Why Now
Real Estate Investment in Germany?
by Uwe Falkenberg
Economic developments
A robust
development in the global economy, strong growth in the Eurozone are
indicative of the current macro environment and are the driving forces
behind a boom situation that Germany's economy has been waiting for years.
Towards the end of 2006, the German economy experienced its strongest upturn
since the New Economy boom in 1999/2000. All significant economic indicators
point to a positive growth outlook for 2007 and suggest a sustained economic
revival that will not lose its impetus during the following year. In 2006,
the German economy regained its role as the power behind growth in the
Eurozone, the vitality of this upturn exceeded all expectations. The German
Property Market is Europe's biggest with record transactions in 2006.
Figures for the first half of 2007 show no slackening in volume. 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.
The rent
level is still 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. Germany is still currently one of the few major
economies where an investor can expect a positive cash flow from property
investments.
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. 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 maybe wrong. There is only one solution to
this situation - Alliances
with trustworthy partners already present in the market with access to off
market properties and know-how in their purchase and operation.
What is
the best strategy?
Developing
the right strategy for the way in and the way out again is key to any
investment. The properties need to be selected for the investment period
envisaged. The exit strategy has to be clear and the business plan developed
accordingly. Whether sale as condominiums or a block of rented apartments,
market knowledge of the respective markets is vital for the right purchase
decision and the business plan. With the right partners at the starting
point a successful and profitable exit after 3 to 7 years, depending on the
strategy, is easily achievable.
For more
detailed information please visit the website of
Berlin Portfolio Ltd or
contact the author by clicking on this link: E-Mail
This work is licenced under a
Creative Commons Licence.
