Durch ungeschickte Deals des Landes haben die Ku’damm-Bühnen ihren Bestandsschutz verloren. Für eine Million Euro gab Berlin sein Mitbestimmungsrecht auf.
Das nennt man einen Spitzendeal: Bauunternehmer Rafael Roth kaufte im Jahr 1990 das Grundstück des Ku’damm-Karrees für 30 Millionen DM vom Land. Als er das Ensemble samt Gebäuden zwölf Jahre später weiterveräußerte, strich er 194,2 Millionen Euro ein. Schon 1990 sprachen Experten von einem „Spottpreis“. Auch in den späten neunziger Jahren zeigte der damalige CDU–SPD-Senat beim Karree wenig Verhandlungsgeschick: 1998 verzichtete er auf so genannte Nutzungsverpflichtungen aus dem Deal von 1990. Für die beiden Bühnen im Ku’damm-Karree bedeutete das: Sie verloren de facto ihren politischen Bestandsschutz, denn Berlin gab sein verbrieftes Mitbestimmungsrecht bei Pacht- und Mietverträgen mit den Theatern auf. Dieser Verzicht war relativ billig: Roth zahlte zwei Millionen DM. Jahre später marschierten CDU- und SPD–Politiker in den Protestzügen vorneweg, als es um die Existenz der Theater ging.
Die Vertragsänderung wurde 1998 von der Finanzverwaltung unter SPD-Senatorin Annette Fugmann-Heesing und ihrem Staatssekretär, dem späteren CDU–Finanzsenator Peter Kurth ausgearbeitet. Dieser Vorgang ging auch an die Kulturverwaltung unter CDU-Senator Peter Radunski und Staatssekretär Lutz von Pufendorf. Radunski sagt heute, er könne sich daran nicht mehr erinnern, ob er das Schreiben überhaupt auf seinem Tisch hatte. Fugmann-Heesing möchte sich zu Details nicht äußern, bevor sie in die alten Akten geschaut habe. Sicher ist aber, dass das Parlament nicht informiert wurde. Das musste es auch nicht: 1993 hatte es selber die Kriterien für beschleunigte Verfahren bei Grundstücksgeschäften beschlossen. Darunter fiel diese Vertragsänderung, bei der Berlin auch auf ein Wiederkaufsrecht verzichtete. Generell wurde der Verzicht als „bedenkenlos“ eingestuft – mit einer Ausnahme: „Problematisch erscheint der Verzicht auf das Wiederkaufsrecht aber in Bezug auf die Sicherung von ’Theater am Kurfürstendamm’ und ’Komödie’“, steht in einem internen Verwaltungsschreiben. Doch Folgen hatte das nicht.
„Die gegenwärtig handelnden Personen waren dafür nicht verantwortlich“, sagte SPD-Finanzsenator Thilo Sarrazin auf der Abgeordnetenhaus-Sitzung vor zwei Wochen. Der Regierende Bürgermeister Klaus Wowereit (SPD) leitete 1998 zwar den Unterausschuss Theater. Doch von dem dem Deal erfuhr er offenbar erst bei einem Gespräch mit der Deutsche Bank-Tochter DB Real Estate am 7. Dezember 2005, in dem es um die Zukunft der Theater ging. „Da gab es eine Schocksekunde, als von einem Bankvertreter gesagt wurde, dass das Land seine Sonderrechte verkauft habe“, erzählt ein Gesprächsteilnehmer. Die DB hatte 2002 das Ku’damm-Karree von Rafael Roth gekauft. Dafür erhielt das Land rund drei Millionen Euro, weil Roth es vor der vertraglich festgelegten Frist von 2005 weiterverkauft hatte.
Die DB wollte anfangs beide, später dann nur ein Theater abreißen. Doch damit stieß sie 2005/2006 auf heftigen Protest von Schauspielern, Künstlern – und auch Politikern. Demonstrativ stellte sich im Dezember 2005 der damalige Vizepräsident des Abgeordnetenhauses Christoph Stölzl (CDU) mit Schauspielern und Regisseuren schützend vor die Theater. Am 20. Februar 2006 demonstrierte Wowereit zusammen mit Prominenten für die Erhaltung. „Da wusste er doch schon, dass das Land den Bestandsschutz aufgegeben hatte“, sagt Grünen-Kulturausschussvorsitzende Alice Ströver, die Wowereit „Zynismus und Heuchelei“ vorwirft. Auch CDU-Kulturpolitiker Uwe Lehmann-Brauns unterstellt Wowereit einen „scheinheiligen Umgang“ mit der Zukunft der Theater. Senatssprecher Michael Donnermeyer weist die Kritik zurück: „Wowereit hatte damals die Rechtslage zur Kenntnis genommen, dass es keine juristische Handhabe gibt, auf die Deutsche Bank Druck auszuüben. Er hat trotzdem für die Theater gekämpft. Und das ist nicht zynisch.“
Denkt Theaterdirektor Martin Woelffer an die Solidaritätsbekundungen von Politikern zurück, bekommt er heute ein flaues Gefühl im Bauch. „Da haben sich Leute wie Diepgen oder Wowereit stark gemacht, doch die Suppe war schon gekocht.“ 2006 hat der amerikanische Hedgefonds Fortress von der Deutschen Bank-Tochter das Ku’damm-Karree gekauft. Über Zukunftspläne gibt Fortress keine Auskunft. Nach Tagesspiegel-Informationen läuft derzeit ein Bieterverfahren für den Weiterverkauf.
Auf die beiden Theater lasten Mietschulden von 380 000 Euro, die Monatsmiete beträgt 40 000 Euro. Außer einmaligen Zuwendungen vor Jahren erhalten die von 240 000 Besuchern pro Jahr frequentierten Bühnen keine Subventionen. „Wenigstens könnten die vier Millionen Euro, die das Land erhalten hatte, für die Erhaltung fließen. Und die Häuser müssen unter Denkmalschutz gestellt werden“, fordern Woelffer, die Charlottenburg-Wilmersdorfer Bezirksbürgermeisterin Monika Thiemen (SPD) und andere.Das wiederum lehnt Wowereit mit Verweis auf Schadenersatzforderungen ab. Aber: „Es gibt keinen Schadenersatzanspruch. Denkmalschutz muss ein Eigentümer akzeptieren, auch wenn ein Gebäude nach dem Kauf in die Landesdenkmalliste aufgenommen wird“, sagt Manfred Kühne, Leiter der Obersten Denkmalschutzbehörde. Ein Denkmalstatus sichert allerdings nicht den Fortbestand als Theater. „Über die wirtschaftliche Nutzung ist damit nicht entschieden.“ Das Landesdenkmalamt hat mit Verweis auf spätere bauliche Veränderung abgelehnt, die in den zwanziger Jahren für Max Reinhardt errichteten Theaterräume auf die Denkmalliste zu setzen. Darüber streiten inzwischen die Experten.Ob sich an der Haltung der Denkmalschützer noch etwas ändert? Auf politische Einflussnahmen reagiert das Amt sehr empfindlich. Wolfgang Brauer, Kulturpolitiker der Linken, sagt, Wowereit stehe in der Verpflichtung, den Theatern zu helfen. Jede Landesregierung sei haftbar zu machen für „Vorschäden“ anderer Regierungen wie man am Beispiel der Bankgesellschaft sehe.
quelle: http://www.tagesspiegel.de/berlin/Landespolitik-Ku-damm-Buehnen-Komoedie;art124,2339566
Samstag, 14. Juli 2007
Dienstag, 26. Juni 2007
Boom bei Büros und Lofts in Berlin-Mitte
Berlin - Von der wirtschaftlichen Entwicklung Berlins profitiert auch der Büromarkt der Hauptstadt. Nach Beobachtung von Engel & Völkers Gewerbe Berlin werden wieder mehr Büroflächen nachgefragt; in Teilmärkten von Berlin-Mitte seien derzeit nur noch kleine Büroflächen verfügbar. Generell ist das Interesse an Flächen in Berlin-Mitte und rund um Potsdamer und Leipziger Platz zunehmend. Auch die Nachfrage nach Loftflächen sei erstmals seit Ende des New-Economy-Booms 2001 wieder höher als das Angebot.
Freitag, 15. Juni 2007
Investors in Berlin property blitz
On a street in south-west Berlin, a beautiful red-brick building stands out from the fairly bland apartment buildings that surround it.
It's a former children's home, built in 1906 by a German princess. It once resembled a small cathedral, with a pointed roof, but that was blown off in a World War II bombing raid.
Now the building is being transformed into 37 apartments. A two-bedroom flat costs around £130,000. Tenants won't be hard to find for this development.
It's in Steglitz, a solid and affluent suburb of the city, popular with families and professionals.
All of the apartments have been bought by Irish investors from north and south.
"I was intending to launch this project to German buyers," said developer Dr Andreas Pichotta. "But through my contacts with an Irish agent I realised that there's a demand from Irish buyers."
We're buying them for less than they cost to build. It's a buyers' market for the Irish Mike Morris County Mayo estate agent
And that demand is huge. More than ten billion euro was invested by foreign buyers in Berlin property last year.
If you set aside the massive acquisitions being made by major international investment funds, and look at moves made by smaller private investors, then the Irish are reckoned to be among the top three nations investing here.
Irish investors have simply been priced out of the market in the Republic and Northern Ireland. And Berlin has offered them a new home for their money.
The city's status as a major European capital and its impeccable legal system makes it a more attractive destination that some other countries.
But considering that Berlin is currently 66 billion euro in debt, and property prices fell by 30% between 1994 and 2004, is property a good investment here? Many seem to think so.
"It's for exactly those economic reasons that now is the right time to invest here,"says Mike Morris of County Mayo-based agents, Premier Estates Maloney.
I would never recommend that people buy off a brochure Dr Andreas Pichotta Berlin property developer
"We've been operating here for three and half years and in that time we've seen the market stabilise and there are signs that the economy is improving under Chancellor Merkel.
"Prices are currently rock bottom and we're confident of major growth over the next decade. We're taking a long-term view."
Mike Morris flies back and forward from Dublin to Berlin, buying up apartment buildings and commercial property on behalf of Irish investors. Currently, he's handling around 100m euro of investment.
"Some of the buildings we're buying are around ten years old, constructed during the major building boom of the 1990s," he says.
"We're buying them for less than they cost to build. It's a buyers' market for the Irish."
In Berlin, as in Belfast or Dublin, location is the key and local knowledge is vital. The eastern suburb of Friedrichshain is considered to be "up and coming" and the investors are snapping up buildings here. But there are two faces to this district.
One part boasts renovated historic buildings with attractive facades.
Fashionable bars and restaurants have opened, along with organic supermarkets, always a sign that affluent and responsible young professionals have moved in. Two-bedroom flats here cost around £120,000 or more.
Two stops away on the train, and still in Friedrichshain, you'll find huge post-war blocks of flats.
If you want a tenant to leave, you have to give them a year's notice. And even if they default on their rent, you can't throw them out Calvin McBride Banbridge-born Berlin resident
These "projects" consist of state-owned housing stock, now being sold off in a bid to tackle the city's debt.
You can pick up flats here for £40,000-£50,000 (even less in some other districts).
But there are risks. The area has high levels of unemployment and there's a greater likelihood of
tenants with cashflow problems.
"The most important thing for investors is to come to Berlin and find out about the city for themselves," advises Dr Andreas Pichotta. He's surprised that many Irish investors never travel to Berlin before making their purchases.
"There are low-cost flights and the hotels are cheap. You have to come and see the areas, get a feel for the city and decide if you want to invest and, most importantly, where you want to invest. I would never recommend that people buy off a brochure."
His advice is echoed by Berlin resident Calvin McBride. The Banbridge-born theatre director and playwright has lived here for ten years. He acts as a private tour guide, often for groups of investors from the US, Britain and Ireland.
"Researching the area you want to invest in is extremely important," he says. "Somewhere like Friedrichshain is becoming very trendy and will be expensive in ten years time, but you have to be careful where you buy.
"And you must research your tenants very thoroughly. Tenants have very strong rights in Berlin. If you want a tenant to leave, you have to give them a year's notice. And even if they default on their rent, you can't throw them out."
So, if property such a good buy in Berlin, why aren't the local residents doing it themselves? Home ownership levels here are the lowest in Germany, at just 10%.
Achim Sander is a 40-year-old recruitment consultant, running his own business. He lives in the western suburb of Charlottenburg, in a rented apartment built in the 1930.
"I love my apartment, but I don't really see the point of buying," he says. "Berlin is known as the 'city of singles', and I am one of them. I have no children, and even if I did, they might move away and would not want or need a house from me.
"Also, we Berliners like to travel - Germans are the world champions in this regard - and we spend our money on cars. There are other things in live apart from property."
Achim also points to history, explaining that many Berliners are reluctant to put down deep roots in property because of the city's turbulent past, with so many people uprooted through two world wars and the division of the city in 1961.
"These attitudes may change in time, of course," says Achim.
"But I'm in no hurry to buy a flat, I can't see any sign yet that property prices are rising. If that happens, maybe I'll think again."
source: http://news.bbc.co.uk/2/hi/uk_news/northern_ireland/6756703.stm
Berlin Property: A Genuine Bargain?
As property prices in London, Paris and quite a few other destinations on the Continent (with the possible exception of the Spanish Costas) continue to motor ahead, what are the prospects for the German city of Berlin? A big investment theme going around the City presently highlights the seemingly vast disparity in property prices between Berlin and other major European capitals. For example, in the exclusive Charlottenburg area of west Berlin a square metre of residential property costs around 1,800 (1,220). This is approximately one ninth of the price of the equivalent size in west London. Property prices are significantly below the level of 1990, the first post-unification year. A crude conclusion is that either London is absurd, or Berlin is absurd. The truth is probably somewhere in the middle...
As property prices in London, Paris and quite a few other destinations on the Continent (with the possible exception of the Spanish Costas) continue to motor ahead, what are the prospects for the German city of Berlin? A big investment theme going around the City presently highlights the seemingly vast disparity in property prices between Berlin and other major European capitals.
For example, in the exclusive Charlottenburg area of west Berlin a square metre of residential property costs around €1,800 (£1,220). This is approximately one ninth of the price of the equivalent size in west London. Property prices are significantly below the level of 1990, the first post-unification year. A crude conclusion is that either London is absurd, or Berlin is absurd. The truth is probably somewhere in the middle. There are important reasons why Berlin is at this price level. Even cities in the former Warsaw Pact countries; Prague, Budapest, Talinn are more expensive. There are a myriad of issues in Berlin, some of which might be off- putting. But Berlin is worth investigating if, as the marketing suggests, the weaknesses are all in the price.
The capital of former East Germany is defined by its unique history that still touches virtually every aspect of the daily life. Almost 18 years after the fall of the Berlin Wall (November 1989) Berlin is the German capital and a major cultural centre/ tourist destination. The relocation of the German government from Bonn is about half way complete, with some major ministries and civil service still to move. There is a push to attract new biotechnology/IT and media companies and new investments such as a big new international airport. In terms of its shortcomings through, Berlin is not yet in the same league as London or Paris, and might not be for years.
Berlin has not yet carved out an area of specific expertise the way capital cities these days need to, in order to sustain a high earning local population who will demand higher quality goods and services and support investments in new infrastructure. “A house divided against itself cannot stand” said President Abraham Lincoln in 1858. The same could be said of Berlin. The legacy of its history led to two major city centres one in Frederichstrasse the other in Alexanderstrasse, two smallish airports, two lots of City council and civil service, two of everything.
Berlin seems more American than European, plenty of big non- descript buildings, which resemble more a Los Angeles type disorganised sprawl than a strict Parisian grid system. Any comparison though is unfair to Berlin if the observer does not recognise the fact that Berlin was totally flattened in 1945 and has done remarkably well to rise from the ashes. Post re-unification, Berlin worked hard to end the old divisions.
The re-building boom in the former East (1990- 1994) was premised on a speculative bubble in property in the 1990-1993 period and a big improvement in unemployment. At the time expectations were high, investment horizons were short. The office market which in 1993 had near zero vacancy and prices of €50 per sq metre collapsed. In 2005 office vacancies stood at 10% with prices just over €20 per sq metre. The ending of accelerated depreciation, tax breaks and state subsidies caused the closure and relocation of a number of mid- sized businesses in the mid Nineties.
According to a report by Deutsche Bank, in 2005 Berlin’s per capita GDP was just €21,000 in 2004, around 20% lower than other former West German cities and below the level of 1991. The city has seen a stagnant population of 3.4m and has lost families to leafier suburbs in Brandenburg. Berlin has attracted 65,000 people from elsewhere in Germany and 155,000 from abroad but there has been no net population growth. One major problem is unemployment, which stood at 20% in January 2005 up from 13% in January 1995. During the period 1996-2003 the manufacturing sector shed around one third of its staff.
The City of Berlin is in debt to the tune of €56bn; a more than fivefold increase since 1991. Around 21% of Berlin’s income goes on interest and capital repayments. This scenario resembles a mid-1970s New York situation. The Senate Department in November 2002 claimed the city’s state was “extremely distressed” ie Berlin would require transfers from the federal government. It is not obvious how Berlin intends to extricate itself from this mess, there are very few assets it could sell and it is running into the problems of an ageing population. According to the State Statistical Office the number of households in Berlin is expected to rise to around 1.95m by 2050 but over 38% of households will be over the age of 61 by that time. At present there are around 1.85m households, 20% of whom contain over 65s.
Berlin needs to attract new businesses but also needs to increase taxation across the board. Increases in business taxes, property taxes and sales taxes are likely by 2010. On the plus side, there has been a relocation of media/films, IT and communications as well as biotechnology. Recently Universal Music and MTV Central Europe located to Berlin. To some extent growth in media & IT investment in Berlin has been curtailed by the post “dotcom era” valuation collapse, which saw new investment by these companies cut back heavily.
But Berlin has found around 160 biotech companies with four biotech business parks located in around 70,000 sq metres of city space. Berlin’s BioTOP Action Centre is attempting to create conditions for a centre of excellence in biotechnology. So far sufficient numbers of small biotech companies have located to Berlin to call this move a success, but critics point to the sustainability of most of these new enterprises. Another positive is tourism. Berlin compares well as an inexpensive short break destination with plenty of good restaurants, proximity to central Europe, loads of historical buildings.
The new Berlin Brandenburg airport at Schonefeld, currently under construction, will be a new hub that could attract around 20m passengers per annum. This will primarily take business away from the two existing airports, Tegel and Templehof who together handle around 15m passengers. The new international airport will help ease transport links and raise Berlin’s profile.
It follows that Berlin is cheap for good reasons. It might present a reasonable risk now at these low prices, but anyone investing needs to do so with a view to a ten year investment. There are also certain issues regarding Berlin as a property investment. Berlin has plenty of property to choose from, notwithstanding recent enthusiastic and optimistic buying from the City, the Russians etc. Residential prices were up around 6% in 2006 and a similar rise is possible in 2007.
Buyers face a 4.5% flat stamp duty charge, legal fees of between 1.5% and 2% depending on the complexity of the transaction, and negotiable agents fees of around 6%+VAT so 7.14% net. In Germany, buyers pay estate agents commission which is then shared with the seller and other agents if the property is sold on a joint agency basis. Therefore buyers are facing a big 13.6% transaction charge on the asking price. Once purchased, capital gains taxes are levied if the property is sold within ten years. The broad effect of this measure would be to strongly deter speculators but arguably benefit long term investors, if the property tax carrot remains in place. Obtaining a mortgage in Berlin is procedurally cumbersome and takes time. Banks generally offer mortgages for a maximum of 50%-60% on 80% of the valuation.
Hence a property costing €100,000 could obtain mortgage finance worth €40,000-€48,000. In this scenario the buyers’ deposits represents the balance, 52% to 60% of the property value plus transaction costs. This might explain why only 11% of Berliners are owner-occupiers. A London based investor in a rush, would be better off securing finance in London. But this means borrowing in sterling and investing in Euros hence taking a net currency risk. German law is favourable to the tenant, in almost every circumstance. If the boiler breaks down, or there are repairs to do, or other problems, then those expenses plus service charges are on the landlord’s account.
It might take a year to evict a non-paying tenant. However non payment is relatively rare in certain areas. The main problem is rent controls, which apply all over Berlin. The rent table fixes the price of rent per square metre per month for an unfurnished property. It is rare for a tenant to pay a premium to the rent table. If an investor purchases a property with a sitting tenant, then he is bound by the terms of that tenancy. Generally the landlord can raise rents by a maximum of 20% every three years, but a good tenant may be able to negotiate this down. The best scenario, ie the purchase of a top specification empty property will secure a rent that equates to a yield of between 4-5%.
Then the investor has to wait three years for the 20% uplift at the rent review. It is worth specifying the length of lease being offered to an incoming tenant otherwise the tenancy is deemed to be of indefinite length. A resident tenant has the right of first refusal in the event the property is up for sale. The question of where in Berlin is largely down to individual taste. The Friedrichshain area is on a 120 hectare plot near the docks that will see multi-billion euro investment to create the “Mediaspree park district”. This area is a bit like the 1980s Docklands, where 60 sq metre flats can be bought for around €90,000. The Charlottenburg area is the well established Kensington sort of area where prices are around €250,000 for a family flat. Steglitz in Berlin’s leafy suburbs, a good location near to the new airport also, has family flats of 100 square metres at around €170,000.
Then there is Prenzlauerburg, the fashionable Bohemian “arty” area in former East Berlin, where 60sq metre flats are around €100,000. Recently Berlin has been marketed to investors in London by corporate agents, who are selling managed apartment blocks with ten year leases. The investor is persuaded after a weekend break in Berlin, paid for by the agent, to buy a flat in a certain block. The investor gets a net rent but in many cases is buying from the owner of the apartment block at hefty 20%-30% premiums to the prices that they would pay if they were buying through a local agent, hence achieving a profitable exit for purchasers of the apartment block.
The properties generally are not in good areas and have sitting tenants. We would steer clear of taking this approach and would suggest interested investors take a long weekend and view a good selection of properties. To sum up, Berlin certainly offers value for money. The city has hurdles to jump, and it could be years before an Anglo-Saxon style owner culture emerges. Right now Berlin is the land of happy renters and that culture will need to change for serious property appreciation to take place.
As property prices in London, Paris and quite a few other destinations on the Continent (with the possible exception of the Spanish Costas) continue to motor ahead, what are the prospects for the German city of Berlin? A big investment theme going around the City presently highlights the seemingly vast disparity in property prices between Berlin and other major European capitals.
For example, in the exclusive Charlottenburg area of west Berlin a square metre of residential property costs around €1,800 (£1,220). This is approximately one ninth of the price of the equivalent size in west London. Property prices are significantly below the level of 1990, the first post-unification year. A crude conclusion is that either London is absurd, or Berlin is absurd. The truth is probably somewhere in the middle. There are important reasons why Berlin is at this price level. Even cities in the former Warsaw Pact countries; Prague, Budapest, Talinn are more expensive. There are a myriad of issues in Berlin, some of which might be off- putting. But Berlin is worth investigating if, as the marketing suggests, the weaknesses are all in the price.
The capital of former East Germany is defined by its unique history that still touches virtually every aspect of the daily life. Almost 18 years after the fall of the Berlin Wall (November 1989) Berlin is the German capital and a major cultural centre/ tourist destination. The relocation of the German government from Bonn is about half way complete, with some major ministries and civil service still to move. There is a push to attract new biotechnology/IT and media companies and new investments such as a big new international airport. In terms of its shortcomings through, Berlin is not yet in the same league as London or Paris, and might not be for years.
Berlin has not yet carved out an area of specific expertise the way capital cities these days need to, in order to sustain a high earning local population who will demand higher quality goods and services and support investments in new infrastructure. “A house divided against itself cannot stand” said President Abraham Lincoln in 1858. The same could be said of Berlin. The legacy of its history led to two major city centres one in Frederichstrasse the other in Alexanderstrasse, two smallish airports, two lots of City council and civil service, two of everything.
Berlin seems more American than European, plenty of big non- descript buildings, which resemble more a Los Angeles type disorganised sprawl than a strict Parisian grid system. Any comparison though is unfair to Berlin if the observer does not recognise the fact that Berlin was totally flattened in 1945 and has done remarkably well to rise from the ashes. Post re-unification, Berlin worked hard to end the old divisions.
The re-building boom in the former East (1990- 1994) was premised on a speculative bubble in property in the 1990-1993 period and a big improvement in unemployment. At the time expectations were high, investment horizons were short. The office market which in 1993 had near zero vacancy and prices of €50 per sq metre collapsed. In 2005 office vacancies stood at 10% with prices just over €20 per sq metre. The ending of accelerated depreciation, tax breaks and state subsidies caused the closure and relocation of a number of mid- sized businesses in the mid Nineties.
According to a report by Deutsche Bank, in 2005 Berlin’s per capita GDP was just €21,000 in 2004, around 20% lower than other former West German cities and below the level of 1991. The city has seen a stagnant population of 3.4m and has lost families to leafier suburbs in Brandenburg. Berlin has attracted 65,000 people from elsewhere in Germany and 155,000 from abroad but there has been no net population growth. One major problem is unemployment, which stood at 20% in January 2005 up from 13% in January 1995. During the period 1996-2003 the manufacturing sector shed around one third of its staff.
The City of Berlin is in debt to the tune of €56bn; a more than fivefold increase since 1991. Around 21% of Berlin’s income goes on interest and capital repayments. This scenario resembles a mid-1970s New York situation. The Senate Department in November 2002 claimed the city’s state was “extremely distressed” ie Berlin would require transfers from the federal government. It is not obvious how Berlin intends to extricate itself from this mess, there are very few assets it could sell and it is running into the problems of an ageing population. According to the State Statistical Office the number of households in Berlin is expected to rise to around 1.95m by 2050 but over 38% of households will be over the age of 61 by that time. At present there are around 1.85m households, 20% of whom contain over 65s.
Berlin needs to attract new businesses but also needs to increase taxation across the board. Increases in business taxes, property taxes and sales taxes are likely by 2010. On the plus side, there has been a relocation of media/films, IT and communications as well as biotechnology. Recently Universal Music and MTV Central Europe located to Berlin. To some extent growth in media & IT investment in Berlin has been curtailed by the post “dotcom era” valuation collapse, which saw new investment by these companies cut back heavily.
But Berlin has found around 160 biotech companies with four biotech business parks located in around 70,000 sq metres of city space. Berlin’s BioTOP Action Centre is attempting to create conditions for a centre of excellence in biotechnology. So far sufficient numbers of small biotech companies have located to Berlin to call this move a success, but critics point to the sustainability of most of these new enterprises. Another positive is tourism. Berlin compares well as an inexpensive short break destination with plenty of good restaurants, proximity to central Europe, loads of historical buildings.
The new Berlin Brandenburg airport at Schonefeld, currently under construction, will be a new hub that could attract around 20m passengers per annum. This will primarily take business away from the two existing airports, Tegel and Templehof who together handle around 15m passengers. The new international airport will help ease transport links and raise Berlin’s profile.
It follows that Berlin is cheap for good reasons. It might present a reasonable risk now at these low prices, but anyone investing needs to do so with a view to a ten year investment. There are also certain issues regarding Berlin as a property investment. Berlin has plenty of property to choose from, notwithstanding recent enthusiastic and optimistic buying from the City, the Russians etc. Residential prices were up around 6% in 2006 and a similar rise is possible in 2007.
Buyers face a 4.5% flat stamp duty charge, legal fees of between 1.5% and 2% depending on the complexity of the transaction, and negotiable agents fees of around 6%+VAT so 7.14% net. In Germany, buyers pay estate agents commission which is then shared with the seller and other agents if the property is sold on a joint agency basis. Therefore buyers are facing a big 13.6% transaction charge on the asking price. Once purchased, capital gains taxes are levied if the property is sold within ten years. The broad effect of this measure would be to strongly deter speculators but arguably benefit long term investors, if the property tax carrot remains in place. Obtaining a mortgage in Berlin is procedurally cumbersome and takes time. Banks generally offer mortgages for a maximum of 50%-60% on 80% of the valuation.
Hence a property costing €100,000 could obtain mortgage finance worth €40,000-€48,000. In this scenario the buyers’ deposits represents the balance, 52% to 60% of the property value plus transaction costs. This might explain why only 11% of Berliners are owner-occupiers. A London based investor in a rush, would be better off securing finance in London. But this means borrowing in sterling and investing in Euros hence taking a net currency risk. German law is favourable to the tenant, in almost every circumstance. If the boiler breaks down, or there are repairs to do, or other problems, then those expenses plus service charges are on the landlord’s account.
It might take a year to evict a non-paying tenant. However non payment is relatively rare in certain areas. The main problem is rent controls, which apply all over Berlin. The rent table fixes the price of rent per square metre per month for an unfurnished property. It is rare for a tenant to pay a premium to the rent table. If an investor purchases a property with a sitting tenant, then he is bound by the terms of that tenancy. Generally the landlord can raise rents by a maximum of 20% every three years, but a good tenant may be able to negotiate this down. The best scenario, ie the purchase of a top specification empty property will secure a rent that equates to a yield of between 4-5%.
Then the investor has to wait three years for the 20% uplift at the rent review. It is worth specifying the length of lease being offered to an incoming tenant otherwise the tenancy is deemed to be of indefinite length. A resident tenant has the right of first refusal in the event the property is up for sale. The question of where in Berlin is largely down to individual taste. The Friedrichshain area is on a 120 hectare plot near the docks that will see multi-billion euro investment to create the “Mediaspree park district”. This area is a bit like the 1980s Docklands, where 60 sq metre flats can be bought for around €90,000. The Charlottenburg area is the well established Kensington sort of area where prices are around €250,000 for a family flat. Steglitz in Berlin’s leafy suburbs, a good location near to the new airport also, has family flats of 100 square metres at around €170,000.
Then there is Prenzlauerburg, the fashionable Bohemian “arty” area in former East Berlin, where 60sq metre flats are around €100,000. Recently Berlin has been marketed to investors in London by corporate agents, who are selling managed apartment blocks with ten year leases. The investor is persuaded after a weekend break in Berlin, paid for by the agent, to buy a flat in a certain block. The investor gets a net rent but in many cases is buying from the owner of the apartment block at hefty 20%-30% premiums to the prices that they would pay if they were buying through a local agent, hence achieving a profitable exit for purchasers of the apartment block.
The properties generally are not in good areas and have sitting tenants. We would steer clear of taking this approach and would suggest interested investors take a long weekend and view a good selection of properties. To sum up, Berlin certainly offers value for money. The city has hurdles to jump, and it could be years before an Anglo-Saxon style owner culture emerges. Right now Berlin is the land of happy renters and that culture will need to change for serious property appreciation to take place.
Regards, Matthew Peters For The Daily Reckoning
Dienstag, 22. Mai 2007
German Investor Sentiment rises in May
Sentiment among German investors about the outlook for Europe's largest economy improved in May, the latest survey by the ZEW economic research institute showed today.
The think tank said its economic sentiment indicator, based on a survey of 301 analysts and institutional investors, rose to 24.0 this month from 16.5 in April.
'The economic upswing in Germany seems to be hardly influenced by the VAT increase and the economic downturn in the US,' ZEW President Wolfgang Franz said in a statement, referring to a three-point VAT rise earlier this year.
'Increasing employment rates in all economic sectors and a good investment climate put the upswing on a sustainable growth path,' he added.
A separate gauge of current conditions for Germany advanced to 88 from 76.9 in April. The consensus forecast was for a reading of 79.
A measure of expectations for the euro region rose to 22.3 in May from 10.7 the previous month, the ZEW said.
Story from RTÉ Business : http://www.rte.ie/business/2007/0522/Germany.html
links: Centre for European Economic Research
The think tank said its economic sentiment indicator, based on a survey of 301 analysts and institutional investors, rose to 24.0 this month from 16.5 in April.
'The economic upswing in Germany seems to be hardly influenced by the VAT increase and the economic downturn in the US,' ZEW President Wolfgang Franz said in a statement, referring to a three-point VAT rise earlier this year.
'Increasing employment rates in all economic sectors and a good investment climate put the upswing on a sustainable growth path,' he added.
A separate gauge of current conditions for Germany advanced to 88 from 76.9 in April. The consensus forecast was for a reading of 79.
A measure of expectations for the euro region rose to 22.3 in May from 10.7 the previous month, the ZEW said.
Story from RTÉ Business : http://www.rte.ie/business/2007/0522/Germany.html
links: Centre for European Economic Research
Dienstag, 15. Mai 2007
Germany shows strong growth - Eurozone beats forecasts
The eurozone saw solid growth in the first three months of 2007, beating expectations, official figures show.
The 13-country area's economy grew 3.1% year-on-year - below the 3.3% growth seen in the previous quarter, but beating the 2.9% forecast.
The data fuels analysts' view that the area's interest rates are set to rise.
Last week, the European Central Bank (ECB) kept rates at 3.75%, but the bank's head called for "strong vigilance" to counter price risks.
The expression by Jean-Claude Trichet is viewed as a way of implying that the benchmark rate will be lifted to 4% at the ECB's next meeting in June.
"Stronger-than-expected eurozone GDP growth should help provide the extra leverage to the ECB for higher rates in the next few months," said David Brown of Bear Stearns.
While annual growth was 3.1%, growth on a quarter-by-quarter basis hit 0.6%, beating the 0.5% forecast.
"Today's GDP [gross domestic product] report strengthens our belief that the eurozone economy is on a sustained growth trajectory," said Martin van Vliet, an economist at ING.
Less damage
A major factor behind the growth was strength in Germany -
Separate data from Germany's government showed that national growth for the quarter - while less than the previous period - beat expectations, hitting 0.5%.
Although German consumer spending was dented by higher value-added tax (VAT), which rose from 16% to 19% in January, this was countered by strong investment.
Economists greeted the German figures - which showed a 3.3% rise year-on-year - positively.
Bear Stearns' David Brown said: "With the impact of Germany's VAT hike causing less damage to German growth in the first quarter, it has helped solidify euro zone growth... over the last 12 months."
Sebastian Wanke of Dekabank said: "Although the basic story of private consumption and trade as brakes on growth... appears to be valid, it is happening at a higher level than expected."
Eurozone forecasts
Meanwhile, official data from France showed its economy grew by 0.5% in the quarter - the same as the previous three-month period.
Overall, the 27-member European Union saw growth reach 3.2% year-on-year, exceeding the 2.1% seen in the US for the same period.
Separately, the European Commission forecast strong growth over the next six months in the eurozone, before slowing in the final quarter.
The 13-country area's economy grew 3.1% year-on-year - below the 3.3% growth seen in the previous quarter, but beating the 2.9% forecast.
The data fuels analysts' view that the area's interest rates are set to rise.
Last week, the European Central Bank (ECB) kept rates at 3.75%, but the bank's head called for "strong vigilance" to counter price risks.
The expression by Jean-Claude Trichet is viewed as a way of implying that the benchmark rate will be lifted to 4% at the ECB's next meeting in June.
"Stronger-than-expected eurozone GDP growth should help provide the extra leverage to the ECB for higher rates in the next few months," said David Brown of Bear Stearns.
While annual growth was 3.1%, growth on a quarter-by-quarter basis hit 0.6%, beating the 0.5% forecast.
"Today's GDP [gross domestic product] report strengthens our belief that the eurozone economy is on a sustained growth trajectory," said Martin van Vliet, an economist at ING.
Less damage
A major factor behind the growth was strength in Germany -
the region's largest economy.
Separate data from Germany's government showed that national growth for the quarter - while less than the previous period - beat expectations, hitting 0.5%.
Although German consumer spending was dented by higher value-added tax (VAT), which rose from 16% to 19% in January, this was countered by strong investment.
Economists greeted the German figures - which showed a 3.3% rise year-on-year - positively.
Bear Stearns' David Brown said: "With the impact of Germany's VAT hike causing less damage to German growth in the first quarter, it has helped solidify euro zone growth... over the last 12 months."
Sebastian Wanke of Dekabank said: "Although the basic story of private consumption and trade as brakes on growth... appears to be valid, it is happening at a higher level than expected."
Eurozone forecasts
Meanwhile, official data from France showed its economy grew by 0.5% in the quarter - the same as the previous three-month period.
Overall, the 27-member European Union saw growth reach 3.2% year-on-year, exceeding the 2.1% seen in the US for the same period.
Separately, the European Commission forecast strong growth over the next six months in the eurozone, before slowing in the final quarter.
Donnerstag, 3. Mai 2007
Berlin Property: An Investment Market
It is a fact that Berlin in Germany has undervalued real estate and with shrewd multi national companies already investing in the city its only a matter of time that others will follow. It is now time for the smaller overseas property investor to examine Berlin's housing market. Research reveals compelling evidence that Berlins housing market is the next big thing in European city investment.
Berlin real estate offers overseas property investors a great opportunity to benefit from low prices with great potential for capital gains. Berlin's property prices are still low and represent the lowest prices in any European City. Recently Prudential Real Estate Investors announced that it had acquired the famous Ewerk office situated in the heart of Berlin. The Ewerk, a former transformer station built in 1928, was renovated during 2004 and 2005.
So why is Berlins housing market full of cheap property? A little research into Berlins City history reveals why Berlins property prices dropped and never caught up with other European cities.
The opening of the Berlin Wall (1989) and the reunification of Germany (1990) resulted in a wave of optimism. The expectations for Europe's largest economy and it's newly created capital city Berlin were high. The pent-up demand particularly from the East Berliners was immense. The conclusion at the time was that the city required a massive investment and construction programme in all sectors.
The Berlin construction boom of the early nineties coincided with both the reduction in residents and more importantly their purchasing power. This coincided with an increase in unemployment levels. The net result was a fall in the price of property and rental values. Berlin witnessed an increase in the availability of office and residential space without an appropriate increase in demand.
Between 1994 and 2004 new property prices fell in Berlin by 30% and rents by 15%.The disposal of large property portfolios by public authorities further undermined price levels.
Property prices in most European countries significantly increased while those in Berlin stagnated or fell. Berlin now represents the most competitively priced property in Europe.
The people of Berlin like to rent property with only 12% of Berliners owning their properties compared with over 20% in Hanover, Hamburg, Munich and Stuttgart. This lack of demand has kept prices low and provides buyers with ample supply of Berlin tenants.
Tourism has increased by 16% in 2004 alone. In excess of 2,000 four and five star hotel rooms have been built in the last 3 years including Ritz-Carlton and Radisson. There were 14 million overnight stays in 2005 compared to 11.2 million in 2003. British tourism increased by 22% in 2006 alone.
The indications are that Berlin is set to boom and the time appears to be now for overseas property investors to head for Berlin.
Berlin real estate offers overseas property investors a great opportunity to benefit from low prices with great potential for capital gains. Berlin's property prices are still low and represent the lowest prices in any European City. Recently Prudential Real Estate Investors announced that it had acquired the famous Ewerk office situated in the heart of Berlin. The Ewerk, a former transformer station built in 1928, was renovated during 2004 and 2005.
So why is Berlins housing market full of cheap property? A little research into Berlins City history reveals why Berlins property prices dropped and never caught up with other European cities.
The opening of the Berlin Wall (1989) and the reunification of Germany (1990) resulted in a wave of optimism. The expectations for Europe's largest economy and it's newly created capital city Berlin were high. The pent-up demand particularly from the East Berliners was immense. The conclusion at the time was that the city required a massive investment and construction programme in all sectors.
The Berlin construction boom of the early nineties coincided with both the reduction in residents and more importantly their purchasing power. This coincided with an increase in unemployment levels. The net result was a fall in the price of property and rental values. Berlin witnessed an increase in the availability of office and residential space without an appropriate increase in demand.
Between 1994 and 2004 new property prices fell in Berlin by 30% and rents by 15%.The disposal of large property portfolios by public authorities further undermined price levels.
Property prices in most European countries significantly increased while those in Berlin stagnated or fell. Berlin now represents the most competitively priced property in Europe.
The people of Berlin like to rent property with only 12% of Berliners owning their properties compared with over 20% in Hanover, Hamburg, Munich and Stuttgart. This lack of demand has kept prices low and provides buyers with ample supply of Berlin tenants.
Tourism has increased by 16% in 2004 alone. In excess of 2,000 four and five star hotel rooms have been built in the last 3 years including Ritz-Carlton and Radisson. There were 14 million overnight stays in 2005 compared to 11.2 million in 2003. British tourism increased by 22% in 2006 alone.
The indications are that Berlin is set to boom and the time appears to be now for overseas property investors to head for Berlin.
His position means that he is contact with hundreds of real estate agents and developers world wide.
This has enabled him to gain a unique insight into international real estate markets from those who work in them at first hand.http://www.homesgofast.com/home/Germany/
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