I've heard that property prices have hardly gone up in Germany in years due to high unemployemnet, slugggish economy and a culture of renting? But could be due fro an upturn soon. Anybody invested there? which are the cities to target?

Ive just bought in E Berlin. Land 1000m2 for 92000 euros.

I targeted land that could be developed for both resi and or commercial property in order to expose myself 2 both markets. As they climb out of recession, the demand from business for prime space will be huge.

Germany is the worlds no1 exporter, but sentiment has kept prices very low. Thats all changing. Money is flowing into both property and German equities.

I sold my UK B2Ls in order to work my money harder, and this investment is part of that stratergy.

WHY BERLIN?

Its redesignated the capital. Think about that. Most western cities (let alone capitals) have experienced a boom. Berlin stands out like an investment beacon. Its strategically placed for E Europe and was prior to communism a magnet for economic activity. Huge development has been underway for some time, but there is still a lot to do, to shrug - off the communist / grey feel, buts thats just a matter of time.

Exciting indicators of change are the fact that this year for the first time office space demand had surged (36% up). The world first multi - owned nightclub has just opened - where thousands of people stumped - up small amounts to finance it. EXPERTS and economists often miss these small details, but it is these very details that bring about the change in sentiment on the ground.

Money flows to undervalued assets. The new conservative Govt have signalled thier plans to bring about changes that will have a positive impact on real estate.

The World Cup will be a useful trigger. The commonwealth games did a lot for Manchester, yet these are of minor significance compared to the world cup.

WATHOUT - the pessimists will scare u with tales of doom and gloom, but then these same people would never have invested in dirty Northern UK towns, Ireland or America. Imagine thier response if just after 9/11 you had asked them whether New York was a good play?


The time to buy is when there is blood on the streets. Berlins blood spills following years of communist decline and the pain of re - unification is well and trully being mopped - up, so dont hang about.

I bought land from the Berlin Govt local municipality and used a Lwyer with a London branch.

What about renting - out? Its true tenants have more rights, but if you know what you are doing you can reduce your downside. Some LLs rent via corporate short - term agancies for example. In any event as the German sentiment improves rent yields and the desire to buy will follow suit. You might even want to buy commercial property. Ive seen old supermarkets for sale, car - parks, warehouses - the opportunities are endless.

ONE MORE THING, BMW have just opened thier biggest outlet, its in Berlin. Aks yourself what this means. I think it means invest now.

Property market was flat to negative in most of Germany for the 2000-2005 timeframe. There are some signs of recovery and if i were choosing I'd choose Berlin. Local government is aggressively targeting business investment and so looking to use this to upgrade the city. Munich has been most consistant positive market in that time.
I was in Rhein-main area for 5 years and rented for the same price for the whole time. When we moved the l/lord split the place into 2 flats and was advertising both for €350 less than our collective rent. I believe a lot of this was due to huge reduction in expat community. I know of only 1 guy from all my friends who still gets an international package. The rest took local deals or went back to home country.
It will still take a lot of work to get the economy back where it was and the US export market is a major factor in the economy. So there is some risk there but significantly less risk in Germany than UK for housing land.

How do you go about finding deals? best to take a trip out there? I couldn't really find any websites, can you guys give me any links?

2 people Ive used (both E/As - but unlike UK E/As, the service is far more professional and all encompassing).

Say Richard gave you thier details.

www.jop-immobilien.de (ask for Mr Pfitzner)

www.karras-immobilien.de (Ask for Barbarra, her English not so good, but her son Thomas is usually on hand to translate).

Please treat them with respect, and do not be a 'time vampire'. Try and narrow down what it is you want. I prefer land that has commercial or resi use.
If u want small appartments, Barbarra has new ones in a funky Camden type area (Freiderikshaine) for around 85000 euros right in the busy bar streets.

You can pay as little as 30000 euros further out.

My land is in Kaulsdorf in the old Eastern side. Anywhere near Kopenick seems a good bet as its a busy shopping area with good links not too far out and has lots of parks and lakes etc. Mr Pfitzner had some stuff here.

Bare in ind the legal process is quite legnthy and you will have to consider things such as whether land is contaminated with asbestos buildings etc.

Good luck - its the best investment you will ever make Im sure.

Wohnung is flat, Miete is rent , Kauf(en) is to buy. Haus is...well you get the idea. I also think when buying that the purchaser pays the Estate agent.......


http://www.immobilienscout24.de/marktplatz...p?ftc=2011BUTde

I have been living in Germany since beginning 1998. So thought I would add my 10 cents for what it is worth.

Germany is a "renters" market. Under 40% of Germans have property, and in most large cities prefer to rent. Berlin, Munich, Hamburg, and Frankfurt are the key towns.

From 1998-2000 the housing market was strong, and virtually impossible to find rented property in the large towns. There was a large expat community, especially in banking in Frankfurt and technology in Munich etc that pushed rents up a lot. Then the economy dropped like a stone, expat deals for employees became less, and most foreigners have been heading home from 2000-2005.

Berlin has been a special case. The German goverment has invested billions on housing and infrastructure through the 1990's. Office and house blocks were popping up everywhere in Berlin and the Government looked for foreign investment which did not happen. So the market in Berlin dropped big time, whilst Frankfurt and Hamburg stayed flat and Munich was flat to up.

However thing's are changing. Merkel (the PM) is trying to libralise the banking segment to make it easier to buy property, she has set plans and has already undertaken the sale of large government land and property assets to domestic and foreign investment and thing's are improving. The rent market is getting tough and with low interest rates (under ~4% for a 10 to 15 yr fixed mortgage) the buy has started slowly. I would summmaries as the UK market in 1970's before Margaret Thather turned UK into a home owning society.

The changes are affoot and it may be slower than we would all wish but I am sure Germany will be the best performing and safest property investment in Western Europe over the next 10yrs.

If you guy's need some advice let me know as I have experince of buying and selling in Germany. Cost of buying is 5-10% of purchase price due to fees and taxes. Buyer pays! , not like UK where Seller pays .

I will be moving back to UK in March '06 so if anyone is interested I have some properties for sale in Munich.

Look at this market analysis of the German property market from Deutsche Bank.
http://www.dbresearch.com/PROD/DBR_INTERNE...00000188134.pdf

The UK sits uncomfortably at the top of the highest increase in property prices of Europe since 1990, followed by Holland and Spain.

If you want to look at historical UK house prices look at the Nationwide:
http://www.nationwide.co.uk/hpi/downloads/...r_inflation.xls

To me it is only a matter of time before a major correction in house pricing takes place in the UK, and the smart money is moving abroad. As the cost of borrowing rises in the UK with higher interest rates housing needs to be more affordable. Historically mortgage payments in the UK have stayed at approx 30% of income, and 3x annual salary.

For me Germany looks like a good long-term and safe bet.

A good analysis of the German market can be found at the following link:

Germany Property analysis

Does anybody know of UK company that would sell my German property to investors.

I lived and worked in NE Germany (2hrs North of Berlin). It was a building with two long term tenants in the middle floor. I did the bottom floor up and it is rented to a business and I converted the top floor to a penthouse for me to live in. Now I have moved out the 'penthouse' is also rented.

I have been toying with the idea to sell to release capital but do not want to put up a 'For sale' sign, in case I spook the solid tenants that I have. Ideally I'd like to sell it, change hands seamlesly without tenants being really aware - my guess an ideal opportunity for an investor.

Anyone know of any such a service?

I've done another analysis of my own which you can find attached. This was based on buying a block of flats to gain from rental yield over the long term.

Any comments would be welcome. Also if you know the answers to my questions I'd be very grateful if you could let me have them.

Hi all,

Im new to this forum

I'm looking to invest in Germany as well, in Berlin and I was wondering what you guys thought in terms of which area in Berlin would be good. I was thinking about Kreuzberg, Friedrichshain and parts of Tiergarten.

This is because of the following statement, which may or may not be true, which is all I have to go with for now:

The general rule is: the higher the capital aprreciation potiential the lower the yield. Some may argue that Kreuzberg and Friedrichshain and parts of Tiergarten hold true for both, though.

Any thoughts?

BFAM

Yes i would say for Kreuzberg and Friedrichshain. I did not like tiergarten at all, lots of businesses around but not many funky areas.

Hiya,

For what it's worth, I bought a flat in the Kreuzberg area just before Christmas - my first little foray into foreign property. Some observations:

- As mentioned several times above, buyer nearly always pays the estate agent's fee and expect it to come in at 6-7% of the property value. Though rare, it is possible to strike a deal with the seller to go 50/50 on the fee if he's desperate enough to sell.

- I found a great Berlin-based solicitor (Notar), but expect to make all the payments to the owner, banks, land registry (Grundbuch), taxes, etc. yourself. The solicitor will just tell you how much and when to pay it.

- When you go to the solicitor's office to sign the contract, it has to be read aloud by the Notar in German and you have to prove that your German is good enough to understand or bring along a translator. Some offices will charge extra to translate it to English for you.

- Notar's fees are regulated and calculated based on property value - they are much cheaper than UK solicitors... no suprise there

- I'd agree that Kreuzberg is a great area to invest, especially near the popular Bergmanstrasse area. There are lots of developer deals around there at the moment. Friedrichshain is generally a bit more edgy and funky... like Prenzlauer Berg area 12 years ago. If Fhain goes all gentrified and posh like PB did (as some predict), property prices will soar. It has a long way to go though...

- Property auctions are interesting, but highly complicated and protracted. Franell Consulting run one-off seminars which cost 40 euros to attend and are full of relevant info - http://www.zv-information.de. It's a genuine seminar as opposed to UK-stylee 'investment seminar' rip-off operations. You will need good German to follow it though. The gist with auctions is - there are savings to be made, but you will invest serious time and stress in the project.

Jason

My two cents as a German citizen:

As long as unemployment will rise, no chance for rising property prices over here.

Without a "German Thatcher" no chance for lower unemployment...

I bow to your personal experience but.... In Germany it seems you can buy central quality property with 8+% returns. If borrowing at 4% this means you can buy self funding projects in a 1st world country. This kind of oppurtunity does not exist in another 1st world country.

I'm off to Germany soon to have a look

Fishface good luck to you and it certainly looks like a good invetment area. I just wanted to correct your statement on returns in 1st world country. Theer are very good opportunities in the US with yields as high as 50% in some of the affordable major cities. Also can get 14% yileds on family homes in Texas.

Bardon, are you the chap who mentioned very high returns in the USA before but then never specified?

I'm afraid I do not believe that you can get 50% rental yield on 'safe/easy' property in the US. If its in the middle of some crack jungle maybe. The statement is actually near ridiculous. If I bought a property for say $250000 are you honestly saying it would generate $125000 per year rent????????????? By the same logic I could spend $2000000 and could retire in 10 years with $10000000 in the bank( I've knocked of $2000000 for void periods)

Fishface you are in your own paradigm about house prices with the say $250,000 price bracket being only 10 fold out in this example.

Try this, bought foreclosed duplex for 14.5K spent 10k rennovate each unit rented for 600 per month. Its the house price stupid....that makes the difference.....sure that was a great deal but it shows it can be done. 20-25% yield very very safely being done by many positive cash flow property investors right now. Not forgetting that the area is appreciating at 5-6%. picture attached

10-15% yields in single family homes in Texas fairly standard, check out San Antonio and Houston houses at $75K.

As far as never specifying the returns they are available right now in Buffalo and Rochester USA as many an astute UK,Aussie and NZ investor that are investing up there right now will tell you.

No hard feelings and nothing wrong with your investment strategy just wanted to correct the statement that you can not get 8% returns like Berlin in a 1st world country.

[quote name='Bardon' date='Mar 19 2006, 07:20 AM' post='325046']
picture attached

Wheres the picture?

I'm not having a dig mate, but you specifically said 50% returns. Where are they then?

Also if one resides in the UK ( as I presume most here do) how to manage multi let residential property in the USA?

My maths still works because a property may cost $20k but you could still buy $2millions worth and have $10million in ten years time at 50% return. Tell me where this is and I'll emigrate....

And please can I see this picture?

Do you live in the USA?

Fishface,

Picture is attached 14.5k purchase, 10k rehab duplex rented out at 2 x 600 per month. This house is in Rochester.

Property manager manages property.

I live in Australia.

Might be useful to summarise why Ive invested in Berlin;

1. Property currently at 1970s (some say 1965) prices

2. Mortgage market rumoured to liberalise as happened in the UK in the 1970s. This means average people can aquire a mortgage much more easily as deposit of 5% instead of 30% becomes available. This kick - starts property prices.

3. Berlin is the capital of the worlds 3rd biggest economy and the worlds largest exporter - think about that. Communism temporarily trashed the place but the Germans are resigned to re - making this place a world leading city.

4. Masses of news articles concerning cutting edge / culturaly significant events. For example the current Easy jet magazine has more articles connected to Berlin than any other place, such as one covering a floating swimming pool. In other words a head of steam and a buzz is emmerging.

5. This is the Western gatway to the East and an important commercial hub.

6. A brand new international airport is at last underway (after years of court battle).

7. Money flows to undervalued asset classes. Hedge funds have been buying in Berlin for a while. This is a self - fulfilling prophecy as we have seen happen in other parts of the globe.

8. Dont be too hung - up on yield. Some rich people I know did it all on capital growth, yield never came into it.

Some on here say wait and see, but it will be too late. You have to go with your gut in investment, there is no magic 'formulaiec' process for investing - if there was everyone would simply carry out the supposed magic fomula and make it rich and investment funds would never fail as they simply relied on locating areas where the magic formulae applied.

Bardon, I take my hat of to you. I'm still flabbergasted that a prop worth $24k turns over $14.5k a year in the USA. To me it doesn't make sense but your post has pushed me to look into the USA. Thanks

Dogbox, thanks for your replies. I think this is one of the most 'exciting' threads I've read. I intend to visit Berlin in the next few months to have a look, but my focus will be commercial property. I agree with all the positives you mention but how to you counter the arguements that

1) The Berlin population is set to shrink not expand

2) The chancellor has not really gone very far with economic reforms

3) Very strong tenants rights means the potential of profit from(residential) property is limited

I am not hung up with yields, its just that they really help. I'm after property for long term investment. When I look around England you cannot get prime property for much above 5% return these days, I remember only a few years ago they were 10%. I wish I had bought when they were 10%. Now I see Berlin property advertised for 8-10% returns I don't want to make the same mistake again.
Also since euro money is available to borrow at 4% a 8%+ return makes things easy.

Are you there Dogbox?

I just got back from Berlin Trip. It has been a strange experience. All buyers are international buyers and all sellers are forced by the bank (negative equity) to sell after many years of lower prices. Unemployment is extreemly high and especially in the east some local councils are offering 2 bedroom flats for rent at only 100 euro a month. This will keep rents in control.

However there property out there that can yield 8-9% in reasonable areas. As long as you can get cheap mortgages it makes sence as a long term investment. If rent grows 2% per year and house prices 2% per year just inline with inflation you are doing very well.

The German population as a whole is shrinking I do not thim this will effect Berlin very much.

I made 2 offers on 2 appartment blocks (Kreuzberg (near Bergman Strasse) & Neukoln).

Hi soldintime

Glad you had a good trip. Have they accepted your offers?

May I ask which bank you have managed to get a mortgage through, and how easy was the process?

Many thanks

Cheers Fish,

1) This is nonsense written by an academic. Berlin has all the early signs of reclaiming its pre - communist glory, the people are essentially the same, just communism beat them down. Not only that but I constanlty here Berlin mentioned in the press and on TV, articles about new mega - nighclubs, floating swimming pools, cutting edge architectural projects THE NEW MASSIVE AIRPOT FOR 2010. Essentially this all builds inot a head of steam and more and more 'funk young things' are drawn to the bright lights. THE CAPITAL OF THE WORLDS THIRD LARGEST ECONOMY WILL HAVE A GROWING POPULATION, OF THAT I AM CERTAIN.

2) Give economic reforms time, they are unstopable. Even without any, many worldwide hedge funds are on a buying spree in Berlin - this 'buy mindset' will start to trickle down to the common Man.

3) Tenant stability also offers the owner a lot of benefits they dont enjoy in the UK, so in some respects the rental position is more not less attractive. Also new tenancy arrangments are emmerging where specialised agencies will lend on short - term corporate basis to corporate clients, although I suspect they only take top - end property.

If you can get into commercial I think it an exciting play.

Im looking for an apprtment this time or even just a UK based property fund (but I cant find one, Speymill is too risky - its just a single company rather than a fund I think).

Well here is the complicated thing. On one property there are four owners and the bank has told them to sell (severe negative equity). Three owners want to sell the 4th with a 5% stake is not so convinced. So the accepting of the offer is going to take some time. On second property one of the owners (husband) has been in coma for a year. But wife and bank are no negotiating on accepting the offer. So as you can see lots of forced sellers. Should here more this week.

I am talking to an german IFA for mortgages, 75-80% LTV is possible depending on location and condition, too many commercial units and the LTV will go down. Send me a PM if you want more particular details.

Hi Dogbox, can you help with the following? Is the tax regime similar to the UK? ie can the interest portion of the repayment be written off? What is the level of taxation after that? Whats the level of CGT?

Many thanks

FF

Im afraid I know not.

One thing to keep in mind is most property investors Ive known down the years tend not to declare foreign property sales anyway.
My attitude to investment is not to get bogged down in minuciae or you can end up investing in nothing except the most unimaginative low risk arenas.

Another freind tells me she bought land in Perth Australia 2 years ago at £180000. Just sold at over £400000. She didnt get all scientific and detailed, just bought on gut.

Thanks DB.

I'll let you know once I've been on my scouting trip

Before you invest in German property be sure to fully understand the German tenancy laws and all your duties as a landlord (lots.). They are a lot more strict than UK laws, and they are one of the reasons why property isn't booming in Germany.

Good luck tho!

I'm more interested in commercial property, if its like the UK, that would mean tenant is responsible for repair/insurance etc. Makes life easier, especially when you are in a different country.

Buying is painfull. It has now been 2 weeks since i have made offers. Both parties on both properties are facing bankruptcy. The banks and courts have to agree on what a good price for the property is. This will drag on for a few more weeks to come. Yields are dropping quickly in Berlin as sellers ask for more money due to the foreign buying frenzy. 6.5% is now the norm for good property.

I am off again, but this time visiting Leipzig and Dresden as well as Berlin. Yields are still good here and you are not buying dumps that they try to sell in Berlin.

I looked at Dresden and the property seems to be a lot better for the money.

Keep an eye out for a cheap appartment for my portfolio would you

What is the best way to find good property in Berlin? I am struggling to find any property. I am looking for something upto max Euro 580K and yield 8.5%. Fully tenated in a good area.
Is this possible? What is a good place to find property before taking a trip out to berlin.

Thanks

I have been trying now for 3 months to get a deal closed in Germany. I have made now 5 offers on 5 different porperties. It is just bloody difficult. Nothing is clear cut, lots of undecisive sellers and slow processes with reposesed properties for sale by the banks.

Not very friendly for foreign private investors. You will find out when you try yourselves.

soldintime

[quote name='dogbox' date='Jan 18 2006, 02:43 PM' post='277574']

www.karras-immobilien.de (Ask for Barbarra, her English not so good, but her son Thomas is usually on hand to translate). /quote]

Respect? How's your German, dogbox?

sceptic

Sceptic, my German extends to asking the way to the beach in a very loud voice, thats about it. I used a German Lawyer with London branch. He acted for me so language didnt come into it.

BTW, Im hearing the bargains in Berlin are gone. Not sure if true or not.

I agreed my Berlin purchase last year. Ive now decided not to invest further there as I couldnt resist another virgin market - Morocco.

Can I get tax relief for interest payments for buying overseas property (in Germany)? I.e. if I rent out a German property, can I deduct capital expense for buying this property against rental income? And if so, where? In Germany or in the UK? Would this be under Double Taxation Treaties or direct (EU)? We're resident in the UK. Thanks for your help!

Phew,

3 Blocks of flats have gone through. I am awaiting the other 3 to go through aswell. All in all the processes seem more cumbersome than in the UK. All I can say to would be investors in Germany is keep hanging in there.

Dear Sceptic
Yes you can set off your interest bill against tax in Germany and the UK. The important thing is that if you borrow the money in the UK (by remortgaging a UK property- which bar the xrate risk could be cheaper than taking out a German mortgage ..... although that's a whole new story) it is VERY important that you get the lender to ringfence the amount you have borrowed with the relevant documenation. This is so that you can prove to the German tax authorities that you have borrowed the money for this purpose.
On the second point there is a double taxation treaty meaning any tax you pay in Germany can be offset against your UK tax bill. Unless you invest in a lot in German property, or don't have interest expenses, you are very unlikely to be paying anything near 40% in Germany in taxation- in fact if you have a couple of small apartments it will be closer to 15% according to our calculations. This is mainly due to your 2% depreciation allowance. So if you are a UK higher rate tax payer it really doesn't make much difference.
If you are looking for opportunities please come and look at our website at www.berlin-capital.com and give me a call any time if you have some questions.
Julian Power

At the dentists yesterday I leafed through this months 'A Place in the Sun' magazine. Amongst all the glossy ads for new builds in Dubai, the Costas and Bulgaria it has a feature on Germany, listing it as the hottest place to invest.

I sniff a bandwagon

Dogbox

You seem to know a lot about the Berlin market. I noticed an earlier post you had made about buying directly from the council. But I could not see how to reply to that actual post. Can you clarify how you buy direct?

Many Thanks

Seamus

www.solidrockconsultancy.com

I have found property through them. They beat the competition on value for money. I have been out with 4 other agents but this company really showed me quality at a good price.

Ive started a thread on a Berlin development with 10 year guaranteed state rents.

test

I am new to the forum, been watching for a few months.

I used to live in Germany (rented), and at the time found this website useful for looking at property prices. Within the website you can also look at rents, so to get a good idea of how much to expect.

http://www.immobilienscout24.de/de/finden/...F94378E.worker1

I am serisously thinking of investing there, if someone could post some links/details to UK based companies that will help me organise the finance/legal side of things that would be most helpful.

ex-pat investor, I am the owner of a few high yielding properties in Germany and I placed one of them for sale on the site: www.invest-germany.eu as a test case (it is the house in Gera-Langenberg with the 12% optimized annual net yield). The site is UK based and offers legal and administrative consultancy.