Investment Focus – The Rhine-Ruhr Area of Germany
Whilst ProVenture have operated to a great extent in the former East of Germany for our first 5 years of operation, we continually seek new markets in which to operate across the country. The economy across the country is continually performing well despite the headwinds of the current Eurozone crisis [I sit here now in Feb 2012] and the economy is set fair for a positive decade you would say. Certainly after it sat in the doldrums for much of the 90s and early century whilst re-unification weighed down and productivity was improved. Our journeys in the West have so far taken us to the port of Bremerhaven, a yield market which we opened up for clients in 2011. Here, we are achieving 8-12% yields, backed with 80% finance and a strong tenant sector. Perfect conditions you might say. Whilst the Bremerhaven market is fairly small, we have have sought similar conditions across the state of North Rhine Westphalia [NRW]. We have found some interesting, positive and potentially exciting markets –
Are we going to invest? What yields can we expect? – find out here.
German Economy
Despite the significant headwinds of the Eurozone turmoil, Germany continues to weather the storm as good as you would expect. In terms of unemployment, the country is at a new low, according to this report from the BBC reports and shows Leipzig as booming
The German manufacturing sector returned to growth in January, with a PMI of 51 (according to data from Markit). That’s a recovery from 48.4 in December, and means Germany’s manufacturing sector expanded for the first time since September, since the start of the Eurozone woes.
The monthly Ifo Business Climate for trade and industry in Germany improved for the third time in succession in January. Although companies assess the current business situation as less favourable than in December, their business expectations have brightened considerably. The German economy has started the year positively.
The business climate improved in manufacturing. Manufacturers see their current business situation as slightly improved and their business outlook as clearly more favourable than in the previous month. Export expectations and personnel planning are also somewhat more positive once again. Capacity utilization in manufacturing is currently slightly lower than in autumn 2011. However, use of equipment and machinery remains above average.
The business climate in construction improved for the third month in succession. The constructors surveyed are significantly more confident about their six-month business outlook.
It seems, as much as possible, it is set for “business as usual” for Germany for 2012, as it uses it diversified export market to take up the slack from the under-performing and indebted mess of the countries which surround it. GDP growth will be the one to watch over 2012. The economy has had a great run in the last 2 years, posting 3.8% and 3% respectively. As most Eurozone countries continue the nose-dive this year, a German growth of above 1% this year will be seen as a good result and during a period of low inflation and increasing productivity. This is important as the country faces increasing competition from overseas exporters.
Real Estate
Investment volume for larger German residential deals rose 59% last year to €5.97bn, says realtor BNP Paribas Real Estate Commercial space take-up in 2011 in Leipzig, was up 27 percent (103,000 m²) on 2010 and one of the best performing cities in Germany in terms of increase in take-up.
You start to hear strange stories of a bit of a panic to buy property, not only from local buyers but from those overseas. Below is one from Reuters:
Rutilio de Vito, a 61-year-old pensioner from a hillside town in southern Italy, doesn’t speak a single word of German but jumped at the chance to buy a flat in Berlin. Concerned about the euro zone crisis and suffering the pinch from painful austerity measures at home, de Vito is among many middle-class Europeans, especially from worst-hit Italy and Greece, seeking to shelter at least part of their life savings in property in the capital of the region’s strongest economy.
"I feel responsible for my two children and I thought I had to keep something for them while we are preparing for the worst," said de Vito, a former court clerk who lives in a small town near Avellino and retired four years ago.
"I don’t speak a word of German and the flat is 1,700 km away, but we have to get out of our small world and look at wider horizons if we want to survive," he said.
It’s a much cheaper alternative to top property spots like London, the domain of wealthier investors.
Italian pensioners, doctors, film directors, architects, young couples and teachers, as well as similar middle class Greek families, are looking around with budgets of up to 150,000 euros (123,000 pounds), more than enough for a two-room apartment, agents in Berlin said.
The property rush has made the fortune of Berlin real estate professionals who speak foreign languages.
"Sales of residential property skyrocketed in the last two months due to fears of a possible default of Italy, new property taxes and threats of a recession," said Federico Racca, a manager at Berlino Immobiliare, a real estate agency in Berlin whose clients are mostly Italians.
"Our customer base has moved significantly closer to small savers," he said.
Racca also works with clients from France, Spain, Russia and the Nordic countries – so far the most active foreign buyers of property in Berlin.
De Vito said his 32-year-old daughter was considering the possibility of moving to Berlin to live and work after she degrees in psychology. She is still undecided. If she decides not to go, de Vito will rent the apartment out.
The strength of German’s economy and cheap housing prices were what clinched the deal, he said.
With Italy’s latest 33 billion euro austerity package so far failing to restore market confidence and no end to the crisis in sight, the trend of buying from Italy is likely to continue.
M2square agent Annalisa Fornari said: "What we (are seeing) has no comparisons with the last eight years. There is an entire portion of the market that is moving for the Italians."
Stefano Guala, agent at L&B Immobiliya, a Berlin property agency which started serving Russian clients but was now growing thanks to Italians, concurred.
"Often people bought an apartment without even coming to Berlin and doing everything via email and over the phone. This is what has struck me most," Guala said.
Both m2Square and L&B Immobiliya have more than doubled their staff with Italian-language skills to 10 and six, respectively.
De Vito, who has been enjoying touring Italy in a caravan with his wife since he retired, said he rushed to buy his apartment in the eastern Berlin district of Lichtenberg — without ever stepping into Germany.
Whilst ProVenture exited the Berlin market pretty much in 2008, and have sold all privately-owned investments there as the prices are just too high for yield clients, the same story is being seen in the markets of Leipzig, Chemnitz and Bremerhaven. Good property is finding a home very quickly, usually to local buyers, but the demand from Eurozone investors looking for a place to put their Euros is off the scale. We are trying to keep up…
Latest Property Offers
850,000€ | Leipzig
Potential Yield: 8.2%
Type: Residential
Approx. Size: 1120 sqm
This is a fully residential package of 2 apartments in Leipzig. The first property, Max Metzger Strasse is a 4 floor, multi-family house with 5 out of 8 units let. It is located in Gohlis Mitte, a highly desirable and attractive
location just a couple of kilometres north west of the city centre. The micro-location is very appealing; there are
woods on the opposite side of the road, and the road itself is nicely secluded from the main road. The property
is in good condition, with the 3 vacant apartments now needing refurbishment to appeal to high quality
incoming tenants.
975,000€ | Leipzig
Potential Yield: 8.2%
Type: Residential
Approx. Size: 1180 sqm
Located in the trendy south part of the city in Sudvorstadt, on the demand street of the “Karli” here we have a beautiful period apartment house of the 1900s. The location is characterised by young people and students living in the area, with the best of the bars, coffee shops and society living that the city can offer. Rents in this area are increasing, with 6 – 9 Eur per sqm being typical in period properties such as this. Prices per sqm for owner occupied units are in the range of 1.200-1.800 Eur per sqm. In its current configuration we have 9 residential units and 1 commercial [a bar / restaurant, in residence since 2003]. The property stands with vacancy to 3 units, and here some re-configuration is needed to maximise the potential of the property. To the rear of the property are balconies with a pleasant aspect and space for parking. This is a rare object for sale as a complete apartment house and demands a viewing at this price per sqm.
400,000€ | Chemnitz
Potential Yield: 10.1%
Type: Residential
Approx. Size: 786 sqm
Well located in the popular district of Schloss Chemnitz we have here an apartment building with 11 residential
plus 2 commercial units, together with 6 parking places to the rear. The Scloss area, surrounding the historical
castle is well-regarded by above average tenants and has a high proportion of owner-occupation. The appeal
is some nice parkland areas nearby, together with the lake, but still within walking distance of the city centre.
The property is of the 1900 period, and presented in middle standard with most units being well-refurbished
with laminate flooring and bathrooms. The apartment sizes are mainly in the range 60 sqm which is ideal for
letting.
320,000€ | Chemnitz
Potential Yield: 16%
Type: Mixed
Approx. Size: 848 sqm
Only 377 Eur per sqm!!
Presented here is a beautiful period property, with 7 residential and 3 commercial units plus
parking for 12 cars. The property is located in Schönau and is one of the premium areas of
Chemnitz for private homes and neighborhoods, and one of the locations in the city where the
demand exceeds the supply. Renovated fully to a good standard in 1994, the property is of a good
standard of refurbishment and presents well for new tenants. Located on 4 floors, the lower 2
levels are set as as commercial and the upper floors are residential.
380,000€ | Chemnitz
Potential Yield: 10%
Type: Residential
Approx. Size: 672 sqm
Located in the suburb of Reichenbrand in Chemnitz, here we have 2 adjoining and purely residential
properties being brought to the market. The property is of an attractive construction of the early 1900s period
and stands well in the location. It comprises 11 apartments in all, with balconies and average size of 61 sqm
which is an appealing size for tenants. The rear garden is well-kept and attractive. Average rentals for the 10
units let now is 4.6 Eur per sqm and around the level for this area. There is now 1 apartment vacant which will
remain un-let during the marketing period to allow for access to see the internal of the property.
In a very pleasant part of the city, and priced at only 565 Eur per sqm, this unit is well worth considering an
inspection.
240,000€ | Leipzig
Potential Yield: 9.77%
Type: Residential
Approx. Size: 568 sqm
This is a property is in Alt-Lindenau, an area just a few kilometres from the city centre and well connected by tram. it is an entirely residential offering, with 11 units spread over 4 floors, with the majority of the units sized between the highly rentable range of 45 – 60 sqm.
720,000€ | Leipzig
Potential Yield: 9%
Type: Residential
Approx. Size: 1074 sqm
This is a primarily residential apartment block located in the highly popular region of Connewitz, lying around 4km to the south of Leipzig City Centre. Only 720.000 Euro Investment Opportunity – Full Tenanted
1074 Sqm – Only 670 Euro per sqm
105,000€ | Berlin
Potential Yield: 5.77%
Type: Residential
Approx. Size: 74 sqm
This ground floor apartment is a bright elegant 3-room apartment with a central hall, open kitchen as the central element, a newly tiled bathroom with modern plumbing elements and the rooms are equipped with parquet or laminate flooring.
Reduced to 410,000€ | Leipzig
Potential Yield: 10.2%
Type: Residential
Approx. Size: 719 sqm
14 Apartments, fully rented investment opportunity with scope for rental income uplift. Renovated with 8 units boasting balconies. Upto 80% Finance available.
970,000€ | Wuppertal
Potential Yield: 8.41%
Type: Residential
Approx. Size: 1911 sqm
Situated in the bustling city of Wuppertal, this large residential and commercial property, set across 3 adjacent buildings, with 26 residential and 6 commercial units is located close to the famous cable car, numerous green areas and in the central location of Wuppertal-Oberbarman..
Built in 1957 it underwent renovations to the façade and balconies in 2011. The apartments all have decentralised gas heating. Currently there are 7 vacant apartments and a vacant commercial unit in the rear building. In addition, the are 11 parking places, 8 of which are vacant.
540,000€ | Herne
Potential Yield: 11.51%
Type: Residential
Approx. Size: 1046 sqm
Built in 1910 it underwent renovations in 2005, including new glazed windows, laminate and granite flooring, new roof, electrics, plumbing and bathrooms. A total of 16 apartments, split between the main building and 2 ‘town houses’, with a total living space of 1046 m². The heating is by centralised gas provided by a modern Vieissman boiler. There are currently 3 vacant apartments that have been guaranteed tenanted prior to contracting.
420,000€ | Gelsenkirchen
Potential Yield: 10.69%
Type: Residential
Approx. Size: 795 sqm
Built in 1954 and completely renovated in 2011, this attractive multi family house is situated in the popular residential district of Schalke. Within a short walk of the property are eight kindergartens and four primary schools, making the district very popular with families. In addition to the 12 rented apartments, there are 6 garages which are also fully rented. Gelsenkirchen is known in Germany especially for the football Bundesliga club Schalke 04, but the city has much more to offer than just football. It has one of the busiest shopping streets in the whole Ruhr area and in the top 30 in Germany.
385,000€ | Wuppertal
Potential Yield: 9.77%
Type: Residential
Approx. Size: 739 sqm
Situated in the bustling city of Wuppertal, this property contains 7 residential and 2 commercial units is located close to the famous cable car, numerous green areas and in the central location of Wuppertal-Langerfeld. Built in 1909, it is in need of some renovation to modernise the apartments are tenants leave, but the structure and façade are very sound. The heating is presently gas centralised and the windows are PVC double glazing.
265,000€ | Duisburg
Potential Yield: 9.38%
Type: Residential
Approx. Size: 382 sqm
Built in 1955, the building has undergone renovations when needed; the electrical installations were renewed, as was gas central heating and double-glazed vinyl windows have been installed. Six of the eight apartments have balconies. In 2009, the two top floor apartments were also fully renovated. There are new bathrooms and kitchen installations, laminate flooring was laid and painting and electrical installation work carried out. The apartments on the lower floors are thoroughly good condition – the bathrooms are also renovated.
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