attending the Expo said, with buyers reluctantly digging deeper in their pockets and banks extending credit to avoid losing market share to competitors.

“The real estate market will remind us at some point that it is cyclical,” said Thomas Koentgen, co-head of the covered bond lender Deutsche Pfandbriefbank, the successor institution to Hypo Real Estate, which collapsed in the crisis.

Many investors have not realised that real estate is a long-term business and not suitable for short-term deals, he said.

“We are dealing with increased risk; a wary eye is appropriate,” Koentgen said.

Another manager at the Expo put it more bluntly: “There are a lot of speculators about.”

Ultra-cheap credit conditions fuelled by the European Central Bank’s quantitative easing programme fuelled the boom.

Calculations by the advisory and brokerage house JLL show the transaction volume in Germany so far this year at just over 32 billion euros (£23.5 billion), an increase of 46 percent over last year.

And those figures capture only commercial property deals, not the multibillion-dollar mergers in the residential sector such as the bid by Deutsche Wohnen for peer LEG Immobilien.

For now, those paying the typical price of 22 times rental income for property are still earning annual returns of 4.50 to 4.75 percent but this is already below the long-term average of 5.25 percent and the trend is down, officials said.

Real estate investors generally look at the spread between government bonds and property returns to gauge if markets have becomes overheated.

The lower the spread, the less attractive property has become for investors. Real estate assets are less liquid than government bonds and come with management costs attached.

Georg Allendorf, responsible for the business of real estate funds at Deutsche Bank, said he remains hopeful for 2016.

“I don’t think that yields are going to fall further,” Allendorf said.

Germany’s Bundesbank said last year it did not see a bubble building in the real estate market but more recently it has said it needs to keep a closer eye on developments.

Meanwhile, those institutions providing finance to the property sector look set to stoke activity further, with insurers and pension funds increasingly backing lending alongside traditional banks and covered bond lenders.

“For banks there is huge competition to acquire business in the face of low margins,” said Oliver Beyer, a property analyst at law firms Simmons & Simmons.