German Boom Fuels Inflation Angst

[OnlyMe]

Wonder what happens if all the money floating round the piigs stil and us) goes and floods the german market - toegether with a flood of migrant labour. They got lucky with the absorption of East GErmany in many ways - business cycle (ok driven by the central banks), and it helped maintain a competitive edge in many ways by preventing speculation because there was so much really cheap land and labour nearby.

Could see some real blowback from ultra-loose montary causing some damage.

http://www.spiegel.de/international/business/0,1518,760105,00.html

The German economic boom is fuelling inflation, and prices are expected to keep rising because of Europe's one-size-fits-all monetary policy. The European Central Bank can't raise interest rates aggressively enough to curb German price pressures because that would hurt the weaker euro-zone economies.

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Property Boom in Top German Cities

The German real estate market is booming in Hamburg, Munich, Düsseldorf and Berlin. Large brokerage firms such as Engel & Völkers have reported record sales. "A lot of people are currently withdrawing their money from the bank and investing it in residential real estate," says Jürgen Michael Schick from the German real estate industry association IVD, "and this trend will continue throughout the year."

Investors are not merely interested in buildings and residential properties, but also farmland and forests. Some property dealers are currently reaping enormous profits. "We've seen a massive increase in land value," says real estate agent Dirk Meier Westhoff, "especially in eastern Germany."

For many years, no one was interested in the fields and forests in northeastern Germany's Uckermark region, or anything east of Magdeburg for that matter. But now prices have soared by as much as 20 to 30 percent in recent months. "This is a tremendous development in our market," says Meier Westhoff.

[aa3]

German property is probably an amazing place to be over the next decade. It seems with the Euro zones low interest rates and powerful real growth in Gemany.. you can't screw up with borrowing money and buying or building capital in Germany.

[LuckyOne]

German property is probably an amazing place to be over the next decade. It seems with the Euro zones low interest rates and powerful real growth in Gemany.. you can't screw up with borrowing money and buying or building capital in Germany.

I agree (especially with respect to Eastern Germany).

The biggest risk is demographic. There are not that many cities in Germany which will have growing populations (especially in the East) in the next couple of decades which will implicitly increase voids and put downward pressure on rents.

I think that the optionality is in the buyer's favour too. The physical assets are in Germany while the paper loans are in Euros which could fall apart.

[scepticus]

I agree (especially with respect to Eastern Germany).

The biggest risk is demographic. There are not that many cities in Germany which will have growing populations (especially in the East) in the next couple of decades which will implicitly increase voids and put downward pressure on rents.

I think that the optionality is in the buyer's favour too. The physical assets are in Germany while the paper loans are in Euros which could fall apart.

http://www.spiegel.de/international/business/0,1518,729597,00.html

"Eastern Germany Confronts Skilled Labor Shortage"

[LuckyOne]

http://www.spiegel.de/international/business/0,1518,729597,00.html

"Eastern Germany Confronts Skilled Labor Shortage"

Very interesting and consistent with the themes running through much of what you say. Thanks for that.

In a way, it would be nice if we had similar problems.