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jmpoure

Panic On German Real-estate

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Link to an article from Le Monde (French first and most famous newspaper): En Allemagne, la débâcle des fonds immobiliers sème la panique

In short : real-estate is crashing in Germany.

As there is no solution to stop the crash,

investors are now withdrawing their money, leading to a larger crash.

Funds will need to sell their properties, but it seems that some properties already have a ZERO value.

This is not a soft-landing, not a hard-landing, just a complete crash reducing value to ZERO.

If you view these posts, real-estate seems to reachs zero value in certain locations.

Examples:

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=1318

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=4525

Stuck in the British, French or German real-estate crash? Your house is on sale and unsold for a year? Relax and try our games:

How much is worth 6.650 square meters of office space in Germany: 10.000€

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6519

How much is worth a complete building in Berlin: Interested ???

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6508

How much are worth two buildings in Berlin: Interested ???

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6516

Who would like to buy a 6866 m2 castle in Germany: Anyone ???

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6483

Kind regards,

Jean-Michel

Edited by jmpoure

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Guest Charlie The Tramp
In short : real-estate is crashing in Germany. As there is no solution to stop the crash, investors are now witdrawing their money, leading to a larger crash.

Dogbox will not be happy. Looks as if Angstsparen is growing in Germany.

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Difficult to tell how widespread the problems really are. The tactics used so far are questionable though - i.e. blocking investors from withdrawing money from funds that actually seem to have problems - this has had the knock on effect that investors in other funds are suddenly asking themsleves the quetions - "What if my fund gets frozen and I can't withdraw the money and it just happens to be a duffer - I may lose the lot".

I expect the same to happen some time with mortgage backed securities and other credit based instruments, only a matter of time before a shoe drops and maybe then people may start asking about the real risks of default and how much their paper is really worth.

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When wii the crash bottom-out? Predictions anyone. I suppose Berlin is looking like a less and less attractive location for property investment even though its such a great city.

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When wii the crash bottom-out? Predictions anyone. I suppose Berlin is looking like a less and less attractive location for property investment even though its such a great city.

I keep a close watch on US real estate together with the UK and believe there is a widespread perception that real estate is overpriced world-wide. It has been a mania fuelled by low interest rates and speculation which is ultimately unhealthy for any economy. The IMF and other international financial institutions have been issuing warnings for a number of years and it is possible that the "collective conscience" of investors is saying its time to get out. Sadly, as with most speculative bubbles most get out too late because they can't read the early warning signs. The crash in Germany is not an early sign.

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Difficult to tell how widespread the problems really are. The tactics used so far are questionable though - i.e. blocking investors from withdrawing money from funds that actually seem to have problems - this has had the knock on effect that investors in other funds are suddenly asking themsleves the quetions - "What if my fund gets frozen and I can't withdraw the money and it just happens to be a duffer - I may lose the lot".

I expect the same to happen some time with mortgage backed securities and other credit based instruments, only a matter of time before a shoe drops and maybe then people may start asking about the real risks of default and how much their paper is really worth.

Please see the other thread on this here.

Some of these funds have a long history and were always sold to investors as very save investments, yielding only slightly above average. My Mum has been holding shares in one of them for a long time (more than ten years I think). Coincidentally, this one was the first to lock in investors' monies at the end of last year.

The practise of locking in investors' money has been unprecetended in Real Estate Trusts until late last year, and this has, I think, indeed had the effect of damaging the reputation of all other funds as well. It has even been contemplated that the Deutsche Bank (holders of the first to close) only locked in the money because they wanted to get rid of this fund altogether anyway.

I'm holding shares in a different Real Estate Trust, and that one suffered as well over the last year or so. I have been told the revaluations are over, and it should not lose any more value. I have also been led to believe that other Real Estate Funds have not revalued their properties (unfortunately, I don't understand the legal stuff here: how often properties are being revalued etc). I sold half of my shares in the beginning of January anyway. We'll see.

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is that 40K euros for a Berlin apartment :o

No 40.000 € is for the COMPLETE flat, of course.

You can buy a COMPLETE house for 2.000€.

When the crash comes, it is a COMPLETE crash, not a small drop in prices.

Edited by jmpoure

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When the crash comes, it is a COMPLETE crash, not a small drop in prices.

It has to come into balance though dose'nt it. Not to many miles from Berlin, a friend of mine bought a nice wee farm in Latvia for about the same price as a garage here. Has a Latvian girlfriend though.

Same story with another mate, got a really nice house in Bulgaria for 3K through local friends. Thing's here are just way out of ballance here, especially as all the jobs are going that way as well,

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Link to an article from Le Monde (French first and most famous newspaper): En Allemagne, la débâcle des fonds immobiliers sème la panique

In short : real-estate is crashing in Germany.

As there is no solution to stop the crash,

investors are now withdrawing their money, leading to a larger crash.

Funds will need to sell their properties, but it seems that some properties already have a ZERO value.

This is not a soft-landing, not a hard-landing, just a complete crash reducing value to ZERO.

If you view these posts, real-estate seems to reachs zero value in certain locations.

Examples:

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=1318

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=4525

Stuck in the British, French or German real-estate crash? Your house is on sale and unsold for a year? Relax and try our games:

How much is worth 6.650 square meters of office space in Germany: 10.000€

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6519

How much is worth a complete building in Berlin: Interested ???

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6508

How much are worth two buildings in Berlin: Interested ???

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6516

Who would like to buy a 6866 m2 castle in Germany: Anyone ???

http://www.bulle-immobiliere.org/forum/viewtopic.php?t=6483

Kind regards,

Jean-Michel

Impoure - was that castle selling for E354k??

That's the price of a two bed 60m2 flat in London..... :o

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Impoure - was that castle selling for E354k??

Of course, yes.

You can sell a two bedroom flat in London and buy a bundle including:

- a huge castle in Germany

- AND 10.000 square meters of office space,

- AND a complete building in Berlin.

Usually, Investors buy theses buildings and include them in 'cargo' companies, and sell them to investors on the stock exchange in London or Paris. In many places, the value of real-estate in Germany and Eastern-Europe is ZERO, and will stay ZERO during the next 50 years, because of these countries have entered a deep demographic depression.

Hence the notion of 'Real-estate Black Hole' (software patent Jean-Michel Pouré): In certain areas and cities, investors buy nice properties and buildings for nearly zero. They refurnish their properties and loose everything, because there is not a single buyer or noone willing to rent. Prices of land, buildings, houses and office space goes down like in a giant swirl. Over time, the falling prices still attract new investors, especially American Funds, who know nothing in demographics and will in turn get ruined. This situation can be compared to a black-hole, because the attraction is too important for investors, and once you are in the whole, you cannot escape without selling one percent of the buying price, which reduces your investment to ZERO.

This is only the beginning of a very deep real-estate depression in Germany. Only the beginning.

Edited by jmpoure

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Guest Charlie The Tramp

Of course, yes.

You can sell a two bedroom flat in London and buy a bundle including:

- a huge castle in Germany

- AND 10.000 square meters of office space,

- AND a complete building in Berlin.

So the Count who owns the castle can sell and have enough money to buy that dream two bed flat in London.

I bet he can`t wait. :D

Edit: Just noticed a certain poster reading the thread and then going offline. ;)

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This is only the beginning of a very deep real-estate depression in Germany. Only the beginning.

What nonsense. I studied Berlin prices and found they had dropped 70% in last few years. We have just passed rock - bottom.

The investment funds failing clients will only lead to people wanting to purchase real - estate directly themselves and turning thier backs on fund managers just as we did (endowments pensions etc).

Western European living standards are the goal of Eastern Europe and make no mistake they will achive thier goal and in the process property prices will become on par with developed Europe (UK, Scandinavia, Spain etc).

AS I ALWAYS SAY ABOUT PERMA - BEARS, 'ALTHOUGH YOU PROCLAIM YOU WILL BUY IN TROUGHS, WHEN THE TROUGHS ARRIVE OTHER FACTORS CAUSE YOU TO LOOSE YOUR BOTTLE'. You will not buy when the UK crash comes, as a myriad of negative factors will blind you.

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What nonsense. I studied Berlin prices and found they had dropped 70% in last few years. We have just passed rock - bottom.

The investment funds failing clients will only lead to people wanting to purchase real - estate directly themselves and turning thier backs on fund managers just as we did (endowments pensions etc).

Western European living standards are the goal of Eastern Europe and make no mistake they will achive thier goal and in the process property prices will become on par with developed Europe (UK, Scandinavia, Spain etc).

AS I ALWAYS SAY ABOUT PERMA - BEARS, 'ALTHOUGH YOU PROCLAIM YOU WILL BUY IN TROUGHS, WHEN THE TROUGHS ARRIVE OTHER FACTORS CAUSE YOU TO LOOSE YOUR BOTTLE'. You will not buy when the UK crash comes, as a myriad of negative factors will blind you.

If you are right, now is the time to buy into those funds that haven't closed. Are you intending to do this?

EUR 3,000,000,000 has been taken out of them in December -

http://today.reuters.com/investing/finance...-24_L24767303:1

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So the Count who owns the castle can sell and have enough money to buy that dream two bed flat in London. I bet he can`t wait.

Probably can't. I looked into buying a castle years ago, but the repair and maintenance costs would have been insane, let alone running costs for heating the place... from a financial point of view, it probably will be a lot cheaper in the long run to buy a two-bed flat at the peak in London than a castle for half the price.

That said, if I was rich enough not to worry about those costs, I'd certainly have a few castles around the world for weekend breaks.

Edited by MarkG

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If you are right, now is the time to buy into those funds that haven't closed. Are you intending to do this?

EUR 3,000,000,000 has been taken out of them in December -

http://today.reuters.com/investing/finance...-24_L24767303:1

I'd like to but Ive run out of dosh.

For those interested, but swayed by the negativity, I am bound to remind you that I recall London in the early nineties - you couldnt give property away. The pioneering B2Lers at that time were pretty much dismissed by everyone.

Germany has had years of recession but are well placed for a boom.

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I wasn't being facetious. The bigger the risk, the bigger the return. If you think you can call the bottom then good for you. It's trite to say, but I agree that if the majority who have the ability to invest in X thinks that it's a good idea to invest in X, then it will generally be too late for a decent return.

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I wasn't being facetious. The bigger the risk, the bigger the return. If you think you can call the bottom then good for you. It's trite to say, but I agree that if the majority who have the ability to invest in X thinks that it's a good idea to invest in X, then it will generally be too late for a decent return.

The nature of risk needs to be considered. Just because you take a big risk doesn't mean you will get a big return. Basically it works like this: if 10 people put their money in the bank for a year, they will get an almost guaranteed 4.5% return.

If 10 people invest in very risky assets, 9 of them will lose their shirts, and 1 of them will get a 100% return.

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Certainly the best time to buy is when everyone else is selling: but that didn't do any good for those who bought Enron shares on the way down. Anyone who buys just because something is cheap and no-one wants to buy it is a fool. You want something which is cheap which no-one wants to buy but has strong fundamentals behind it... like gold a few years ago.

In terms of German property, the fundamentals are high unemployment, lousy demographics, foreign competition and rising interest rates: all clear signs that there's about to be a boom in house prices, I'm sure.

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What nonsense. I studied Berlin prices and found they had dropped 70% in last few years. We have just passed rock - bottom.

The investment funds failing clients will only lead to people wanting to purchase real - estate directly themselves and turning thier backs on fund managers just as we did (endowments pensions etc).

Western European living standards are the goal of Eastern Europe and make no mistake they will achive thier goal and in the process property prices will become on par with developed Europe (UK, Scandinavia, Spain etc).

AS I ALWAYS SAY ABOUT PERMA - BEARS, 'ALTHOUGH YOU PROCLAIM YOU WILL BUY IN TROUGHS, WHEN THE TROUGHS ARRIVE OTHER FACTORS CAUSE YOU TO LOOSE YOUR BOTTLE'. You will not buy when the UK crash comes, as a myriad of negative factors will blind you.

The problem is not with living standards ... Living standards always grow. The German living standards are high enough, don't you think. IMHO, the German case shows that demographics really drive the price of real-estate.

In most European countries, there are enough buildings and houses for the next 50 years, as the population will decrease very fast. Look at this map:

une-europe.png

Countries like Spain, Italy, Poland and Germany are real-estate black-hole candidates.

Most Eastern countries have less than 1,3 child per woman. But this includes women between 15 and 50 years old. In these countries, young women give birth to less than 1 child average. There is nearly no need to build, sell or buy new houses. In these countries, there are enough houses in these countries for the next 50 years.

Therefore, for a question of low demand, houses probably have no value.

We have to build a new financial system, where financial bonds do not ultimately rely on real-estate - at least in European countries.

Because the German population will decrease from 80 millions to 50 millions people, investors entering the market now will probably get ruined. Germany is a "real-estate black-hole". As every black-hole, it will certainly attract stupid investors.

Germany will stay a whealthy country,

but real-estate will be nearly free.

Kind regards,

Jean-Michel Pouré

Edited by jmpoure

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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