Preview on Property Market Germany 2009
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Property Market Preview Germany 2009
In this article we will give you a summary on the current scene in Germany, as far as property is concerned. We recommend to read the full article, use the link below.
To understand the „Immobilienmarkt“ or property market in Germany one has to evaluate first of all segments, second locations and third size or volume. From these categories you can practically derive any data you need. The segments to look at are residential, commercial, logistic, shopping and 1a city locations, hotels and all other property.
The locations to look at are major economic power spots, medium sized cities and the capital with its special role in Germany; the rest can be falling under minor towns and countryside. You might also subdivide into “old west” and “old east” but that’s of minor priority here.
The volume segments you need to take into review are above 10 Million, above 3 Million and under 1 Million Euro.
To evaluate the usefulness of informations read in newspapers, blogs, magazines and the faces of friends you have to decide for whom the information is relevant. Thus we recommend to subdivide as user groups four categories: Institutional Investors, Private Equity funds and similar, Wealthy private Investors and Private Investors in general.
Major trends are set by International Institutional Investors and large Investment Groups. Major influences on trends are current economy and consequences of the financial crisis, government and central bank decisions and news agencies. Read the rest of this entry »
Background to the German Property Market
Since re-unification, the east has in effect been subsidised by the richer west of the country. Back in the first half of the 1990s, initiatives in the form of tax incentives offered by the government were aimed at stimulating economic growth in the region and west Germans invested heavily in property in the east creating a “bubble” in the market there. However, without the massive investment required in roads, factories, environmental clean-ups etc, combined with the governments’ commitments on pensions, wider European labour market reforms and entry into the Euro, the economy in the east stagnated and the property bubble burst leaving many wealthy investors out of pocket and reluctant to risk further investment in property anywhere in Germany. The cost of re-unification has been estimated at over $1 trillion (levied by taxation) to the German economy as a whole, with the result that today, property in Germany trades at historically low levels.
Recent economic indicators suggest the situation is about to change. Unemployment is falling and greater fiscal discipline on the part of the federal govt is enabling them to reduce borrowings. A prolonged slump in the performance of the German economy has been matched with a long period of depressed prices in German real estate. This, together with a reluctance on the part of German lenders, banks etc, to offer competitive mortgage deals, in spite of historically low interest rates, explains the general stagnation in the property market and has alerted foreign investors, pushed out of their domestic market due to high prices, to the opportunities in Germany and the low prices on offer.