German Property Market
For the 3rd quarter 2007 the German economy experienced its strongest upturn since the re-unification boom in the early 90's and for the first time in years the growth was led by consumer spending. Despite the "sub prime" irritations in the US financial markets the EU-Commission's economic growth forecast for Germany for 2007 is 2.5% and for 2008 2.1%.
The German Property Market is Europe's biggest with record transactions in 2006. Figures for the first half of 2007 show no decrease in volume. Except for the mega portfolio deals the German market has seen in that period the focus points were Berlin followed by Dresden and Leipzig.
Germany is still currently one of the few major economies where an investor can expect a positive cash flow from property investments. Despite the high demand prices are still low in comparison to international markets, even the Eastern European ones. The potential for property appreciation is strong.
Berlin Property Market
The Berlin property market still shows traces of the rent regulations in ex East Berlin because of the political system and ex West Berlin because of the highly subsidised status of the rental market. The rent level is relatively low and trailing behind the economic development. So buying now offers an upside on the cash flow as a good management can capitalise on the catch-up to follow.
Why now?
Global property players have been in the market for over two years now and have tied a great deal of their equity. This is where the chance lies for new arrivals in the market. They are not absorbing new opportunities coming to the market. Good investment opportunities require speedy decisions and ready available equity. These factors create a competitive advantage in the market. Equity is the easy part for a new arrival in the market but speedy decisions require market information and knowledge if they are not to turn out as risky or possibly wrong.
The solution in this situation - local partners, already present in the market with access to off market properties and know how in the execution of their purchase, development and operation.
