RESIDENTIAL REAL ESTATE MARKET OF MUNICH. REPORT FOR THE 1st HALF OF 2014 ACCORDING TO EKM DATA

RESIDENTIAL REAL ESTATE MARKET OF MUNICH. REPORT FOR THE 1st HALF OF 2014 ACCORDING TO EKM DATA

Report for the 1st half of 2014

EKM – Expert Commission for the valuation of land in the area of the city of Munich

In the first half of 2014, the Munich real estate market was relatively buoyant again. In almost all submarkets of built-up and non-built-up land plots, the number of purchase and sale transactions exceeded the level of the previous year. At the same time, about 4.5 billion Euros were sold on the entire real estate market. The growth rate of money turnover amounted to about 11 percent compared to the same period of the previous year.
In the market of private apartments, the number of concluded sale and purchase agreements has noticeably decreased. Despite this, the volume of money turnover, according to the preliminary calculation, slightly exceeded the figures of the previous year. According to the market analysis, the increase in turnover in the apartment market is associated with continued high demand and new price increases.

Turnover dynamics

Market of undeveloped land plots for construction

Individual housing construction

In the market of land plots for individual housing construction (houses for one to three families, semi-detached houses, duplex houses, private residential buildings), the number of concluded sales contracts in the first half of 2014 corresponded to the level of the previous year. However, there was a decrease in the turnover of areas by 1.8 hectares. As a result, the cash flow decreased slightly.

Cash turnover: minus 4%
Area turnover: minus 10%

 

Multi-storey housing construction

In the submarket of land plots for the construction of multi-storey residential buildings, the number of concluded sale and purchase agreements in the first half of 2014 slightly exceeded the value of the same period of the previous year. 35 contracts for the sale and purchase of land plots were registered (in the same period of the previous year – 31). Of these, 16 transactions for the purchase of land plots with a total area of about three hectares were classified as housing construction under the state support program. The turnover of money and the turnover of space decreased significantly in comparison with the level of the previous year.

Cash turnover: minus 36%
Area turnover: minus 36%

Experience shows that market fluctuations in the segment of undeveloped land for the construction of multi-storey residential buildings are often determined by periodic sales of urban land (usually large areas) and/or long design phases (before development plans come into effect).

Land plots for the construction of commercial real estate.

In the first half of 2014, 22 contracts for the sale and purchase of land plots for the construction of commercial real estate were presented to the expert commission. Of these, 10 sites are intended for the construction of objects of simple commercial purpose (8 in the previous year), and 12 sites (6 in the past year) for the construction of objects of mixed commercial use, in particular, office and administrative buildings.

Despite a doubling in the number of sales of land plots for the construction of mixed commercial properties and an increase in the turnover of areas from 1.9 hectares to 4.5 hectares, the cash turnover in this submarket exceeded the previous year’s figures by only four percent. The absence of a more significant increase in cash turnover is not caused by price increases, but by the fact that the relatively high cash turnover of the previous year was provided by single sales of expensive objects in the inner part of the city (tens of millions).

Built-up land

Individual housing construction

In the market of single-family residential buildings, semi-detached houses, semi-detached residential buildings, as well as small residential buildings, the expert committee registered 13 percent more sales contracts in the first half of 2014 than in the first half of 2013. At the same time, there was a significant increase cash flow and space turnover.

Area turnover: plus 23%
Cash turnover: plus 25%

Residential buildings with apartments for rent

For multi-storey residential buildings with apartments for rent, in the first half of 2014, 7 sales contracts were registered less than in the same period of the previous year. However, the cash turnover for the reporting period increased slightly compared to the previous year.

Number of contracts: minus 9%
Cash turnover: plus 3%

Commercial objects

In the commercial real estate market during the reporting period, three sales contracts were registered more than in the previous year. 51 purchase and sale transactions allowed in the first half of 2014 to reach a cash turnover of about 1.3 billion Euros. The volume of money circulation exceeded the level of the previous year by about 380 million euros. The noticeable increase in turnover was driven primarily by the sale of individual large office and administrative buildings, as well as a hotel in the inner city.

Number of contracts: plus 6%
Cash turnover: plus 42%

Home ownership and fractional ownership

In the market for privately owned apartments and shared properties (such as offices, shops or parking spaces in underground garages), the number of sales in the first half of 2014 fell by nine percent compared to the previous year. Despite this, the money turnover, according to preliminary estimates, exceeded the figures of the previous year by three percent.

The actual value of cash turnover and the distribution of sale and purchase transactions by submarkets (apartments in new buildings, used apartments and objects of shared ownership) for the reporting period can only be estimated, since not all submitted sales contracts have yet been entered into the database purchase price register data.

Of the approximately 5,200 private apartments/share properties sold, approximately 29% were new buildings (approx. 1,490 contracts).

Market trends and price development

Despite the decrease in the number of concluded contracts for the sale of private apartments, in the first half of 2014, the Munich real estate market saw a very high turnover. Compared to the previous year, cash turnover increased by almost 11 percent. At the same time, according to the analysis, in almost all areas of the residential real estate market there was an increase in prices. Demand is high and supply is limited.

Purchase prices on the market of undeveloped land plots for housing construction again exceed the figures of the previous year. However, in these market segments, the number of analyzed purchase and sale transactions is still too small for specific estimates of growth rates.

In the private apartment market, cash turnover increased slightly in the first half of 2014, although the number of sales decreased markedly. An analysis of purchase prices for apartments in new buildings confirms a noticeable increase in prices, in particular for objects with a mediocre location.

There was also a continued increase in prices for private apartments in the secondary market with a mediocre and good location. The graph below shows the dynamics of prices for apartments in houses of different years of construction. However, the 2014 price data can only serve as a trend indicator. A more accurate price analysis is possible in a later period based on the processing of more information about sales transactions.

Prices, further price dynamics

Prices for land plots for the construction of single-family houses with a mediocre and good location – exceed the average market value of real estate as of 12/31/2012 by approximately 35%.

Prices for land plots for the construction of apartment buildings with a mediocre and good location – exceed the average market value of real estate as of December 31, 2012 by approximately 20%.

Increase in the price level of houses with apartments for rent, average interest rate of about 2.5% (range: 1.5 – 3.4%), 19 ratings (years of construction: 1878 – 1976), with / without protection of historical monuments historical monuments.
Price of an apartment in a new building:

  • with a mediocre location – an average of about 5.650 Euro / m2 of living space
  • with a good location – on average about 6.450 Euro/m2 of living space

Secondary market apartments with protection of historical monuments:
with a mediocre location – an average of about 5.600 Euro / m2 of living space
with a good location – an average of about 7.000 Euro / m2 of living space

Price level for half of new semi-detached houses with mediocre and good location

  • on average about 900.000 Euro
  • approx. 6.700 Euro/m2 living space (approx. 135 m2 living space, plot area approx. 300 m2)

Resale prices for half semi-detached houses, with mediocre and good location
on average about 700.000 Euro

  • approx. 5.600 Euro/m2 living space (approx. 125 m2 living space, land area
  • approx. 375 m2, built 1926 – 2009)

Price level for new semi-detached corner houses with mediocre and good location

  • on average about 715.000 Euro
  • approx. 5.950 Euro/m2 living space (approx. 120 m2 living space, land area approx. 275 m2)

Prices for semi-detached corner houses with a mediocre and good location in the secondary market

  • on average about 580.000 Euro
  • approx. 5.500 Euro/m2 living space (approx. 105 m2 living space, land area approx. 355 m2, built 1958-2004)

Price level for new average semi-detached houses with mediocre and good location

  • on average about 675.000 Euro
  • approx. 5.400 Euro/m2 living space (approx. 125 m2 living space, land area approx. 160 m2)

Price level for new average semi-detached houses with average and good location

  • on average about 565.000 Euro
  • approx. 5.150 Euro/m2 living area (approx. 110 m2 living area, land area approx. 225 m2, built 1961-2005)

Munich Expert Committee The activities of the Munich Expert Committee are based on the maintenance of a database of the purchase price register and the analysis of relevant information. The data and information analysis of the database of the purchase price register serve to ensure market transparency and are published annually by an expert commission in the report on the real estate market.

In addition to mostly salaried real estate appraisers, the Munich Expert Committee also includes, as freelancers, representatives from the tax office, the planning department and, more recently, project developers, developers and realtors.

Imprint: Publisher: Branch of the Munich Expert Commission for Land Valuation in the Munich area. September 2014 Responsible for content: Dipl. eng. (FH) Helmut Thiele, MRICS, chairman of the expert committee. Translation: WiP Immobilien GmbH

The role of Russians in the German real estate market is growing

The Institute of German Economics wondered whether investors from other countries are really buying housing and offices in Germany. The experts got an unequivocal answer and told us about it.
For several years now, the German real estate market has been booming, which has led to a noticeable rise in the price of houses and apartments, especially in large cities. According to popular belief, the current rise in prices is largely due to the fact that foreigners are actively buying up real estate in Germany. And this, in turn, gave rise to fears that own housing at home would soon become inaccessible to representatives of the German middle class.

More sales than purchases

Therefore, the experts of the Institute of German Economics in Cologne (IW) decided to find out what is actually the role of foreigners in the real estate market in Germany – both residential and commercial. After analyzing the statistical data for the period from 2002 to 2011, they received an unequivocal answer: this role is insignificant.

Thus, in 2011, individual and institutional investors from other countries accounted for less than 1 percent of all purchase and sale transactions. “Even between 2004 and 2007, when there was a surge in investment from abroad, this share was only about 5 percent,” said Professor Michael Vogtländer, head of the study, in an interview with DW.

At the same time, German investors, on the contrary, were very active in foreign markets. So, during the indicated period, they annually acquired objects and land plots in other states, mainly in Europe and the USA, on average for 7.5 billion euros. As a result, the total value of their foreign real estate reached by the end of 2011 approximately 147 billion euros.

The Russians are in fourth place.

Foreigners, according to the IW Institute, owned real estate in Germany worth 24 billion euros by that time. At the same time, in 2011 they purchased objects for 685 million euros, and sold – for 816 million. It was mainly the Dutch, the British, and also the Americans who sold – all those who had previously actively bought, but, faced with a crisis in the real estate markets in their own countries, began to return capital to their homeland to compensate for the losses that had arisen there.

But who practically only bought that year was the Russians. “It should be noted that even at the beginning of the 2000s, investors from Russia essentially did not play any role in the German real estate market,” said Professor Vogtländer. “However, in 2011 they were already in fourth place, albeit with a relatively modest amount of 50 million euros.”

For comparison: the Austrians then invested 63 million euros, the Dutch (not only selling, but still buying) – 126 million, and 242 million came from Luxembourg. However, the leadership of a small European principality is explained by the fact that numerous real estate funds are registered there. Their main shareholders are often German investors, so Luxembourg investments in the German market cannot be unconditionally considered purely foreign.

So, by the beginning of 2012, the following situation had developed in the German real estate market: almost two-thirds of investments from abroad came from three countries neighboring Germany – Luxembourg, the Netherlands and Austria. They were followed by Russia, and Michael Vogtländer suggested that its share in 2012, for which there are no statistics yet, increased even more.

Only cross-border transactions were taken into account

It should be noted that the IW study used data only on cross-border investment flows, when transactions were made with money received, for example, directly from Russia. “If a Russian investor first founded a company in Germany, and only then paid for the purchase of commercial real estate from its account, then this was not included in our statistics,” the expert warned.

Therefore, it can be assumed that the real volume of Russian investment, especially in the housing market, is higher than indicated in the published study. In addition, the sharp activation of investors from Cyprus attracts attention. Never before there was no interest in German real estate. And in 2011, from a small island on which Russian capital is widely represented, 7 million euros suddenly arrived at once – the same amount as from Spain.

In an interview with DW, Professor Vogtländer specifically pointed out that in large German cities, primarily in Berlin, the share of foreigners in real estate transactions is significantly higher than the national average: “There it is no longer 1 or 5, and, apparently, 10-15 percent. Berlin, according to the interlocutor, has the advantage that real estate in the German capital is still relatively inexpensive – when compared with London or Paris. Therefore, foreign investors are counting on a fairly high dynamics of price growth.

01/14/2013, Andrey Gurkov DW

Commercial real estate in Germany, supermarket.

INVESTMENT IN RETAIL FACILITIES

COMMERCIAL REAL ESTATE OPERATIONS IN GERMANY – SUPERMARKET

For the whole of 2018, transactions with retail facilities, most of them “supermarket”, amounted to 9.8 billion euros. It was a little short of the 10 billion euro mark, which was exceeded over the past 10 years in 2015 and 2017. Against the backdrop of the extraordinary rise in the German investment market across all property classes, the decline in the retail sector compared to 18% of the previous year is striking. The market share was reduced to only 16%. This is one of the lowest rates in a long time. On average over the past 10 years, it was about 28%. Despite this, retail facilities are in second place compared to other asset classes. Commercial real estate in Germany, supermarket.

SUPPLY AND DEMAND FOR SUPERMARKET

Along with an unusually large number of high-end office properties sold, structural changes in the retail space have led to a below-average result. The negative effects of digitalization and the growth of online sales are affecting retail more than any other asset class. Dramatically changing consumer behavior will bring about major changes for sellers, owners and real estate investors. In line with this, the awareness of risks in relation to commercial real estate has increased significantly over the year. Market participants are increasingly avoiding certain retail locations and types of organizations that are more affected by structural changes. This includes rarely visited shopping centers with goods that are widely available online (fashion, media, electronics) or located in less attractive small towns or on the periphery of class A cities. The same applies to commercial buildings within the city. On the contrary, retail trade objects, the main direction of which are food products, are gaining more and more popularity. This may include individual specialized markets, specialized or hybrid centers.

Коммерческая недвижимость в Германии, супермаркет

COMMERCIAL REAL ESTATE IN GERMANY, SUPERMARKET.

Thus, this type of organization, which also includes supermarkets, discounters and hypermarkets, tops the list in terms of the number of transactions. It is followed by real estate on the main shopping streets and commercial buildings with 31%. Deals with shopping centers have gone far to third place with 17%. Judging by the smaller amounts of investment pouring into specialized markets and market centers, a slightly different picture emerges when determining the volume of transactions. The format of retail facilities accounts for a third of the invested capital, about 18% for shopping centers. In the first place with an indicator of 48% is real estate on the main shopping streets and commercial buildings. This result was largely driven by the largest ever German commercial real estate transaction in 2018: Signa Prime Selection’s equity acquisition of 59 Kaufhof properties for just under 2 billion euros.
As in the previous year, the share of “portfolios” at 55% or 5.5 billion exceeded the share of single purchases. They amounted to 45% or 4.4 billion euros. Geographically, the main point was again outside the seven large investment centers of the country. Outside the TOP-7, two thirds of the volume of purchases are noted.

The share of foreign buyers increased by 7 percentage points during the year to 44%, which is slightly larger overall than the share of asset classes of 40%. Austria, as the home country of Signa, tops the list with a 22% volume share. The United States (more than 6%) and Great Britain (almost 5%) are far behind.
Real estate agencies in the group of buyers, having reached the mark of 2.8 billion euros or a market share of 28% due to the market-defining transaction with Kaufhof, outpaced open-ended real estate funds (2.0 billion euros or 21%) and became the largest investors. Asset managers are in third place (1.7 billion euros or 18%). Leading among the sellers were “opportunity” funds with their 20% share, such as Joint Venture, which is behind the Kaufhof deal. They are followed by open real estate funds with 18%.

Коммерческая недвижимость в Германии, супермаркет

Yield COMMERCIAL REAL ESTATE IN GERMANY, SUPERMARKET.

The upper limit of the yield has largely stabilized during the year. In contrast to the office or logistics markets, the growth potential in the rental sector as a whole has been exhausted. This primarily applies to commercial properties with a prestigious location and shopping centers. Sales per unit area are in a state of stagnation. The share of retail food products is growing, as well as catering concepts that increase attendance. All this partially leads to a reduction in the volume of rent of supermarkets.
The upper limit of profitability for supermarkets with a prestigious location in the seven investment centers of Germany in December was between 2.75% (Munich) and 3.30% (Düsseldorf, Cologne). Shopping malls provide 4.50% on average. In search of decent interest, most investors highly value specialized markets and market centers with their yields sometimes well over 5% and a solid influx of funds.

CONCLUSION AND FORECAST

Against the backdrop of profound changes in the structure of retail facilities, the selective behavior of investors when purchasing retail facilities will continue in 2019. Many cautious investors in this cycle may be waiting for the long overdue revival and repositioning of malls and commercial buildings within the city before turning their attention to non-core products. With this development, shopping malls can provide revenue growth throughout 2019. The specialty market segment, dominated by food retail, will continue to lead the way in operations, resulting in stable, slightly higher purchase prices. Due to the limited number of objects, despite the large number of transactions, it must be assumed that this year the milestone of 10 billion euros will not be passed. Moreover, the corresponding product “Commercial real estate in Germany, supermarket” is becoming scarcer.

Коммерческая недвижимость в Германии, супермаркет

 

The role of Russians in the German real estate market is growing

The Institute of German Economics wondered whether investors from other countries are really buying housing and offices in Germany. The experts got an unequivocal answer and told us about it.

For several years now, the German real estate market has been booming, which has led to a noticeable rise in the price of houses and apartments, especially in large cities. According to popular belief, the current rise in prices is largely due to the fact that foreigners are actively buying up real estate in Germany. And this, in turn, gave rise to fears that own housing at home would soon become inaccessible to representatives of the German middle class.

More sales than purchases

Therefore, the experts of the Institute of German Economics in Cologne (IW) decided to find out what is actually the role of foreigners in the real estate market in Germany – both residential and commercial. After analyzing the statistical data for the period from 2002 to 2011, they received an unequivocal answer: this role is insignificant.

Thus, in 2011, individual and institutional investors from other countries accounted for less than 1 percent of all purchase and sale transactions. “Even between 2004 and 2007, when there was a surge in investment from abroad, this share was only about 5 percent,” said Professor Michael Vogtländer, head of the study, in an interview with DW.

At the same time, German investors, on the contrary, were very active in foreign markets. So, during the indicated period, they annually acquired objects and land plots in other states, mainly in Europe and the USA, on average for 7.5 billion euros. As a result, the total value of their foreign real estate reached by the end of 2011 approximately 147 billion euros.

The Russians are in fourth place.

Foreigners, according to the IW Institute, owned real estate in Germany worth 24 billion euros by that time. At the same time, in 2011 they purchased objects for 685 million euros, and sold – for 816 million. It was mainly the Dutch, the British, and also the Americans who sold – all those who had previously actively bought, but, faced with a crisis in the real estate markets in their own countries, began to return capital to their homeland to compensate for the losses that had arisen there.

But who practically only bought that year was the Russians. “It should be noted that even at the beginning of the 2000s, investors from Russia essentially did not play any role in the German real estate market,” said Professor Vogtländer. “However, in 2011 they were already in fourth place, albeit with a relatively modest amount of 50 million euros.”

For comparison: the Austrians then invested 63 million euros, the Dutch (not only selling, but still buying) – 126 million, and 242 million came from Luxembourg. However, the leadership of a small European principality is explained by the fact that numerous real estate funds are registered there. Their main shareholders are often German investors, so Luxembourg investments in the German market cannot be unconditionally considered purely foreign.

So, by the beginning of 2012, the following situation had developed in the German real estate market: almost two-thirds of investments from abroad came from three countries neighboring Germany – Luxembourg, the Netherlands and Austria. They were followed by Russia, and Michael Vogtländer suggested that its share in 2012, for which there are no statistics yet, increased even more.

Only cross-border transactions were taken into account

It should be noted that the IW study used data only on cross-border investment flows, when transactions were made with money received, for example, directly from Russia. “If a Russian investor first founded a company in Germany, and only then paid for the purchase of commercial real estate from its account, then this was not included in our statistics,” the expert warned.

Therefore, it can be assumed that the real volume of Russian investment, especially in the housing market, is higher than indicated in the published study. In addition, the sharp activation of investors from Cyprus attracts attention. Never before there was no interest in German real estate. And in 2011, from a small island on which Russian capital is widely represented, 7 million euros suddenly arrived at once – the same amount as from Spain.

In an interview with DW, Professor Vogtländer specifically pointed out that in large German cities, primarily in Berlin, the share of foreigners in real estate transactions is significantly higher than the national average: “There it is no longer 1 or 5, and, apparently, 10-15 percent. Berlin, according to the interlocutor, has the advantage that real estate in the German capital is still relatively inexpensive – when compared with London or Paris. Therefore, foreign investors are counting on a fairly high dynamics of price growth.

01/14/2013, Andrey Gurkov DW

Munich – it would have been more profitable to buy real estate yesterday!

Demand for housing in Munich is no longer as hysterical as it has been in the past two years. Of course, prices in the city itself and in the vicinity of Munich remain at the same high level. And most likely, the situation will not change in the near future.

375 Euro rent per month, in the very center of Munich, excellent area – the price is quite reasonable. But in this case, we are not talking about a successful deal, but only about the cost of renting a place in an underground garage. Renting an apartment of 87 sq.m in the Palace near the Opera, the former Postal Residence, is 4604 Euro per month, utilities are paid separately. The mentioned property belongs to the category of the “craziest” of what Munich has to offer, 53 Euro per sq. m of rent – for this price in Macklenburg you can buy a building plot.

The luxurious building with the famous Klenze portico is a separate topic of conversation. At the end of 2012, the deal of the year took place on the real estate market in Munich. A Russian investor acquired the Residenzpost Palace for 300 million Euros. The most expensive plot, the most expensive apartments, the highest rent – this is often written about in the press lately on the first pages. For ordinary residents of Munich, this turn of events began to cause concern.

The housing crisis worries the mayor of the city, Christian Uhde. At the same time, the Palace at the Opera is of little interest to him. Oude knows that politics is powerless against individual rare cases. Uhde worries that average prices are rising very rapidly, as well as apartment prices in the former working-class neighborhoods (Giesing and Westend) and on the outskirts of the city are already overstepping all bounds. The danger, according to Uhde, is that his city is becoming inaccessible even to people with average incomes. Today, more and more Munich residents spend more than half of their income on housing.

For example, the family of Frank Herrnberger. The architect lives with his wife and two young daughters in a rented apartment. He and his wife are graduates and both work full-time. For a long time and unsuccessfully, the family has been looking for a suitable apartment for themselves.

Very close, not far from the river Isar, a new residential complex Rodenstock Garten is being built. 20 houses, 285 apartments. And although the cost of a square meter on the first floor of a house on a busy street is from 5,000 Euros, and the facility will be built only in the summer of 2015, all apartments have already been sold out. To this, Frank Herrnberger only waved it off: “These prices are not for me.”

2012 brought no relief to Munich. Demand is strong, the market is empty, and prices have nearly doubled in many areas. Inside the Middle Ring, encircling the old city, all parts have long been planned out. “Even in those areas of the city that were never prestigious, the price of real estate has jumped up a lot,” says Helmut Thiele, chairman of the Commission of Expertise. The Commission publishes annually a handbook on the state of the real estate market with official housing prices. Mr. Thiele claims that the commission’s independent land valuation data released earlier this summer is up 20 percent from the previous year. The expectation does not justify itself, according to Mr. Thiele: “The best thing would be to buy property in Munich yesterday.”

Brokers also do not believe in the possibility of falling property prices. Rudolf Dan from Gerschlauer Immobilien believes that demand in 2013 is no longer as “explosive” as in the previous year. It only rarely happens that buyers raise prices, as at an auction. Thomas Aigner from Aigner Immobilien believes that the decay phase has begun. It wouldn’t hurt to calm down. The prices for buying an apartment are 30 times higher than the annual rent. If you calculate the profitability of a rented apartment, then it will not be enough even to cover inflation.

In addition, many buyers forget about additional costs such as utilities, technical support, and an accumulation fund for repairs.

“Investors believe that money invested in real estate in Munich is more secure than in any other real estate,” says Benjamin Huyus from the brokerage office Planethom. Young wealthy heirs, older couples with cash and other savers assume that prices in Munich will not go down for a long time.

We must also take into account the growth of the population, which increased from 2011 to 2013 by 100,000 people. Until 2014, another 50,000 will be added, after which the population mark will reach one and a half million. Some find a job here, others a place of study. The birth rate is also growing.

The state support program “Live in Munich V” plans to invest about 800 million euros between 2012 and 2016 in housing construction, which is 175 million more than the previous time. There is not enough land for new construction, it is necessary to develop new territories. 9,000 new apartments are planned to be built on the site of the former barracks Prinz Eugen, Luitpold and Funkkazarm. Commercial real estate areas such as Togal in Bogenhausen, Agfa in Giesing, Paulaner in Au, Siemens in Sendling, Mailer in Moosach, Diamalt in Allach will not be left without attention – the project activation covers all parts of the city. By 2016, approximately 15,000 new apartments are to be commissioned. And since this is clearly not enough, there are again discussions about the construction of high-rise buildings. The first trial buildings were erected on the former territory of Siemens, 16-storey buildings were built here.

Housing construction is also being carried out on a grand scale in Freiham. The first apartments in the new district of the city will be ready in 2014-2017, 20,000 people will find their cozy home here. Is Freiham interesting for investors? “Almost every area in Munich can be recommended,” says broker Dan from Gerschlauer Immobilien. First you need to carefully familiarize yourself with the area, if we are talking about a new building. After all, the area can become “problematic”.

For the family of the architect Herrnberger, Freiham or Riem are no alternative to the Three Mills district, where the family lived near the idyllic Rocklplatz. The family would willingly move to the outskirts in a townhouse, even with the need for repairs, but not far from the metro station. Participate in the race for the price in the elite areas of the state. Herrnberger has no desire.

Capital 18.04.2013

RESIDENTIAL REAL ESTATE MARKET OF MUNICH. REPORT FOR THE 1st HALF OF 2014 ACCORDING TO EKM DATA

RESIDENTIAL REAL ESTATE MARKET OF MUNICH. REPORT FOR THE 1st HALF OF 2014 ACCORDING TO EKM DATA

RESIDENTIAL REAL ESTATE MARKET OF MUNICH. REPORT FOR THE 1st HALF OF 2014 ACCORDING TO EKM DATA

Report for the 1st half of 2014

EKM – Expert Commission for the valuation of land in the area of the city of Munich

In the first half of 2014, the Munich real estate market was relatively buoyant again. In almost all submarkets of built-up and non-built-up land plots, the number of purchase and sale transactions exceeded the level of the previous year. At the same time, about 4.5 billion Euros were sold on the entire real estate market. The growth rate of money turnover amounted to about 11 percent compared to the same period of the previous year.

In the market of private apartments, the number of concluded sale and purchase agreements has noticeably decreased. Despite this, the volume of money turnover, according to the preliminary calculation, slightly exceeded the figures of the previous year. According to the market analysis, the increase in turnover in the apartment market is associated with continued high demand and new price increases.

Turnover dynamics

Market of undeveloped land plots for construction

Individual housing construction

In the market of land plots for individual housing construction (houses for one to three families, semi-detached houses, duplex houses, private residential buildings), the number of concluded sales contracts in the first half of 2014 corresponded to the level of the previous year. However, there was a decrease in the turnover of areas by 1.8 hectares. As a result, the cash flow decreased slightly.

Cash turnover: minus 4%
Area turnover: minus 10%

Multi-storey housing construction

In the submarket of land plots for the construction of multi-storey residential buildings, the number of concluded sale and purchase agreements in the first half of 2014 slightly exceeded the value of the same period of the previous year. 35 contracts for the sale and purchase of land plots were registered (in the same period of the previous year – 31). Of these, 16 transactions for the purchase of land plots with a total area of about three hectares were classified as housing construction under the state support program. The turnover of money and the turnover of space decreased significantly in comparison with the level of the previous year.

Cash turnover: minus 36%
Area turnover: minus 36%

Experience shows that market fluctuations in the segment of undeveloped land for the construction of multi-storey residential buildings are often determined by periodic sales of urban land (usually large areas) and/or long design phases (before development plans come into effect).

Land plots for the construction of commercial real estate.

In the first half of 2014, 22 contracts for the sale and purchase of land plots for the construction of commercial real estate were presented to the expert commission. Of these, 10 sites are intended for the construction of objects of simple commercial purpose (8 in the previous year), and 12 sites (6 in the past year) for the construction of objects of mixed commercial use, in particular, office and administrative buildings.

Despite a doubling in the number of sales of land plots for the construction of mixed commercial properties and an increase in the turnover of areas from 1.9 hectares to 4.5 hectares, the cash turnover in this submarket exceeded the previous year’s figures by only four percent. The absence of a more significant increase in cash turnover is not caused by price increases, but by the fact that the relatively high cash turnover of the previous year was provided by single sales of expensive objects in the inner part of the city (tens of millions).

Built-up land

Individual housing construction

In the market of single-family residential buildings, semi-detached houses, semi-detached residential buildings, as well as small residential buildings, the expert committee registered 13 percent more sales contracts in the first half of 2014 than in the first half of 2013. At the same time, there was a significant increase cash flow and space turnover.

Area turnover: plus 23%
Cash turnover: plus 25%

Residential buildings with apartments for rent

For multi-storey residential buildings with apartments for rent, in the first half of 2014, 7 sales contracts were registered less than in the same period of the previous year. However, the cash turnover for the reporting period increased slightly compared to the previous year.

Number of contracts: minus 9%
Cash turnover: plus 3%

Commercial objects

In the commercial real estate market during the reporting period, three sales contracts were registered more than in the previous year. 51 purchase and sale transactions allowed in the first half of 2014 to reach a cash turnover of about 1.3 billion Euros. The volume of money circulation exceeded the level of the previous year by about 380 million euros. The noticeable increase in turnover was driven primarily by the sale of individual large office and administrative buildings, as well as a hotel in the inner city.

Number of contracts: plus 6%
Cash turnover: plus 42%

Home ownership and fractional ownership

In the market for privately owned apartments and shared properties (such as offices, shops or parking spaces in underground garages), the number of sales in the first half of 2014 fell by nine percent compared to the previous year. Despite this, the money turnover, according to preliminary estimates, exceeded the figures of the previous year by three percent.

The actual value of cash turnover and the distribution of sale and purchase transactions by submarkets (apartments in new buildings, used apartments and objects of shared ownership) for the reporting period can only be estimated, since not all submitted sales contracts have yet been entered into the database purchase price register data.

Of the approximately 5,200 private apartments/share properties sold, approximately 29% were new buildings (approx. 1,490 contracts).

Market trends and price development

Despite the decrease in the number of concluded contracts for the sale of private apartments, in the first half of 2014, the Munich real estate market saw a very high turnover. Compared to the previous year, cash turnover increased by almost 11 percent. At the same time, according to the analysis, in almost all areas of the residential real estate market there was an increase in prices. Demand is high and supply is limited.

Purchase prices on the market of undeveloped land plots for housing construction again exceed the figures of the previous year. However, in these market segments, the number of analyzed purchase and sale transactions is still too small for specific estimates of growth rates.

In the private apartment market, cash turnover increased slightly in the first half of 2014, although the number of sales decreased markedly. An analysis of purchase prices for apartments in new buildings confirms a noticeable increase in prices, in particular for objects with a mediocre location.

There was also a continued increase in prices for private apartments in the secondary market with a mediocre and good location. The graph below shows the dynamics of prices for apartments in houses of different years of construction. However, the 2014 price data can only serve as a trend indicator. A more accurate price analysis is possible in a later period based on the processing of more information about sales transactions.

Prices, further price dynamics

  • Prices for land plots for the construction of single-family houses with a mediocre and good location – exceed the average market value of real estate as of 12/31/2012 by approximately 35%.
  • Prices for land plots for the construction of apartment buildings with a mediocre and good location – exceed the average market value of real estate as of December 31, 2012 by approximately 20%.

Increase in the price level of houses with apartments for rent, average interest rate of about 2.5% (range: 1.5 – 3.4%), 19 ratings (years of construction: 1878 – 1976), with / without protection of historical monuments historical monuments.

Price of an apartment in a new building:

  1. with a mediocre location – an average of about 5.650 Euro / m2 of living space
  2. with a good location – on average about 6.450 Euro/m2 of living space
  • Secondary market apartments with protection of historical monuments:
    with a mediocre location – an average of about 5.600 Euro / m2 of living space
    with a good location – an average of about 7.000 Euro / m2 of living space

Price level for half of new semi-detached houses with mediocre and good location

  1. on average about 900.000 Euro
  2. approx. 6.700 Euro/m2 living space (approx. 135 m2 living space, plot area approx. 300 m2)
  • Resale prices for half semi-detached houses, with mediocre and good location
    on average about 700.000 Euro
    approx. 5.600 Euro/m2 living space (approx. 125 m2 living space, land area approx. 375 m2, built 1926 – 2009)

Price level for new semi-detached corner houses with mediocre and good location

  1. on average about 715.000 Euro
  2. approx. 5.950 Euro/m2 living space (approx. 120 m2 living space, land area approx. 275 m2)

Prices for semi-detached corner houses with a mediocre and good location in the secondary market

  1. on average about 580.000 Euro
  2. approx. 5.500 Euro/m2 living space (approx. 105 m2 living space, land area approx. 355 m2, built 1958-2004)
  • Price level for new average semi-detached houses with mediocre and good location
  1. on average about 675.000 Euro
  2. approx. 5.400 Euro/m2 living space (approx. 125 m2 living space, land area approx. 160 m2)
  • Price level for new average semi-detached houses with average and good location
  1. on average about 565.000 Euro
  2. approx. 5.150 Euro/m2 living area (approx. 110 m2 living area, land area approx. 225 m2, built 1961-2005)

Munich Expert Committee The activities of the Munich Expert Committee are based on the maintenance of a database of the purchase price register and the analysis of relevant information. The data and information analysis of the database of the purchase price register serve to ensure market transparency and are published annually by an expert commission in the report on the real estate market.

In addition to mostly salaried real estate appraisers, the Munich Expert Committee also includes, as freelancers, representatives from the tax office, the planning department and, more recently, project developers, developers and realtors.

Imprint: Publisher: Branch of the Munich Expert Commission for Land Valuation in the Munich area. September 2014 Responsible for content: Dipl. eng. (FH) Helmut Thiele, MRICS, chairman of the expert committee. Translation: WiP Immobilien GmbH

07.10.2014 — ALEXANDER KONOCCHKIN “REAL ESTATE CENTER ALEX”

A unique contract with the Bavarian company WiP Immobilien GmbH and another victory in the all-Russian professional competition CREDO-2014 was brought to the Rostov Real Estate Center Alex by high-quality staff training.

On October 2, 2014, Rostov-based Real Estate Center Alex won the Best Realtor Organization in the Secondary Housing Market nomination at the CREDO-2014 National Competition in Real Estate, Construction and Mortgage Lending, as it became known to the Press Release Workshop. The competition was held in St. Petersburg as part of the All-Russian Housing Congress, one of the largest industry events in Russia.

The director of the Alex Real Estate Center, Alexander Konochkin, in particular, told the Press Release Workshop that, in addition to the prize cherished for any real estate company, he brought from the housing congress a unique cooperation agreement with WiP Immobilien GmbH (Germany). According to its terms, the German side will not only expect clients wishing to purchase real estate in Germany from the Rostov partner. But also look among compatriots for owners of real estate in Russia, which needs to be properly managed, as well as Germans who want to invest in Russian real estate.

According to Alexander Konochkin, in Munich the yield of residential real estate is considered to be very good in the range of 3-4% per annum. In Rostov-on-Don, the liquidity of real estate is high, and the yield can reach 8% per month, which is certainly attractive for German investors. The successful implementation of such a joint project can give a new vector to the development of international relations of the Russian Federation in the real estate business.

Rostov’s Real Estate Center Alex faced strong contenders in the Best Realtor Organization in the Secondary Housing Market nomination: Moscow Real Estate Agency (Petrozavodsk) and Nord Agency (St. Petersburg). Nevertheless, the professional community gave preference to Rostovites. Let us recall that a year earlier, at CREDO-2013, CN Alex, the first of the South Russian companies, was recognized as the winner in the nomination “The Best Brokerage Organization in the Mortgage Lending Market”. The more surprising for the winners was repeated success.

Speaking about the prerequisites for this victory and all previous awards of the company, Alexander Konochkin singled out one in particular:

— The main thing that helps us to regularly receive prestigious professional awards is constant and high-quality staff training. Alex Real Estate Center has been conducting training courses for the profession of a realtor for more than 10 years. The three-day course, which took place on September 17-19, could not accommodate everyone,

therefore, we were forced to open a recruitment for the next, 15th group, and it is already one third full.

According to Alexander, the demand for the course is due to the fact that in the process of training, students are given all the basics of the profession of a realtor in a concise and capacious form. This allows Alex Real Estate Center both to prepare its own recruits for successful work and to replenish its staff with people who came to the courses “from the street”. And an indicator of the quality of agent training is the fact that agents from other real estate agencies and specialists from the sales departments of developer companies are sent to the courses, and not only from Rostov-on-Don.

MUNICH AS A PLACE OF PROGRAMMED, LITTLE JOYS

MUNICH AS A PLACE OF PROGRAMMED,
LITTLE JOYS

Read review on prian.ru

In the generally attractive German real estate market, experts still talk about Munich with a special breath. In a stable and reliable industry, the capital of Bavaria is considered the “best” in many respects. Prian.ru, together with the CEO of WiP Immobilien GmbH, Regina Borger, looked into the phenomenon of Munich in order to answer the question: who is suitable for real estate in this city and who is not.

***

We can say that the crisis, which seems to have affected the entire real estate in Europe, did not particularly affect Munich. Over the past seven years, price charts for both new and existing housing in the city have been moving steadily upwards. This growth has become especially noticeable in the last three years. Back in 2011, the average price per square meter in new buildings in the most prestigious districts of the city exceeded €5,000 sq.m., and in the “medium” ones it was €4,000. 600-5700 respectively.

The secondary market is experiencing similar growth. More than one and a half times in seven years, apartments in houses built both 50 and 5 years ago have risen in price.

***

When we talk about the high standard of living in Germany, it is important to remember that it varies from region to region. The east of the country – the territory of the former GDR – is still, let’s say, average, the maritime industrial northwest is richer, and the south is the most successful. When we talk about the great German industry, we must understand that this greatness is largely concentrated in Bavaria.

Here are just a few companies headquartered in Munich: BMW, Bosch, Siemens, Allianz, MAN, Paulaner, Osram… And more than a hundred and fifty major publishers, German and European patent offices, the German Federal Financial Court.

There is a lot of work and many jobs in Munich. Annual population growth due to the birth rate and moving to the region is 9,000 people, and only 3,000 are provided with new housing. What this means for property buyers – I think it is not necessary to explain.

***

The high average standard of living in Munich is determined by education, medicine, and cultural layer. Here, too, you can simply list: the famous LMU – Ludwig-Maximilians-Universität and TUM – Technische Universität München, two medical Universities and developed medical tourism, the largest library in Europe, the famous Pinakothek, 60 theaters, 47 museums …

Munich is a surprisingly green city (a quarter of the territory is a park area), especially for a large business and industrial center. Megacities do not always create “spaces for people”, but in this case everything is exactly like this: parks (including the famous English Garden), neighborhoods immersed in greenery and 2,000 hours of sun a year make the Bavarian capital almost a resort. Except there is no sea.

But near the Alps with their world resorts. From here less than 100 km to Austria, 350 km to Italy, 200 km to Switzerland. And the Adriatic Sea, in general, is not far away, although by European standards 450 km is a decent distance.

***

Real estate in Munich is called Betongold (in literal translation – concrete gold). The hint is clear: this is a great place for those who want to keep their savings.

But “preserve” or “multiply”? When answering this question, it is worth remembering that in settlements with steadily rising real estate prices, it is rarely possible to receive high income, for example, from renting out. In Munich, there is a tenant for almost any apartment, but it is difficult to earn more than 3% per year under this scheme – the price of housing is too high. That is: whoever seeks stability and liquidity in investments will fully benefit from this metropolis. If your goal is to maximize your deposits, look elsewhere.

As in other cities, Munich has more and less prestigious areas, and not all of them are located in the center. The most expensive are Altstadt, old Schwabing, Bogenhausen, Nymphenburg. The price per square meter here is about €8,000, and the most modest apartments are certainly not cheaper than €200,000…

***

In Munich, it is difficult to count on financial success with a modest budget. Firstly, because there is simply no frankly cheap real estate here. And secondly, due to the fact that inexpensive (relatively) housing can hardly be called liquid even here.

Regina Borger says:

“One of our clients, who was very persistent, severely protected her budget up to €120,000. We started looking for an option, although we warned in advance that you can’t count on much for that kind of money in Munich. The real option is an apartment of 25-28 sq. m. not in the city center. When a potential buyer arrived in Germany, we showed her several objects, to be more precise – 6 apartments, of different price categories. One of the options was significantly more expensive – € 200,000.

After analyzing what she saw, the client sent a response: “… I came to the conclusion that I am not ready to buy yet. Other money is needed… Of course, the first object is very tempting, but there is nothing there even for €190,000, not to mention €120,000. Buying a tiny attic is, alas, not my choice…»

This is a typical example when expectations and opportunities do not match! For Munich, the situation is not rare, I would even say typical.”

***

So, Munich appears as a city for life in the broadest sense of the term. Green, with exceptional cultural heritage and rich. And also southern, although not a resort in the usual sense of the word.

The only – but important – limitation… it is expensive. However, given all the above advantages, it could hardly be otherwise.

Author Philip Berezin
Photo by PressFoto

Experts named the most attractive real estate markets in Europe

Professional investors working in the real estate market in various countries have become quite whimsical. Germany is leading the way and is an attractive place to invest this year. Ernst & Young Real Estate surveyed 120 real estate investors, including banks, insurance companies, funds and real estate agencies. This made it possible to prepare a report predicting increased activity in the real estate market.

From which it follows that the closing link of the European ranking is Italy. 70% of respondents assess the state in southern Europe as “little attractive” when it comes to investing in real estate, namely, none of the respondents in 2013 would like to invest in residential real estate, as one in four expects prices to fall.

Spain is right behind Italy. About 63% of respondents say that they consider Spain unattractive state for investing in real estate, as both European countries are suffering from a debt crisis. Only one in ten expects prices to rise from investments in objects with a type 1a location.

France is also at the bottom of the ranking. Only 33% of respondents assess our neighboring country as unattractive, while 46% indicate that France is an attractive place to invest in real estate. 46% of investors expect prices to rise from investments in residential real estate located in the best areas. In the periphery, this figure is 33%.

The Netherlands has a more advantageous position: 62% of respondents consider the country an attractive place for investing in real estate, 16% – a very promising country. Only 22% of those surveyed said they would not invest their capital.

Also, 50% of respondents rate Ukraine as an attractive place for investment in real estate, about 30% as very attractive.

Next to Ukraine in the ranking is Austria. Although only 48% of respondents consider the country an attractive place to invest in real estate, nevertheless, 33% consider Austria as a very promising option.

Russia is also a country where investors would like to invest money. This is confirmed by 64% of respondents. 23% rate Russia as a very good real estate investment opportunity.

The local market in Poland is assessed by the respondents especially positively. 45% consider the country in terms of investment in real estate as an attractive and even very attractive place. Only 10% of interviewees assessed the situation not so positively.

The British can rejoice, their country is classified by 63% of the respondents as attractive, the next 28% rated England as very attractive. In addition, 66% of professional investors in the UK expect to receive a return on investment in residential property with a type 1a location.

Also, for 60% of those interviewed, Switzerland is an attractive place to invest in real estate. Only 8% assess the country negatively from this point of view. Investor interest in housing in Switzerland is particularly high. 55% of capital investors expect price increases for properties located in the best areas.

The pursuit of material values is especially characteristic of Germany. About 58% of respondents consider this country as an attractive place to invest in real estate, about 41% rate Germany very well. In addition, in Germany, one can note an increase in prices of approximately 66% for properties with location type 1a. In the periphery, 15% of respondents still expect price increases.

Non-European countries position themselves better. Turkey shows a very good result in the ranking: all interviewees positively evaluate the country for investing in real estate. 40% of respondents consider her very attractive, 60% of respondents consider her attractive. 55% expect real estate prices to rise in prime locations.

Analytics for renting office space in Munich

The real estate market is gradually gaining momentum. The rent is growing noticeably. In the first half of 2014, the office rental market in Munich was able to record 303,400 m² of space. The real estate market is gradually gaining momentum. The rent is growing noticeably. In the first half of 2014, the office rental market in Munich was able to record 303,400 m² of floor space. The net income from the rental of 293,000 m² of space was 16% higher than the result for the same period last year. An increase in this profit could be expected, but nevertheless, many tenants were relatively cautious and indecisive when concluding new contracts. Since last year’s profit was not high, the increase and growth in profit this year is relative.

In the first quarter tenants such as Brainlab in the exhibition city of Riem and temporary contracts from Bay-Wa in St. Martin set the tone. In the second quarter, the largest number of office leases were on average between 1,000 m² and 5,000 m². In the last 3 months alone, 36 contracts were concluded for a total area of 70,000 m².

Offer and vacant premises

When compared to major real estate markets in Europe, Munich has the lowest vacancy rate. Over the past 12 months, this quota has decreased by another 20 points, i.e. by 5.8%. North of the Old Town in the direction of Schwabing and Bogenhausen, this quota is 2.2%, as low as in any other area of Munich. Many vacant premises are found in the southeast, where 6.4% of the area is offered for rent. The same picture is observed in the southwestern part of the city, where the number of vacant premises was 9.2%.

In both of the aforementioned parts of the city you can find large areas for rent, but the demand for them has fallen because the buildings do not meet modern standards. In more remote areas, the vacancy rate is consistently 8.1%.

In the second half of the year, an additional 104,400 m² of space will be added to the office real estate market, so that, including the new building, the total area of office space will be 212,300 m². Of these, 70% have already been leased or occupied by owners. The biggest new builds in the second half of the year include the “arabesque” in Arabelapark with over 26,000 m² of floor space and the “Mona” next door to the Olympic Trade Centre. Office space accounts for 11,000 m² of the total leasable area. In the fall, the second NuOffice site, which has already been rented out, will be completed near Schwabing.

Demand

Based on analyzes of results in this industry, the real estate market as a whole presents the usual picture. In addition to companies renting 56,400 m² (19%), IT companies account for 53,500 m² (18%) and consulting offices 39,800 m² (13%), which is already a good result.

Outside the city, the picture on the real estate market is changing towards a decrease in dynamics. In the western suburbs, a small plus could be registered, while in the northeastern suburbs, in which communities such as Aschheim-Dornach, Unterföhring and Ismaning are located, a relatively high turnover capacity of 34,400 m² was achieved. Although the share of office real estate in the total real estate market (21%) was much higher than in the previous quarter (18%), it is, if considered over the years, at a level below the average.

Leasing of the premises that are still in the project, as well as those that are still under construction, gave 16% of the turnover. And 9% fell to the share of those areas that were rented for the first time. The rest of the areas, namely the vast majority (75%), were rented from stock real estate and from among the refurbished objects.

Rent of office premises

A large number of lease agreements within the “Old City”, as well as a further decrease in supply in the central parts over the past 12 months, have led to a new increase in rent. In general, in the real estate market, the nominal office rental fee is 15.79 € per m², which means it is 8.5% higher than last year. Continuous rent increases since mid-2010 have brought rents to their highest levels since 2002.

The increase in rent is observed exclusively within the city, where the price per m² of office space in the first half of the year was 17.01 €, while the rent in the outskirts is 9.77 € per m² (4%), i.e. slightly decreased.

Most of the leased area, namely 65%, has reached a payment of 15.00 € per m². In the segment with high pay, starting from 20.00 € per m², 14% of the space was leased. Last year it was only 11%. The development of prices for rental premises is in the direction of “adaptation” to the market, and in this sense, prices remain stable, so one cannot speak of a threatening “collapse” of prices in the city of Munich.

The same scenario is observed when analyzing prices for renting Lage 1 A premises (location “TOP – premium +”). In the middle of this year, this figure was 34.50 € per m². This is 10% higher than a year ago. Over the past 12 months, 21.700 m² have been rented out, of which 10.100 m² of space at a price of over 30.00 € per m². This leads to an increase in the average and high fees, especially in the central areas of the city. Spaces that meet modern requirements and are located in the city center will be in great demand. This allows us to expect that the rent for office space will continue to grow.

Results and forecasts

In 2013, the real estate market for office space in Munich developed relatively calmly. But in the first 6 months of 2014, it started moving again. Economic conditions confirm the fact that the growth of market dynamics will not stand still. Despite this, many tenants pursued a “wait and see” policy. Although searches for new space have increased slightly, they have not yet reached the level of 2010.

In the second half of 2014, the market acquires a new momentum and has a better performance than in the second half of last year and the annual result will reach 550,000 m². This would be higher than last year, but lower than the result of the ten-year cut, where this figure was 615.000 m².

01.10.2014 Colliers Analytical Office, Tobias Seiler

The role of Russians in the German real estate market is growing

The Institute of German Economics wondered whether investors from other countries are really buying housing and offices in Germany. The experts got an unequivocal answer and told us about it.
For several years now, the German real estate market has been booming, which has led to a noticeable rise in the price of houses and apartments, especially in large cities. According to popular belief, the current rise in prices is largely due to the fact that foreigners are actively buying up real estate in Germany. And this, in turn, gave rise to fears that own housing at home would soon become inaccessible to representatives of the German middle class.

More sales than purchases

Therefore, the experts of the Institute of German Economics in Cologne (IW) decided to find out what is actually the role of foreigners in the real estate market in Germany – both residential and commercial. After analyzing the statistical data for the period from 2002 to 2011, they received an unequivocal answer: this role is insignificant.

Thus, in 2011, individual and institutional investors from other countries accounted for less than 1 percent of all purchase and sale transactions. “Even between 2004 and 2007, when there was a surge in investment from abroad, this share was only about 5 percent,” said Professor Michael Vogtländer, head of the study, in an interview with DW.

At the same time, German investors, on the contrary, were very active in foreign markets. So, during the indicated period, they annually acquired objects and land plots in other states, mainly in Europe and the USA, on average for 7.5 billion euros. As a result, the total value of their foreign real estate reached by the end of 2011 approximately 147 billion euros.

The Russians are in fourth place.

Foreigners, according to the IW Institute, owned real estate in Germany worth 24 billion euros by that time. At the same time, in 2011 they purchased objects for 685 million euros, and sold – for 816 million. It was mainly the Dutch, the British, and also the Americans who sold – all those who had previously actively bought, but, faced with a crisis in the real estate markets in their own countries, began to return capital to their homeland to compensate for the losses that had arisen there.

But who practically only bought that year was the Russians. “It should be noted that even at the beginning of the 2000s, investors from Russia essentially did not play any role in the German real estate market,” said Professor Vogtländer. “However, in 2011 they were already in fourth place, albeit with a relatively modest amount of 50 million euros.”

For comparison: the Austrians then invested 63 million euros, the Dutch (not only selling, but still buying) – 126 million, and 242 million came from Luxembourg. However, the leadership of a small European principality is explained by the fact that numerous real estate funds are registered there. Their main shareholders are often German investors, so Luxembourg investments in the German market cannot be unconditionally considered purely foreign.

So, by the beginning of 2012, the following situation had developed in the German real estate market: almost two-thirds of investments from abroad came from three countries neighboring Germany – Luxembourg, the Netherlands and Austria. They were followed by Russia, and Michael Vogtländer suggested that its share in 2012, for which there are no statistics yet, increased even more.

Only cross-border transactions were taken into account

It should be noted that the IW study used data only on cross-border investment flows, when transactions were made with money received, for example, directly from Russia. “If a Russian investor first founded a company in Germany, and only then paid for the purchase of commercial real estate from its account, then this was not included in our statistics,” the expert warned.

Therefore, it can be assumed that the real volume of Russian investment, especially in the housing market, is higher than indicated in the published study. In addition, the sharp activation of investors from Cyprus attracts attention. Never before there was no interest in German real estate. And in 2011, from a small island on which Russian capital is widely represented, 7 million euros suddenly arrived at once – the same amount as from Spain.

In an interview with DW, Professor Vogtländer specifically pointed out that in large German cities, primarily in Berlin, the share of foreigners in real estate transactions is significantly higher than the national average: “There it is no longer 1 or 5, and, apparently, 10-15 percent. Berlin, according to the interlocutor, has the advantage that real estate in the German capital is still relatively inexpensive – when compared with London or Paris. Therefore, foreign investors are counting on a fairly high dynamics of price growth.

01/14/2013, Andrey Gurkov DW

THE BIGGEST CHRISTMAS CALENDAR IN MUNICH

Nowhere in Munich is there such traffic as on the Donnersberger Bridge. Rush hour always reigns here, the streams of cars non-stop “flow” along the numerous lanes of the Middle Ring, along Arnulfstrasse. About 180,000 cars pass here every day. Motorists traveling on a regular route to work; cars moving from one area to another; transit vehicles. Add to this the movement of trains, rumbling every minute under the bridge – suburban trains, long-distance trains, mail and transport trains. The Donnersberger Bridge is perhaps the most uncomfortable place in the city, you want to pass it as soon as possible without delaying.

But it is here, in the middle of the culmination of the infinity of traffic, that you see a spectacular, memorable building that attracts the eye with its transparent beauty during the day, sparkling and shimmering in the darkness of the night.

Here, parallel to the Donnersberger Bridge, is the Mercedes-Benz Center Building, a showcase building approximately 150 meters long. It was built in 2003. The huge transparent walls of the house are divided into “cells”, each exhibiting a Mercedes car, brightly and beautifully illuminated from all sides. From afar, the building seems to be filled with toy models of modern cars.

70 models of the latest cars that regularly replace each other, finding their customers; the latest innovations are put on display for motorists passing by. It looks like a huge exhibition with changing exhibits, of course, only Mercedes brands.

Behind the gigantic model car façade is a light-filled showroom, a car repair shop, and a 65-metre-high round glass tower. But all eyes are drawn, of course, by the “toy world” of Mercedes cars, which turns into December days into the largest Christmas calendar in Munich. Every day from December 01 to December 24, a new window opens, in which a surprise is “hidden” – a new car.

Welcome to the “Toy World” of Mercedes!

Material: WiP Immobilien GmbH

Hunting in the Bavarian forests

We are ready to offer hunting in Bavaria with a fixed fee. Changes in the dates of arrival and departure, number of people, dates of hunting and dates of residence, you can specify when submitting an application.

WEEKENDDURATION1 CATEGORY 2 CATEGORY
Arrival on Friday (Departure on Sunday2,5 days of hunting (2 nights)520-590-
Additional day1 day130-158-

 

HUNTING WEEKDURATION1 CATEGORY2 CATEGORY
Arrival on Saturday (Departure on Sunday)6 days of hunting1.300-1.560-

Охота в баварских лесахShot taxes are valid in Bavaria. Overnight stay in category 1 includes accommodation in a hunting lodge without electricity, with a stove, category 2 – hunting lodges with an electric or gas stove, with separate rooms and showers. In case you want to get a more comfortable home, we will send you offers with prices.

 

List of services included in the price:List of services paid separately:
transfer from and to the nearest train station stationscatering
overnight stay in category 1 for 1 personorganization of drinks
hunting tax and small game shootinghoofed game taxes
training in the hunting districthunting guide 1/1
trophy preparation

REGISTRATION APPLICATION

At the end of your hunt, you analyze and draw your hunting route with the head of the district and sign a document about your trophies. After that, you will be issued an invoice with a duty on the shot, taking into account the deposit you have made.

Информация/Бавария

Охота в баварских лесах

We offer you organization and support in hunting in the Oberfalz areas of Bavaria with a high content of red and black hoofed game, through the pristine coniferous Bavarian forest, as well as in Lower Bavaria, which can offer excellent hunting for small game, right up to the Algäu region. Not so widely known among hunting enthusiasts is the Oberfalz region, located near the border with the Czech Republic. But in this area there are wonderful opportunities for hunting red deer and wild boars.

The wildlife population is also very high in the Bavarian Forest, famous for its pines and firs. But those who decide to hunt in these forests must not forget about all the difficulties associated with hunting in the forest. This hunting region is not intended for those who imagine wild nature only in meadows and fields.
And those who would like to hunt small game, such as foxes, hares and game birds, will find the region of Lower Bavaria inimitable with game feeding grounds, hunting with a dog can be especially enjoyed here.

The Algoy region is famous for its high-mountainous alpine pastures with lush grass. Roe deer, chamois, black goats feel excellent here. And under the canopy of the forests, noble deer hide, making the heart of an inveterate hunter beat faster. We have signed a contract for 900 hectares of hunting grounds in this area for deer and chamois.

Bavarian real estate market. Between attractiveness and prospects.

The real estate market in Bavaria has been in a fever for more than a year. And this applies not only to Munich, the capital of the region. When buying a home, you have to think not only about financial costs, but realistically evaluate forecasts for a constant increase in value. The latest research, titled “Private Property 2015”, highlights the leadership of Bavaria in the German real estate market.

Недвижимость Мюнхен Германия

Over the past few years, this leadership has been noted by all publications and studies in the field of real estate. But Bavaria is noted not only as the most expensive real estate market, but also a region with good forecasts for the future. Almost all the lines in the ranking of the TOP-15 regions of Germany are occupied by the Bavarian regions: the district of Ebersberg, Erding, Freising and Landsberg on the Lech River, etc. In addition to the Bavarian lands, only the Brezgau-Hochschwarzwald district (Baden-Württemberg) is mentioned in the ranking, it occupies the tenth position in the list. The capital of Bavaria, Munich, leads in almost all areas: the development of the job market, the market for innovation, the development of wealth, etc.

“Whoever owns a house or apartment in this region will always benefit from the sale if he decides to do so in the future. This is what makes real estate in Bavaria a profitable investment, despite exorbitant prices, ”these are the conclusions of the studies.

And yet, it should be noted that Munich began to lose its positions compared to previous years. The reason is the constantly creeping up prices for “golden concrete”. Financing an apartment of 110 sq.m., a house of 130 sq.m. becomes unbearable.

A well-known problem in Munich: Monday morning and Thursday evening – overcrowded intercity trains. The destinations are very different: Frankfurt, Stuttgart, Cologne, etc. The family middle class exhausts itself with weekly commutes between work and home. But the decision to change the place of residence for the whole family is made last. Why? Is it really so bad for families with children in Bavaria, in Munich? No, of course, Bavaria is a vacation destination for many couples, it has everything you need for a happy life: a well-developed infrastructure, a high level of educational schools, excellent medical care, the beauty of landscapes, a mild climate, numerous opportunities for sports, convenience and the attractiveness of life in this land is hard to underestimate.

But only when moving from another area in Germany, you will most likely have to change your large separate house with a garden for the crampedness of a small apartment. And on this, despite the big gain in wages, not all are solved. This has become a never ending slog that many employers face in large companies based in Munich.

On the one hand, the economic development of Europe in recent years is striking; this applies not only to the market of Germany and the “strong southern powers, but also to the whole of Europe as a whole. On the other hand, the level of real estate prices is already difficult to calmly assess, and the ability of investors to fulfill their payment obligations since the beginning of the financial crisis is generally difficult.

The reason for this incredible growth in housing and commercial real estate prices can be easily named: the desire to hedge against risks, an overflowing money market deposit account that needs investment opportunities, or, on a global level: the mass of the foreign exchange market has grown to 2 billion euros and so in dire need of investment projects.

Bavaria is an object of international investment

In recent years, foreign investors have shown interest in Bavarian housing. Therefore, an important point is to study the possibilities of developing and expanding the construction market in Bavaria and Munich.

It is noteworthy that the largest and, perhaps, the most politically powerful state fund in the world, the pension fund of the Kingdom of Norway, recently presented an investment project for locating the “Eight Cities of the Future” and is planning two of them in Germany. And the land interest of the Sayazan Foundation is not only with Berlin, but also in Bavaria.

And this is not the first case in Munich: many Asian state funds, such as the Chinese pension fund, are also showing their interest in the German market. One of the major real estate transactions was carried out with the former territories of the Siemens company in the Neu-Perlach district of Munich, the Chinese fund “Ginko Tree” invested in this property. Behind the giant investors, dozens of others appear, pinning their hopes on the stability and growth of the capital of Bavaria.

The dynamics of the real estate market pushes for change

But the more prices rise, the more formerly stable structures are criticized. The study of the McKinske Foundation “Bavaria 2025” formulated the main directions that should be developed in the future: the development of education, especially for migrants; investments in modern models of agricultural development; innovations in the construction market.

Investments in the industries of the future

Привлекательность рынка нежвижимости в Мюнхене

What do the above tasks have in common with investments in the real estate market? Quite a lot, especially after today’s boom and incredibly high prices are bounced back. A strategist investor always looks to the future. And here it is necessary to honestly answer the question: where are young enterprises concentrated, often developing without the support of state programs? In Munich? No, this name rarely appears on the list. The most frequently mentioned are Berlin and Hamburg. This, of course, is not a cause for drama, but an occasion to think about how to attract “young forces.”

Over the past 20 years, the model of economic development has changed a lot, investment capital has become much more mobile, everything is decided by the question of the rationality of investments designed for the future. In the construction of new residential properties, campus-ensemble building concepts are becoming more and more in demand, providing for the various needs of residents, with round-the-clock service.

The leadership of the city should have long been thinking about what measures should be taken to ensure that the housing stock of Munich becomes acceptable for payment. The still limited housing market in the capitals of Bavaria does not make it unattractive for the life of the middle class, but the problem of “broken” families during the week is becoming more and more global. Competition among contractors and technical innovations in the real estate market can be decisive here.

Personal experience: bought two apartments in Munich, rented out

IS IT POSSIBLE TO BUY AN APARTMENT IN MUNICH, GERMANY AT THE OFF-PLAN STAGE? DOES THE COST OF A SQUARE METER GROW AS THE BUILDING IS READY? IN WHAT KIND DO GERMAN DEVELOPERS RENT HOUSES INTO OPERATION? PRIAN.RU’S QUESTIONS ARE ANSWERED BY VLADIMIR FROM PENZA, WHO BOUGHT TWO APARTMENTS IN MUNICH.

управление недвижимостью в Мюнхене

Buyer: Vladimir from Penza
Management company: WIP Immobilien GmbH
Region: Germany, Munich
Object: two two-room apartments
Price: €250,000 and €350,000
Deal: 2012 (secondary market) and 2014 (new building)

Their rates were loyal – from 2.5% to 4.5% per annum.

A typical practice for us – we sold ten apartments, which means we are building a foundation, found more clients, moving on – is impossible in Germany.

They can fulfill any whim, but for your money.

— Vladimir, why did you choose Germany? Did you have business connections there? Or maybe relatives?

– No, for the first time I came to Munich to conduct a medical examination. He successfully solved those cases and began to look at Bavaria from a tourist position. I immediately liked it there. Then I came back several times – Munich always lived up to expectations. At that time, there were no crises yet, the Russian economy was stable, business was also going well … All these factors came together, and a desire to invest in real estate appeared in Munich.

– Did you immediately plan to buy an apartment for rent?

– The ways of the Lord are inscrutable … Thoughts were different. First of all, I bought high-quality real estate in a good location, and what to do with it, I planned to figure it out along the way.

— What object did you choose in 2012? And what was his fate in the end?

– We bought a two-room apartment in a quiet, calm area of Munich, not in the center, for 250,000 euros. At that time, there were no free funds for the transaction, so we decided to take a loan. And so that the apartment does not pull extra money from the pocket, they came to the conclusion that it was necessary to rent it out. All these years she has been successfully renting, and now the loan has almost been paid off.

– Under what conditions did German banks issue mortgages at that time?

– Their rates were loyal – from 2.5% to 4.5% per annum. In theory, in all civilized countries such should be. I’m glad I got the loan.

Note! To date, foreigners can take a mortgage in Germany at 2-3.5% per annum. The rate depends on the solvency of the client and the quality of the object. Typically, loans are issued for up to 15 years.

– How profitable is it possible to rent such an apartment?

— Each case is individual. The rates depend on the location, the quality of the apartment, the presence or absence of furniture … An experienced manager will explain to you how they are formed. In my case, the rent fully covered the main payment and interest on the loan, and there were still about 200 euros left.

– Apparently, this result suited you, since you decided to buy another apartment …

– Yes, in the future I want to leave the first apartment to my daughter, and I bought the second one for my son.

– That is, you were counting not so much on earnings from rent today, but on making a contribution to the future of the family?

– Exactly.

 

New buildings in Munich

— Tell us about the second, more recent deal. What task did you set? How was the object chosen?

— At that time, Regina Borger, director of WIP Immobilien GmbH, had already established an informal relationship. The first transaction was successful, then all these years they were engaged in renting out an apartment, in a word, we understood each other, and I completely trusted them. So I just voiced the idea and asked for something to pick up.

On one of my trips to Germany, I was offered to buy an apartment in a new building, they showed me the booklets of the developer. We went to the site where the house was supposed to appear. At that time there was a wasteland, they were only taken for a foundation pit. And while I was far from the first buyer! It was important for me to see the area – so that it was calm, without immigrants, so that there was a subway nearby. Then we studied the design of the house. I liked everything. True, they asked for an apartment a little expensive – 350,000 euros. But still, this is a new building, and in Germany they are highly valued.

They began to think what to do. I was offered a loan from another bank. To be honest, I thought that they would refuse me, because. I had another outstanding loan hanging on me. But the specialists studied my credit history, noticed that we regularly paid on the first mortgage, that the matter had almost come to an end, and approved the loan. When I found out about this, I immediately signed the contract, almost blindly.

Was it not scary to buy real estate at the very first stage, when there was not even a “box” yet?

– No, these are the Germans, not our Russian developers, who will take the money, and then run after them, look. Everything is clear there.

– I wonder if the cost of apartments in Germany varies depending on the stage of construction? In Russia, for example, you can save 30-40% if you are not afraid and take the object at the stage of excavation.

“There is no such thing in Germany. If it does change, it is very small. Local builders do not have an urgent need for urgent money from buyers. These are powerful organizations with solid budgets, and lending for them is more than affordable. I am sure that the developer can easily take a loan at 1-2%.

For them, money from buyers is just a guarantee that the object will be sold. Naturally, they use them, but this is not a decisive factor in construction. A typical practice for us – we sold ten apartments, which means we are building a foundation, found more clients, moving on – is impossible in Germany. There, buyers pay in stages, only for what has already been done in the house.

– How long did it take to build? And how did you follow the process while in another country?

– A couple of times during our visits to Germany, we drove past the facility, saw how it was being built. But in general, there was never any doubt. Firstly, my German partners, whom I already trusted, recommended this developer. Secondly, I have already managed to make sure that in Germany all systems work well.

As a result, the house was handed over even faster than planned. They were going to finish in October of this year, but last year they forced the process and reached the finish line in May. For me, it was not even very convenient – I knew in advance when the next tranches were due, and then I had to change plans.

— Vladimir, maybe due to the fact that you were buying an apartment in the first stages, the developer offered you to change something for yourself – to make the layout or finish to your liking?

– The price of real estate they had included a standard package – ie. typical finishes and equipment (in the kitchen – built-in wardrobes and appliances, in the bathroom and toilet – plumbing). If we wanted to change something, we would have to pay extra for it. They can fulfill any whim, but for your money.

We didn’t spend money on it. The child is still small, it will not be long to live there. Immediately assumed to take, why in this case to excel. Anyway, when the time comes to use the property ourselves, we will make repairs. No matter how careful the tenant is, the situation will need to be updated.

– How did you solve the issue of renting? Where are you looking for tenants? How did you make contracts with them?

– I had one criterion – that my apartment would not be killed. In Russia, this happens all the time, we have already gone through it. Therefore, I shifted all the worries to the management company. Let them, being in Germany, look for people, monitor the situation, and resolve issues. I know that the choice of WIP Immobilien tenants was approached very carefully – they checked their reliability, solvency, the reasons why they came to Munich. I did not delve into contracts with tenants – in order to understand this, one must not only know German well, but also understand local law.

– Have you even seen the tenants who live there?

– I saw the tenant from the first apartment. When we arrived in Germany, we called her and warned her that we would come. I just wanted to see with my own eyes how the apartment is maintained. Of course, over the years, equipment wears out … The plate had to be changed. But there it was not new, after all, the apartment was bought on the “secondary”. This is natural wear and tear, we counted on it. But in general, everything is in order, the condition is good.

What about the second tenant?

– I have not seen him yet – the apartment was only recently handed over.

– And what are the current rates for new “kopeck pieces” in quiet areas of Munich?

– About 1100-1200 euros

Новостройки в Мюнхене

 

 

 

 

 

 

 

 

– If you were approached by a person who is in the same situation as you in 2011 – then you were just thinking whether or not to buy your first apartment in Munich – what would you advise him? What to look for in order to be satisfied with the deal?

– If he came to me in 2011, I would definitely say: be sure to buy property abroad, and especially in Munich, if there is a financial opportunity.

— What has changed now?

Now, the future is unknown. Look at the European Union, the UK is leaving it, our relations with Europe, the whipping up of military hysteria… Where is the world heading in general? Somewhere before 2014, until the conflict in Ukraine began, everything was wonderful. What now? I don’t know… Probably, even the President does not fully understand what will happen next.

– Of all the countries in Europe, it is Germany, at least in terms of the economy and the situation on the real estate market, that seems to be the most certain. And probably Switzerland…

— Yes, I learned about Switzerland, it is much more expensive there. And Germany is not all, but only Munich. It was possible, for example, to buy real estate in the Bavarian Augsburg. It’s even cheaper there – for the price of a one-room apartment in the center of Munich, you could take a three-ruble note there. But that’s not it.

It is important that Munich is a major manufacturing center, the most powerful city in Germany. In my understanding, this is the center of Europe. As we did, for example: we got on the train, and in the morning we ended up in Rome. Vienna, Paris are also nearby, and Barcelona, the Canary Islands, Monte Carlo are easily accessible by plane.

I certainly do not regret that I bought a property there. If only now the situation in the world has gone in the direction of detente. The sanctions were lifted, the visa regime was abolished … Then three hours on the plane – and you are there. It would be just wonderful!

Interviewed by Anastasia Faley, Prian.ru
Photos courtesy of WIP Immobilien GmbH

Property management in Germany: useful tips

Property management in Germany: useful tips

 

1. Work with professionals

When you make a big deal, and buying real estate always is, it is very important to enlist the support of a professional who will defend your interests. And even more so, in an unfamiliar foreign market. Why you need a real estate management partner in Germany, probably, no need to explain. But how to choose it, how to evaluate the professionalism of the company, if you yourself are not a professional, is an important question.

“I would first of all study the recommendations,” advises Regina Borger, CEO of WiP Immobilien GmbH. Look what the company has already done. Ask for contacts of clients who have already used their services. This is the best proof of professionalism.

You can also evaluate the company by their specialization. For example, in Bavaria, about 80 firms offer property management services in Germany. At the same time, many are engaged in everything in a row: sales, tourism, medicine, car rental … I think it is more profitable for the buyer to work with narrowly specialized specialists, because. they know their market better.

And finally, an important speaking parameter is the participation of the company in professional organizations, the Association of Managers and the Society for the Protection of the Rights of Owners. This is an indicator of the solidity of the organization.

2. Study the object before the deal

In the case of Munich, it’s not even about the location or quality of real estate. In the capital of Bavaria, literally everything is rented and quickly sold – apartments and houses, large and small, cheap and expensive, in the center and on the outskirts. The risk of buying illiquid assets that will be idle without an employer is minimal in Munich. But there is a chance to overpay and incorrectly calculate the yield.

“It is important to understand how the price is adequate and corresponds to the market,” says Regina Borger. – When we check an object, we look at its technical condition and location. It is very important what kind of heating and roof are there (the facade is already decorations), what repairs have been carried out and what they plan to do in the future. Be sure to read the minutes of the owners’ meetings over the past few years so that their decisions do not come as a surprise to the new owner.

We also evaluate the economic component of the object. It is necessary to find out what the savings funds are in the house and whether they exist at all, how much the tenants pay for utilities, and if the price is too high, understand why, and of course ask if there are ongoing proceedings in court.”

3. Choose a reliable tenant

What is the main goal of an investor? Of course, make a profit. It is unlikely that anyone is interested in solving the problems of tenants. Ideally, you want to find an employer who will live in an apartment for a long time, regularly transfer money, take care of property and not bother about trifles. If you are buying an already rented apartment, you can see the payment history and the condition in which the apartment is kept. And how to check a new person?

“We evaluate each potential tenant from two positions – solvency and problematic,” says Regina Borger. – How do we check the financial situation of a person? We look at his salary certificates for the last few months. We pay attention to what position he has, how long he has been working there, whether the probationary period has passed. If he used to rent a house, you can ask for a recommendation from the previous owner.

Also in Germany for more than 100 years there has been an organization that collects data on the solvency of individuals, the so-called Schufa (for legal entities – Сreditreform). They work directly with banks, telephone companies – and this is always an indicator of whether a person pays regularly for a telephone. If someone becomes bankrupt, he immediately falls into the Schufa database.

But to understand whether the tenant will give you trouble is more difficult. It must be felt. We try to evaluate the psychological portrait of everyone who comes to the screenings.

For example, you recently rented an apartment. The first to arrive was a German couple, seemingly wealthy, but at the same time they find fault with the little things, looking at every scratch on the parquet. I think not, I don’t want to hand it over to you, you will call me later in the evenings and complain that the garbage container is in the wrong place. I’m not kidding, it really happened.

Then comes a family from India with a small child, and the girl is also pregnant. Four people for a kopeck piece is a bit much, and if you take into account Indian traditions in cooking, then they can potentially “kill” an apartment. They also refused.

As a result, the premises were rented to a single working Chinese who regularly pays and does not cause problems.”

4. Write your lease right

And finally, the most important parameter of investment property is the contract with the tenant. In Germany, many objects are sold already with concluded lease agreements. Those of them where the conditions for the owner are unfavorable, and when sold are cheaper. In this case, it is important to read it carefully and understand what you are going for. If you buy a free apartment for rent, you need to take care of drawing up a competent lease agreement.

“Don’t reinvent the wheel, don’t write contracts yourself,” advises Regina Borger. – In Germany, there is a Society for the Protection of Owners’ Rights, whose lawyers draw up up-to-date lease agreements that take into account all the important points. We, as members of the organization, use them, but you can just go to the store and buy such a document.

In the contract, pay attention to the following points: the amount of the rent, how and when you can increase it, the conditions for terminating the contract, what repairs are carried out at your expense, and which at the expense of the tenant, in what form the security deposit (Kaution) is presented and how it transferred to the new owner.

And it is also very important when renting an apartment to draw up an acceptance certificate, indicate in it all the meter readings and the existing shortcomings. If something is damaged in the apartment when the tenant moves out, he will have to fix it at his own expense.”

The editors of Prian.ru would like to thank WIP Immobilien GmbH and personally Regina Borger for their help in preparing the material.

Real estate management in Munich: difficult cases

The German real estate market rightfully bears the title of “reliable”. The system here works clearly and protects all participants in the transaction. But even in Germany, you cannot be sure that you will not be deceived, or you will not get into an unpleasant situation due to your own stupidity. We asked Regina Borger, CEO of Munich-based property management company WiP Immobilien GmbH, to recall difficult case studies.

Property management in Munich

The first and most difficult case. About what can happen if amateurs take care of your business

– A girl called our office, described her apartment in Munich – condition, house, location – and asked how much this could cost. We have a facility under management just on this street, so I knew the situation. I tell her that she can get €300,000 for the property, plus or minus 20%. And then it turns out that in two hours she has a deal, where she is offered to sell an apartment for €200,000.

I ask: when was the object purchased? Turns out it was eight years ago. It turns out that when it is sold now, it also gets taxed. In Germany, if an apartment changes its owner within 10 years, 25-40% is paid on income. Of course, it is more profitable to wait a couple of years. And for some reason she was told that after three years, sales taxes can not be paid.

The girl is in shock. On the one hand, she doesn’t know me. On the other hand, he does not want to lose so much in price. I thought for half an hour, decided to refuse the sale and came to our office to talk. When she told the details of this transaction, I was already shocked. But first things first…

Friends helped her buy a two-room apartment in Munich, and they rented it out for all these eight years. The owner received money from rent irregularly, every now and then they took some amounts from her allegedly for repairs.

Moreover, on the security of this apartment, friends took a five-figure loan for their own needs, the girl, according to her, did not receive money from the bank and did not see the loan agreement.

Then the same friends offered to sell the apartment, and the owner flew to Munich for this deal. She did not read the sale and purchase agreement and did not even know which notary to go to. She was simply told to wait at the bus stop, they say, they will drive up for her. And at the same time, they managed to take €1,800 from her for a notary, which is actually wrong, because. his services are paid after the transaction.

Then the situation unfolded, as in a detective film. I called her German friend, introduced myself as a translator and got the name of the notary. I found his contacts on the Internet, contacted him and asked him to warn all participants in the transaction that the seller would not come. The telephone terror began immediately. We turned off all means of communication and began to think what to do next.

I began to find out how the apartment is rented, where the money comes from, what is written in the contract. It turned out that the girl didn’t see the contract with the tenant either, she didn’t even know how much he pays, the money comes to her friend’s current account, and rent payments are transferred to her irregularly. In general, it became clear that the problems did not end with the refusal of the deal. The owner decided to give us the apartment for management, while she herself left for Russia.

First of all, we wrote a letter to the tenant, but it came back. When I arrived at the indicated address, I noticed that all the signs with the names of the tenant on the apartment and the mailbox had been torn off. Apparently, the “friends” tried …

I knocked on the door and the 80-year-old grandfather opened it. As it turned out, the tenant. He knows nothing about the signs, he has been living here legally for a long time. I introduced myself (of course I had a power of attorney from the owner). I talked with him for an hour and a half, made a copy of the lease agreement and asked him not to transfer money to the old account anymore – we will tell him the details of the new one.

We read the contract – again surprises. First, rents are low. Now a square meter in Munich is rented for €16 per month, and there – for €9.

Moreover, the contract was signed only two years ago, so prices do not rise so quickly. Secondly, the contract states that we do not have the right to increase the rent until 2019.

We told the tenant that he was paying less than the market price and offered to raise the rent. Grandfather, of course, refused, saying that I have a contract, it was promised so, I won’t give anything from above. They showed the contract to the lawyer – it turned out to be valid, you can’t dispute it in any way. It remains only to wait until the fixed rate period ends, then it will be possible to raise the fee by 15% every three years. The good thing is that now the owner receives the full amount of the rent on her account.

And even this is not all the problems that “friends” brought to the owner. We submitted a request to the tax office to find out if there are any debts. It turned out that for the past few years they have not paid property taxes. The amounts there are small – about €200 a year runs up for such an apartment. But the state machine in Germany works well: there are no taxes – real estate is sold at auction. The authorities take away what is due to them, and the remaining funds minus the costs (that’s a couple of thousand more) are returned to the owner. A little more and it would have happened, but we paid off the debt.

Meanwhile, friends have disappeared somewhere. We sent a request to the police.

They must also return to the owner a deposit – a two-month fee that tenants pay when they move into an apartment – and rent for 4-5 months.

As you can see, the girl was framed from all sides. Some things we were able to solve and some things we couldn’t. The loan is still hanging on this apartment, no one pays it, and the owner has no evidence in her hands that she was not involved in this. In this case, even the best lawyer will not help. She will have to repay this loan herself.

Управление недвижимостью в Мюнхене

The second case is just complicated. About what problems dishonest sellers and unnecessary tenants can cause

– A Muscovite asked us to manage real estate in Munich with a request to take care of her store. The facility used to be run by a company from the former GDR, with an office 500 kilometers from Munich, they really did nothing but unsubscribe. Some problems appeared regularly, water leaks, non-payment of rent … In a word, the owner decided to change the manager.

We started looking at contracts. It turned out that she bought a commercial property in Munich with a profitability of 7% per annum. I don’t know what the seller promised her, but the price of the object itself and the rates were clearly higher than the market ones. Moreover, literally a couple of days before the deal, the tenant changed there, i.e. no payment history could be traced.

The new tenant was a Turk who opened a retail outlet in the premises. He paid for a couple of months, and then stopped. Either 30% will pay, then 50%. And all the time he was looking for ways to leave – he referred to the fact that the rates were too high, spoke about the need for repairs, that he simply did not have money right now …

We came to the site to talk with the tenant and understand his problems.

It turned out that there are indeed leaks and for such a room the stakes are really cosmic. We agreed with him that we will carry out repairs and reduce his rent. In this case, he promised to regularly transfer money. With real market rates, the profitability of the object fell to 4%, but it was important for the owner to regularly receive rent, because. there was a loan on the property. She agreed.

A repair company was called and they fixed the water leak. It cost €14,000, but the insurance company paid for everything. By the way, when during the repair they discovered how the Turk arranged the drain of water, they grabbed his head. He made a hole in the facade, brought the pipe out into the street, did not even connect it to the sewer, the water simply went into the ground. This mess has been removed.

The first couple of months the tenant paid according to the schedule, and then the situation repeated itself.

Then we asked him to leave. He didn’t want to. He can’t pay and won’t leave. I had to expel with a lawyer and witnesses. When he was evicted, they breathed a sigh of relief. True, the rent debt remained. But in this case, it is better to end the relationship, albeit at a loss, than to continue to incur losses regularly.

Now the object has been handed over to a new tenant – a well-known concern in Europe. He pays well, we have a wonderful relationship. He admitted that no one demanded as many documents as I asked before concluding the contract – a financial report for three years, a certificate from the chamber of commerce, recommendations from other places where he used to rent premises, even certificates of marital status. In general, they checked it thoroughly, it does not cause problems to the owner and us.

The owner regularly receives payment and has 4.8% per annum from this object. Those 7% that she was promised are very rare in our market. Apparently, she was misled, just to sell the object. In order not to be so disappointed, it is necessary to check in advance the correspondence of the indicated prices and market realities.

Недвижимость в Баварии

Case three, which could be tricky. About how important it is to study the object in detail before the deal

We were approached by property management in Munich by a family who wanted to buy an apartment in Munich for their student daughter. They found the object themselves – a very cheap, by local standards, apartment for € 120,000 – we were required to check the deal and get around the “pitfalls”.

They began to study the object. Found out that there was a leak, but the damage was repaired. It was planned to repair the facade of the house, but a good company was doing this and the accounts of the owners’ association were in order. That is, the owners did not shine with additional repair costs. In general, everything was clean.

Then they began to study the tenant and immediately suspected possible difficulties.

Firstly, the contract with him was drawn up unprofessionally. We always use contract forms prepared by the lawyers of the Society for the Protection of Owners’ Rights. It will take into account all the latest changes in laws and spell out all the nuances. And here the contract was drawn up in free form and they forgot to note the terms of the tenant’s eviction. In this case, the exit may be delayed for a year.

Secondly, the rent for the apartment was underestimated. Moreover, the tenant paid a fixed amount, excluding used utilities, and could use water and heating as much as he wanted. He lived there for a long time and, given the advantages he had, he would hardly have agreed to move out voluntarily.

Thirdly, from the point of view of personal qualities, he seemed somehow inadequate to us.

In general, we warned the buyers that there would be problems with the tenant. Most likely, he will not move out voluntarily. You will need to contact a lawyer, and this is an additional cost. We’ll have to tinker, but there is no risk that he will not be evicted through the court, because. the tenant does not belong to socially protected groups, he is not disabled, he does not have small children. Clients said they were ready to solve these problems in order to buy an inexpensive apartment.

As a result, it did. They did not want to give the apartment to us for management, because. they bought it not for rent, but for the residence of their daughter. Then we advised them a lawyer, without him the employer did not even want to talk about moving. Now everything is fine, the tenant should move out in October.

Yes, the owners had to wait nine months and pay for a lawyer, but at least they knew what they were getting into.

If they had not checked the object, they would have received a very unpleasant surprise. I bought an apartment, but you can not use it. And if the tenant also turned out to be some 80-year-old old man who suffered two strokes (as in the first case), it would be impossible to evict him. Therefore, even in such a reliable market as the German one, one cannot neglect a detailed check of the object before the transaction.

 

Read the following article to learn how not to get into difficult situations.

 

The editors of Prian.ru would like to thank WIP Immobilien GmbH and personally Regina Borger for their help in preparing the material.

Text — Anastasia Faley
Photo — pixabay.com

Buying an apartment under construction in Munich

What are the steps to go through when buying an apartment under construction? Why are new apartments in Munich usually sold in offices? Where do future owners choose parquet and tiles? When will you be invited to Richtfest? Answers to these intriguing questions in the comments of experts from WIP Immobilien GmbH.

Foreign investors are attracted by the capital of Bavaria. But why is there so much interest? After all, profitability in Munich is low. Or maybe it’s just a stereotype, and in fact, Munich real estate is not at all in the top among Russian-speaking buyers?

Regina Borger, CEO of WiP Immobilien GmbH: “It’s often said, ‘Munich is gold in concrete.’ I agree, Munich is a phenomenon. Everyone is drawn here. At the same time, the local real estate market works very differently than in the rest of Germany. And most of the clients come and just say – we want Munich. But they do not know and do not think about how the market works.
Just recently, a family came to us, they say: “We have money, we want to invest.” I ask: “For investment or for myself”? They say: “For investment”. And you start talking, it turns out that they really are going to rent an apartment, but they pick it up as if for themselves. But these are two different things.
We talked about a two-room apartment. I showed the option: 56 sq.m, shady side, where a square meter is cheaper than on the sunny side. This is the best investment, as the “sunshine” does not affect the rent much. But if we ourselves lived there, then 56 “squares” is not enough. And we want the sunny side! But if you think of an apartment as an investment, it should not be big and should not be more expensive than it is…”

Andrey Denisov, Head of Sales at WiP Immobilien GmbH: “The vast majority of clients who want to buy real estate in Munich do not really understand what they want at the initial stage. As a rule, there is an initial amount to be spent, say 500,000 euros.
Of course, there are certain criteria that are standard for everyone. For example, a beautiful house, large area, good infrastructure. Sometimes specific requests are added. For example, you need parking for a Mercedes S-class – the car is long and not all new buildings have a place of the right size. Clients buying apartments for 1-2 million euros want to know who their neighbors will be – in some houses this can be figured out in advance. In any case, we try to understand what the person wants, and after his story, we draw up an action plan.”

новостройка Мюнхен

An important feature of new buildings in Munich is that apartments are sold at lightning speed, most often at the stage of excavation.
This means that, firstly, the decision must be made quickly, and secondly, it is impossible to see the apartment before buying. You do not have to go to the facility, if only because it exists, most likely, only in the plans.

regina-borgerRegina Borger: “A new building is an office sale. I can show the layout, a visual image, I can tell you about the area’s infrastructure, average rental payments, possible profitability… It’s most likely impossible to see the apartment “live”. Almost everything is sold before the house is built yet.

After the buyer makes a decision, the obligatory, but not too creative procedure begins – the conclusion of an agreement with a notary, followed by the first installment.
“The registration of real estate always takes place at the notary, who is an independent person. As a rule, the developer chooses one notary who is fully involved in the sale and registration of the property in question. This is beneficial for both the developer and the client, since a specific specialist knows the whole object.”

Андрей Денисов

Andrey Denisov: “According to German law, the developer does not have the right to take 100% prepayment if the house is not built. He takes payment in parts, depending on the degree of readiness of the object. As a rule, the first installment is 25%, subsequent payments are divided into several parts, the last of which is paid after receiving the keys to the new apartment.”

Example: payment for real estate under construction is carried out on the basis of MaBV (Makler und Bauträgerverordnung) according to the scheme below:

 

Partial payment for real estate under construction in the amount of 25%, after receiving notarization. (including a deduction of 5%, which is paid at the end of construction)
Partial payment for real estate under construction in the amount of 28%, after the construction of the frame, including work on the rooms.
Partial payment for real estate under construction in the amount of 18%, after the construction of the roof, downpipes, completion of the initial installation of heating, plumbing and electrical equipment, installation of windows.
Partial payment for real estate under construction in the amount of 20.5%. When transferring property.
Partial payment for real estate under construction in the amount of 5%. Immediately after the completion of construction work on time and without significant shortcomings.
The last part of the payment in the amount of 3.5%. Immediately upon completion of housing construction, including underground garage and infrastructure.

Отделка квартиры в Германии

When the financial process is launched, more pleasant work lies ahead. You need to think about the decoration and furnishing of the apartment. In Munich, all new buildings are rented with high-quality repairs. But each owner can show his individuality.

Regina Borger:

“The building description defines the quality of construction, as well as the quality of interior decoration. After completing the documents, the developer sends a letter with an invitation to visit special centers where samples of parquet, tiles, and sanitary ware are exhibited. These are not shops, but huge showrooms with very high quality offers. As a rule, you can choose from several options, the cost of which is determined in the contract. If the client wants something special, you will have to pay extra.

The next step is the selection of furniture and kitchen. The developer will want to see her plan as early as possible, since the laying of wiring in the apartment depends on him.

However, if you are not going to live in it yourself, you should not rush to the kitchen, as the future tenant may not need it.

Regina Borger: “How much does a tenant need a kitchen? 50 to 50. It’s a matter of taste. For example, recently one woman told us: “I will never part with my kitchen, she moves with me.”

While you are shopping, construction continues. And now it’s time for a holiday called Richtfest. It passes at the moment when the house takes on its shape, the walls and the roof have already been erected. At the holiday, the owners, in plain language, are put down – in front of the builders and the neighbors who have come to the first light in the new house.

richtfestRegina Borger: “Richtfest” is an old tradition that is supported by some developers. This is a tribute to the workers who are building your building. The holiday is arranged by the residents of the house – for themselves, as well as for all the workers who participate in the construction. This, of course, is not the final point, but an important stage – for the first time you come to your future home … “

P.S. Well, in conclusion…

… the new building becomes the property of the buyer after three conditions are met: The last payment to the developer has been made. 100% payment!

The apartment – the house was put into operation and the acceptance certificate was signed

The final note on the transfer of ownership to the buyer was made in the land register

CONGRATULATIONS!! YOU BECAME A HAPPY OWNER OF GERMAN REAL ESTATE!

 

The material was compiled in collaboration with Prian.ru
September 8, 2016

 

 

Residential real estate in Germany: apartment assistant

WHO WILL MONITOR YOUR APARTMENT WHILE YOU ARE AVAILABLE AND HOW? ARE THE GERMANS THEMSELVES ALWAYS SATISFIED WITH THE MANAGEMENT COMPANY? WHAT IS A GOOD TENANT? FOR YOUR ATTENTION ANSWERS AND REASONS FROM THE EXPERTS OF WIP IMMOBILIEN GMBH.

The usual situation: you are the owner of an apartment, but you yourself do not live in it permanently. Someone must look after the empty square – obviously your assistant, an individual or a company.

 

Regina Borger, CEO of WiP Immobilien GmbH: “What does it mean to protect the interests of the owner? Monitor the economic component so that the owner receives income; and for the technical condition of the apartment, so that its value does not decrease, but grows.” Andrey Denisov, head of the sales department of WiP Immobilien GmbH: “Most clients buy for investment purposes, and they do not want to face a situation where they need to deal with the tenant. From experience, if a client goes to a German company, because of the difference in mentality, he does not understand what it is about.”

To keep abreast of everything that happens in your house, you assign someone to monitor the apartment.

This someone enters into a relationship with the HOA of your house, with the management company, with other neighbors. For example, he represents you at meetings, which in Germany is by no means a useless formality.

Faced with problems of housing and communal services in our homeland, we begin to idealize abroad. Perhaps there is more order here. But Germany is also not a paradise, and there are contradictions between the owner and the management company of your house.

Regina Borger: “Real estate is a lot of money that needs to be monitored. Therefore, the owners go to meetings, actively participate in all discussions. They want their property to remain in good condition both technically and economically.

I think that in Germany the owners are dissatisfied with their management company in about 20% of cases. The usual reason is the reaction to complaints. Companies are slow to resolve conflicts, which means they need to be constantly pressed.

How should disputes be dealt with? If we do not agree with the annual report that was provided to us by the management company, after agreement with the owner, we transfer the documents to our lawyer. And together we are building a plan of action.”

Of course, an empty apartment does not require constant attention. Your partner will come here only when necessary.

Regina Borger: “Of course, our work mostly takes place not on the road, but in the office. We come to a specific house for a meeting of owners or in the event of some kind of force majeure. Well, and one more option if the owner of the apartment has a special request: for example, he wants to set up television in his native language or something like that.”

Immobilien in Deutschland

The situation when the owner of the apartment comes to her two or three times a year happens, but relatively rarely. Much more often, the vacant area is rented out for long-term rent. And your partner has additional responsibilities – for example, finding a tenant.

Regina Borger: What does a good tenant mean? This is the one who pays the rent on time, who does not complain about every little thing, who keeps the apartment in good condition.

Andrey Denisov: “Munich is a specific city. If we announce the rental of an apartment in the morning, up to 20 people can come to view in the evening. Therefore, there is a system for selecting the “right” tenant, who will pay on time and will not cause us any problems. We will find out where the candidate lived before, what is the composition of his family. We ask for an extract from the credit bureau or a letter from the previous landlord stating that the rent was always paid on time. We look at his work contract: where and for how long he works.

Renting out an apartment is passive income.

The word “passive” reflects the unwillingness of the owner to dive into the process. The task of the representative is to solve all problems without pulling the landlord. Of course, in some cases this is not possible. In addition, your partner may be faced with the most outlandish situation.

Regina Borger: “I recently received a letter from our tenant from India. There was mold in the corner of her apartment. And the reason is simple: the apartment was improperly heated and ventilated incorrectly. Well, what to do – in India they don’t know how to heat and they don’t know how to ventilate, there is no winter there. The problem seems to be completely ridiculous, but we will have to teach a woman how to do it.

In general, if a tenant has a problem, we contact the owner, identify it, and offer solutions. The owner himself determines which option to choose.

But this is not the case with the Indian tenant. Yes, the landlord wants the mold removed, but the landlord is not at fault for what happened, who should not bear the cost. Our task is to explain to the tenant what her problem is and how to solve it.”

When the owner begins to rent out an apartment, he enters into financial relations with Germany. A tax consultant helps to formally settle these relations. But he solves all technical financial problems. If your question is more creative – for example, how to increase rental income – it is also better to contact your partner for this.

Regina Borger: “It is better to choose a tax advisor based on his experience and knowledge of several languages. For example, we work with an auditor who speaks Russian, Hungarian, and English. But in general, tax reporting is carried out remotely. You do not need to go to the tax office all the time, to the tax adviser. Meetings happen, but very rarely. Only when you really need them.”

So, communication with the management company. HOA meetings. Repair work. Finding a tenant. Communication with him. After purchasing an apartment in Germany, you have not only rights, but also obligations. Upon closer inspection, they are not so few. So in most cases, finding an assistant or partner is a must. So, when buying an apartment, you better have an answer to the question: “who could it be?”.

The material was compiled jointly with prian.ru, editor-in-chief Philip Berezin, shooting by Shamkhal Eyvazov
September 26, 2016

 

Grundsteinlegung – Groundbreaking Celebration

ANOTHER OLD TRADITION ASSOCIATED WITH THE BUILDING OF A NEW HOUSE IN GERMANY IS THE FIRST STONE CELEBRATION

AT old times, before starting construction, everyone who would build a house gathered in front of a new site, installed and decorated a symbolic pillar, the owners of the house treated the builders. This tradition should bring success and good luck to new housing.

Мюнхен стройка

Now this custom is not so often followed, modern life moves at high speeds, where there is not always a place for a holiday, although it must be admitted that the beginning of construction is an exciting moment. Future residents have high hopes for new housing: part of their lives will pass here, perhaps their children will grow up here. How comfortable, good and beautiful will this house become? This also worries designers, architects, builders: a house designed and built by them must stand for a long time, bring joy, decorate the street of a city or village. Therefore, the celebration of laying the first stone is a celebration of great expectations that must come true.

 

Designers talk about their plans, about what has already been done. Previously, the laying holiday was not the actual start of construction, in most cases it was the beginning of earthworks: excavation of a foundation pit, removal of land. But today the holiday can be held when earthworks have already been carried out and the designer can tell a lot of interesting things about what has already been done. The numbers are always impressive: when you find out that about 3.5 thousand cubic meters of land were taken out to build a new city house, 400 tons of steel for ceilings, 5,000 tons of concrete will be required, then you like it or not, but yo

u will admire the grandeur of the scope and the complexity of the work.

 

Another exciting moment!

 

capsule laying the first stoneThe laying of a metal capsule, in which they put the project of the house, its description and the names of developers, designers and builders. As soon as this document is buried in the ground, it becomes historical: now only distant descendants will be able to read it, and it depends on those whose names are mentioned in this list, how long the new house will delight its residents.

YOU CAN VIEW THE FIRST WORD OF THE OWNER AT THE FESTIVAL OF “LAYING THE FIRST STONE” IN GERMAN ON OUR YOUTUBE CHANNEL “WIP IMMOBILIEN GMBH”

Results of the exhibition New buildings Munich MIM 2017 from 24 to 26 March

MIM 2017. The beginning of the year and the beginning of new projects!

MIM is Munich’s annual local real estate show. This year the exhibition was postponed to an earlier time, apparently due to the early start of spring. This is a time when developers are actively starting new projects and planning future building plot purchases. After negotiations with key players in the new housing market, we noticed that they all agree on one thing: there is almost no land left for building apartment buildings in Munich. We were convinced of this by reviewing project after project at MIM 2017.

A certain number of offers were in the immediate vicinity of Munich. It is assumed that in 5-10 years these will already be urban quarters of Munich. Such offers will suit our clients who do not yet plan to move to Munich, but plan to “settle in the city in 10-15 years. As well as students or young professionals.

Over the past few years, we have received applications for the purchase of apartments for investment purposes, but with an increased income, more than 4%. With the usual yield of apartments at 1.5-3% per year, a higher yield is achieved only by renting apartments by the day. As you and I know, daily rent is prohibited in major German cities, and Munich is no exception. But if the house has a special permit or was originally built for such purposes, then you can get the maximum profitability. At this exhibition, we saw one such project and we are pleased to offer it to you. Profitability of apartments is planned from 4 to 6% per annum. Sales have already begun.

Due to the lack of land for construction, the city gives old objects for demolition. Now we have decided to move the old Paulaner brewery from the city center. The land plot is planned for residential development. The start of sales is planned for September-October 2017. Builds one of the largest construction companies in Munich. The quality of finishes and equipment is high. If you are interested, you can apply through us. The planned cost per square meter is about 9,500 euros.

Of course, at MIM we did not ignore the projects that most of our clients are interested in. These are mass development projects. Neuperlach and Perlach districts for example. The quality of housing is good and the price is reasonable – from 6,200 euros per square meter.

New buildings in the city of Munich are presented here. Of course, not all projects are there, but only the most interesting ones in our opinion. For other projects, you can write or call us.

Munich – demographic growth, demand for real estate is growing

About 1.5 million inhabitants – this is the statistics of the population of Munich today. And if you believe the forecasts, this figure will increase significantly. There are many reasons for such a rapid and irreversible growth.

1. Housing program as a solution

2. Immigration as the most important demographic factor

3. The need to develop suburban public transport

Munich. An up-to-date demographic study with an analysis and population forecast for the period from 2015 to 2035. was announced at a meeting of the Munich Committee for City Planning and Building Regulations. A distinctly growing population makes it possible to make forecasts for the future with high probability.

The number of residents with permanent and temporary residence in Munich will already be more than 1.7 million by the end of 2022, by the end of 2030 it will grow to 1.8 million, and by 2035 it will surpass the number of 1.854 million. Compared to the percentage increase in population from 2015 to 2030, which is 16.4%, the percentage increase from 20130 to 2035 is 19.3%. With an average increase of 0.89% per year, there is a larger increase in population than the 2013 forecast of 0.85% per year.

The capital of the country has been in the growth phase for 15 years. Since the release of the last population forecast in 2013, the population has grown by about 30,000 inhabitants per year. At the same time, Munich is becoming more multinational and diverse, and the percentage of the young population is also increasing.

1. Housing program as a solution

In response, the capital of Bavaria is putting forward a large German public housing program “Live in Munich VI”, which the municipality approved on November 15, 2016. Among other things, the goal of the program is to build 8,500 apartments per year, of which 2,000 housing units must be at reduced prices. The municipality allocated for the program in the period from 2017 to 2021. 870 million euros in government subsidies is a clear sign that special attention is being paid to the creation and maintenance of the housing stock in Munich.

In the course of the long-term development of the housing stock, areas for apartments are constantly being sought, opportunities for construction on the outskirts of the city, and the prospect of compact development is being explored. An expert opinion called “Free space. Munich 2030″ forms the basis for the long-term development of free space and has been actively discussed with the public since 2017. .

2. Immigration as the most important demographic factor

Big cities like Munich are becoming a priority for immigrants. The reason for the high percentage of immigration to Munich is the coincidence in time of migration flows from various countries: expansion to the east of the European Union, from the Mediterranean countries of the EU due to the Euro crisis, the flow of migrants from the countries of the Middle East and Africa.

The influx of immigrants increases the percentage of the population and also leads to a higher birth rate. Recently, the birth rate in the capital of the region has increased the death rate, thus, a “natural” increase in the population has been registered. The future increase in the population of Munich is mainly influenced by the expected immigration to Germany. Thus, the increase directly depends on the development of relations and the situation in the countries where the immigration comes from. In parallel with this, there is also a resettlement of the German population from various regions of Germany to Munich.

The migration increase in the population of Munich also affects the regional dynamics of population growth in Upper Bavaria. Integration within the Munich metropolitan area will be of great importance in the future.

3. The need to develop suburban public transport

Numerous promising projects and programs are of great importance to provide transport links in the ever-growing city. Particular attention is paid to the expansion of suburban transport (ÖPNV), for example, the construction of the 2nd route, the extension of the U5 metro line (from Pasing station). In addition, a change in the draft state budget of the transport communication development plan is envisaged. It should also take into account the expansion of school construction with constantly growing demands on educational institutions.

05/09/2017

Black hole: scary real estate story in Germany

Says Regina Borger, CEO of the management company WiP Immobilien GmbH from Munich.

This story is a real black hole. At each stage, new difficulties surfaced and there was no end to them. It’s hard to believe that this could happen in Munich. But still it happened. I think bad experiences should be shared. There are always lessons to be learned from it. I hope my story will help you make smart and thoughtful investments in Germany.

Part 1. Problem tenant

In 2015, a lady from Moscow, the owner of a commercial facility near Munich, called us at the bureau. She was looking for a management company.

She already had a tenant – a Turk who opened a retail outlet in the premises. But he had problems. He was constantly behind on rent. He complained about constant leaks, argued that the rates were too high and repairs needed to be made, said that he had no money … We went to look at the premises.

It turned out that there are indeed leaks and for such a room the stakes are really cosmic. We agreed with him that we will carry out repairs and reduce the rent. In this case, he promised to regularly transfer money.

When a woman bought an object, she was promised a 7% yield. For Munich, this is unrealistic!

Here they earn 2-3% on residential real estate, 3-4% on commercial real estate, maybe 5% if you are very lucky. Such conditions should have alerted her, but, apparently, greed won over common sense.

With real market rates, the profitability of the object fell to 4%, but it was important for the owner to regularly receive rent, since a loan hung on the property. She agreed.

They invited a repair company, the specialists eliminated the water leak. It cost €14,000, but the insurance company paid for everything. By the way, when during the repair they discovered how the Turks arranged the draining of water, everyone was horrified. He made a hole in the facade, brought the pipe out into the street, did not even connect it to the sewer, and the water simply went into the ground. This mess has been removed. If the city authorities discovered the discharge of waste into groundwater, the fine would be from €20,000.

The first couple of months the tenant paid according to the schedule, and then the situation repeated itself.

Then we asked him to leave. He didn’t want to. I had to expel with a lawyer and witnesses. When he was evicted, they breathed a sigh of relief.

True, the rent debt remained. But in this case, it is better to end the relationship, albeit at a loss, than to continue to incur losses regularly.

Then they handed over the object to a new tenant – a well-known bookmaker in Europe. The tenant admitted that no one demanded as many documents as I asked for before concluding the contract – a financial report for three years, a certificate from the chamber of commerce, recommendations from other places where he used to rent premises, even certificates of marital status. In general, they checked it thoroughly.

The new tenant began to pay regularly, the owner began to receive money regularly. But of course, not the 7% that the sellers promised her, but 4%.

The tenant even made repairs – invested €130,000, overhauled floors, walls, literally everything. He asked the owner for at least €30,000 to upgrade the plumbing. She refused. I don’t think it’s fair, but it’s up to her. As a result, the tenant carried out all the work at his own expense.

Part 2. Dubious purchase

Finally, the owner decided to sell the premises. She bought it in 2014 for €850,000. Her wish: “I want the same amount plus €100,000.”

I answered her that the request was inadequate to the market. The red price of the property at the time of purchase was €500,000. Considering that we found a reliable tenant, and he, in turn, invested in repairs, now you can sell for a maximum of €650,000.

The fact is that with the documents she had, to put it mildly, not everything went smoothly. When they began to figure out what she had bought, they grabbed her head. She was sold a room of 360 sq. m., of which 100 meters is the street. In Germany, there is a so-called charter of division of areas, where you can see what each square meter is. I wonder why she didn’t check it when she bought it. Apparently, the seller misled.

Thus, the third part of her property is air, for which she paid €3,500 for each “square”.

That is, if these 100 meters were a retail space, then the price of the entire object would be about €850,000. But this is not so.

Not only that… The facility consisted of three rooms. One of them is a 30 sq. m. Permission for its construction was obtained in 2008, but the registration of ownership of this lady was not carried out. And this means that the extension does not actually belong to her.

Having studied the land book, we found out that the previous seller had pulled off a cunning scheme. The mediator agreed with the previous Turkish owner that he would buy his object for €650,000. He went to the notary and made a preliminary entry in the land register. After he pays the entire amount, he would be registered as the owner. But this step was not taken.

The mediator was not going to pay the money. Instead, he began looking for a buyer. I found this lady and took €200,000 more from her. And the deal never went through.

The mediator was in cahoots with the seller. When he offered this object to a Muscovite, he had a lease agreement with a Turkish owner for 10 years. He just provided the 7% yield that he promised her. The day before the signing of the sale and purchase agreement, they terminated the lease and entered into a new one with another tenant.

At this stage, the woman should have felt the danger. When a new contract is slipped to you right at the notary, they do not confirm the solvency of the tenant in any way, you should have been wary. But apparently, the promised 7% of income turned the client’s head. What problems then were with the tenant, you already know.

We explained all this to the owner. And they said that the maximum she could count on was €650,000. The lady did not believe us. At the Russian exhibition, she found some firm from Berlin, which promised to sell the property for any money. Buyers, of course, were in no hurry to them.

Part 3. Forced sale

Meanwhile, a parallel process was going on. This room is located in the passage. In addition to our Muscovite, there are about 30 more owners. The concern became interested in the whole complex. He began to offer small owners to buy out their parts. He also offered us €250,000. Our owner refused, she wanted a million.

The concern began to gradually buy up the passage in parts. And soon received more than 50% of the votes in the partnership of owners. And this means that he could organize meetings himself and make any decisions.

Then the concern hired a five-star expert – one of those who do expertise for Siemens and other giants. And this specialist decided that the whole building needs reconstruction. And he made two proposals for repairs – for € 2 and € 3 million. These € 5 million were supposed to be taken from the owners. Our share was about €200,000.

I went to a lawyer. We discussed the situation and found out that the decision of the owners’ meeting for €2 million can be appealed. The probability of winning in court is 99%. This means our costs will go down. They pulled another small owner into the case and filed a lawsuit.

Meanwhile, the concern also found out that an extension of 30 sq. m does not formally belong to a Muscovite, but is the common property of all members of the association of owners. This means that the owners can claim or share with all the money for the rent of these 30 sq.m., or ask the tenant to move out in order to use this space for general purposes. This would result in the loss of part of the lease.

In general, they began to blackmail the woman, offering to sell the object cheaply. Before the repair and the appearance of a new reliable tenant, the concern was ready to pay €250,000, now it offered €400,000.

Moreover, he set a condition: that he was ready to buy real estate only if she withdraws her complaint from the court. She agreed.

Muscovite took the claim. According to German law, whoever withdraws the claim pays all the costs of it, including the costs of the lawyer of the other party. And just 2 weeks later we received a notification that the complaint was satisfied. After all, it was submitted on behalf of two owners, and the second did not take it.

The money raised by the Muscovite was barely enough to pay off the loan she took out to buy this property. There was no mention of any income. She also owes us a large sum for services.

P.S. The problems didn’t end there.

Since the Muscovite abandoned her claim, she must pay all legal costs. This is about € 30,000. This debt does not hang on her personally, and not on her company (GmbH), on which the property was registered. We terminated the contract with her. As far as I know, she does not intend to pay.

She simply underestimates the gravity of the situation. If the parties concerned start to pursue their debt, this money will be “hung” on her personally. The next time she enters Europe, she could be arrested at the border.

She may also try to sell the company. And in this case, he will substitute the one who buys it …

As you can see, in this situation, problems drag on one after another in an endless stream. But if you start to analyze, you see that there were alarming signals.

Compliance of the areas of the object with the charter for the division of areas has not been verified.

Termination of the old and the conclusion of a new lease for 10 years on the day of purchase of the object.

 

  • Lack of documents on the solvency of the new tenant.
  • Lack of technical inspection of the premises.

The woman should have been wary when she was offered a property with a yield twice as high as the market average. She had to refuse to sign an agreement with an incomprehensible and unverified tenant. Be careful! Real estate transactions in any country, even in such a stable one as Germany, always require careful verification. Don’t take the sellers word for it. Work with reliable partners.

 

The text was prepared by Anastasia Faley

SHORT-TERM RENTAL OF HOUSING IN MUNICH MEANS FINES OF HALF A MILLION EUROS.

FINE 0.5 MILLION. EURO FOR SHORT-TERM RENTAL IN MUNICHуправление недвижимостью Германия

Munich is one of the most favorite tourist destinations in Germany. Short-term rental housing in Munich has become a source of income for many residents of the city, thus using the interest in the beautiful capital of Bavaria. Also, many foreigners come to Munich, famous for its medical facilities, for treatment and consultations.

The Munich municipality is stepping up the fight against such use of the housing stock. Now the short-term rental of housing in Munich to tourists is a sufficient basis for a fine, the amount of which will reach up to 500,000 euros, this was stated in the Sunday edition of the Munchener Merkur.

It is estimated that over 1,300 apartments are in constant use as a haven for tourists, apartments can be rented through the airbnb.de platform. The social department creates new jobs.

Last year, the authorities received information about almost a hundred cases of short-term rental housing. The social department allocates additional staff to track the facts of violations: ten new positions are assigned by departments to more effectively combat violations of the use of housing stock.

Huge fines in 2017.

The fact that the situation is getting out of control is evidenced by a sharp increase in fines collected:

2015: 129.555 euros,

 

2016: 396.350 euros,

 

until July 2017: 726.610 euros.

If this trend continues, the wave of fines will exceed the million mark, given the influx of tourists at Christmas.

Inna Lastochkina, 12.2017

 

 

 

BOARDING HOUSE, OR HOW TO GET UP TO 7% PROFIT FROM A SHORT-TERM RENTAL IN MUNICH.

MUNICH IS A POPULAR CITY NOT ONLY AMONG TOURISTS AND BEER LOVERS.

Christmas markets of fabulous beauty, the proximity of the Alps, medical institutions, famous and visited exhibitions – all this attracts guests to the capital of Bavaria. The purpose of the visit also affects the length of stay. And it becomes difficult for many to rent a hotel in the famous metropolis: demand creates supply, often very expensive. Residents of Munich, who until recently rented their housing for a short period of time to tourists and guests of the city, faced a serious problem – fines for such use of the housing stock currently exceed 500,000 euros. Therefore, Boarding House is a good solution for many.

WHAT IS BOARDING HOUSE?

Boarding House are serviced apartments, furnished like a hotel.

The difference from hotels and boarding houses is that a stay in Boarding House apartments can last from one day to six months. In Germany, these apartments are considered as a temporary home for those who come on business, to visit certain projects, exhibitions, for treatment or training. The cost of staying in such apartments is much lower than in hotels.
Boarding Houses are located in convenient places in Munich, equipped with everything you need. The apartments can be very small in size, but always comfortable, fully furnished, they can be large, designed for several people.
About 2,000 Boarding House apartments are currently in the planning stage for short-term rentals.

INVESTMENT PROJECT BOARDING HOUSE “MY ROOM”.

One of the objects under construction is the Boarding House “My Room” on the territory of the exhibition complex in the Rome district.

Those who visit exhibitions in Munich know this area very well: 240 days a year, world-class exhibitions such as Bauma, Espo Real, ISPO, IFAT, Laser World of Photonics, Transport Logistic, etc. take place here. For those who come to work at exhibitions, living within walking distance from their place of work for reasonable money is a gift.
The Boarding House idea is very convenient and practical. Those who invest their capital in apartments of this type can be sure that such a business in Munich will undoubtedly bring profit. Rendits for investors will be from 4% to 7%.

 

MIM IS MUNICH’S ANNUAL REAL ESTATE EXHIBITION

MIM IS MUNICH'S ANNUAL REAL ESTATE EXHIBITION

Every year our company visits the MIM exhibition, and every year it surprises us, discovers new names, brings new projects and fresh ideas to the fore. What was different about the 2018 exhibition?

The main trend of the MIM 2018 exhibition was profitable real estate:

– business apartments (in Germany they are called BORDINGHAUS),

– student apartments.

Over the past few years, the demand for profitable real estate in the segment of small apartments has been growing in the Bavarian capital. Considering that in Munich the yield of ordinary apartments is from 1.5 to 3%, such apartments are offered with a yield of 7%.

The cost of apartments is usually not high, this is possible due to the small living area of this type of property. But nevertheless, this is a full-fledged apartment with all amenities and internet connection.

The price range is 160,000 – 250,000 euros.

BOARDINGHOUSES ARE BUSINESS APARTMENTS FOR SHORT TERM RENTALS FROM 1 DAY TO 6 MONTHS.

Very often, a permanent contingent stops here, visiting annual exhibitions, or coming on business trips. This depends on the location of these apartments (eg Obersendling).

What is Boardinghouse can be read in our article HERE

STUDENT APARTMENTS ARE ONLY FOR UNIVERSITY STUDENTS OR STAFF.

Since there is an acute shortage of student apartments in Munich, there are 29 higher education institutions in the city, and the number of students has exceeded 120.000, so this real estate direction is doomed to success. The location of student apartments is the Schwabing district – the concentration of numerous universities and institutes in Munich, and also one of the most comfortable areas.

Our clients have a choice: to rent out their property themselves, or to involve a management company. Such a company will take care of all the concerns associated with the rental of real estate. In this case, the yield of apartments will be from 3.5 to 4%.

If the property owner plans to manage his apartment/apartments himself, then he/she may be able to increase its/their profitability to 4.3 – 7% by reducing costs. But it will be necessary to take into account many details that are not noticeable at first glance.

The exhibition featured a company dealing with interior equipment for hotels and boardinghouses.

In some cases, if you have to additionally equip the apartment (for example, with a set of dishes, cutlery, maybe an extra sofa), this company offers all the necessary equipment at a discount of up to 10% and with an installment plan of up to 6 years. With often missing interest rates.

A new direction in the development of profitable real estate is an impetus to development, and the next round will take place in 2019. We will look forward to next year’s MIM exhibition.

Investment ideas: business apartments in Munich with a yield of 4-7% per annum

Business apartments in Munich with a yield of 4-7% per annum?

Probably everyone who is even slightly interested in investing in overseas real estate has thought about Munich. This is the most liquid local market in Germany, where housing prices rose by 13.7% in 2017 alone. The reverse side of the reliability of investments is low profitability, up to 3% per annum. And a high entry threshold – usually from half a million euros. If this is what stopped you, read our article. The idea of investing in a business apartment should appeal to you.
Prerequisites

Munich is the most prosperous city in Germany. There is extremely low unemployment, high salaries and… offices of large international companies. Millions of tourists come here every year – not only for recreation, but also for business. Guests who stay in Munich for a couple of days – a week choose hotels. But what about those who need to stay for a month or two?

Living in a hotel for so long is expensive and not always convenient. And renting an apartment, according to the law, is impossible. Daily rent of residential real estate is prohibited in Munich.

“If you own a residential property, you cannot rent it out for a short period of time,” says Regina Borger, CEO of the management company WiP Immobilien GmbH. “The authorities are tightening control over this. Last year, the mayor’s office allocated 16 people just to keep track of apartments that are rented out on specialized portals. The penalties for this are huge. Up to €500,000 per owner.”

The solution is the so-called boarding houses (business apartments or apart-hotels). This is a type of commercial property. It is an apartment building with elements of hotel infrastructure. Apartments in such complexes are small (20-35 sq. m), furnished, equipped with everything you need. By law, they can be rented daily or long-term, but not more than six months to one client.

The target audience of boarding houses is businessmen who come to Munich on business trips, foreigners who are treated in local clinics, students of correspondence programs … Plus, many locals settle in the surrounding cities for economic reasons, while the head of the family travels to Munich to work. In such cases, companies rent housing for their employees in the capital of Bavaria.

The essence of the scheme

For an investor, the advantage of a room in an apart-hotel compared to buying an ordinary apartment is the ability to rent for a short time, which means increasing profitability by 2-3 times.

Rental prices here are lower than in hotels: if a night in a hotel costs an average of €100, then in a boarding house it costs €60. But this is still much more than an apartment rented for a long time will bring in a day. At the same time, the owner of a business apartment can flexibly manage pricing by raising rates for important events, such as international exhibitions. And the owner of an ordinary apartment is limited by the contract and does not have the right to arbitrarily raise the rent.
Legally, buying a room in such a hotel is no different from buying a home. The investor becomes the full owner of a particular object.

After the purchase, the owner decides how to manage the property. For example, in a 50-apartment building there may be several dozen owners. They unite, create (or hire) a management company that rents the entire building, keeps order, resolves issues of residents, etc. The more options, the more expensive such services.

You can rent a business apartment on your own or through your representative in Germany. In this regard, the owner has freedom of choice. The amount of his profit will depend on how much the room actually rented, minus the cost of maintenance and management.

“We were recently at the Munich Real Estate Show,” adds Regina Borger. – They presented a different type of boarding houses – with guaranteed rent. The investor immediately concludes two contracts – for the purchase of real estate and for the long-term delivery of an object (for example, 10 years) to one company. And all these years the company guarantees you a profit of 4.5% per annum from the cost of the apartment, regardless of how much the object will actually be leased.

Read also: Real estate management in Germany: useful tips
Entry threshold

Another advantage of boarding houses for investors is relatively low prices. From €150,000 to €260,000.

For this money you will get a small apartment, most likely a one-room apartment. Moreover, furnished and furnished with everything you need, ie. you won’t have to spend extra money on repairs, except to buy dishes and bed linen.

In the vast majority of cases, existing proposals are under construction. By the time of commissioning, all buildings in Munich have already been sold out, so you need to buy at the stage of excavation.

It will take about a year to wait for the readiness of a house for 50-100 apartments, for a larger one – up to 20 months.

“Boarding houses are initially built for a specific target audience. And they are not located in the old town, closer to Marienplatz, where tourists like to settle. For example, they recently sold out the last apartments in the area of an international exhibition, an analogue of VDNKh in Moscow. Events are held there 240 days a year,” says Regina Borger. – This is a very interesting place, because. the investor will be able to rent apartments at higher prices 240 days a year. These are the places to look for when choosing such objects.

 

Yield

Munich is the most expensive major city in Germany to buy real estate. A “square” in prestigious central locations costs more than €10,000, and an ordinary apartment in a residential area is cheaper than €6,000 per sq. m hard to find.

As a result – low profitability from long-term lease. Apartments in the vicinity of Marienplatz bring owners a little more than 0% per annum, but they are still bought, because the potential for price increases is great. In other areas, you can get 2-3% of the rental income.

In the case of buying boarding houses, experts predict a yield of 4-7% per annum.

“Business apartments are a new real estate format for Germany. In Munich, they began to actively build a few years ago. And judging by the fact that interest is growing, new projects are appearing, this idea justifies itself,” says Regina Borger. “We manage several such facilities ourselves. Due to flexible planning, low entry threshold and higher rental prices compared to conventional apartments, it is possible to achieve such profitability. But keep in mind that these figures do not take into account additional costs.

Expenses that await the owner of a business apartment:

Land tax. It is calculated individually for each apartment. For such apartments, the annual tax will be €100-200.
Utilities (electricity, water, internet, insurance, cleaning, etc.) – approximately €5 per sq. m. per month. As in a hotel, these costs are borne by the owner, but they are included in the amount paid by tenants for each day.
The management company, depending on the volume of services provided, will take 3-7% of the rental rate.
Tax on rental income in Germany. Calculated according to the table. The tax base is income minus expenses. The rate is from 0% to 35%, depending on the amount of profit, as well as the owner (individual or legal entity).

Boarding houses are initially built for a specific target audience. And they are not located in the old town, closer to Marienplatz, where tourists like to settle. For example, they recently sold out the last apartments in the area of an international exhibition, an analogue of VDNKh in Moscow. Events are held there 240 days a year,” says Regina Borger. – This is a very interesting place, because. the investor will be able to rent apartments at higher prices 240 days a year. These are the places to look for when choosing such objects.

 

Yield

Munich is the most expensive major city in Germany to buy real estate. A “square” in prestigious central locations costs more than €10,000, and an ordinary apartment in a residential area is cheaper than €6,000 per sq. m hard to find.

As a result – low profitability from long-term lease. Apartments in the vicinity of Marienplatz bring owners a little more than 0% per annum, but they are still bought, because the potential for price increases is great. In other areas, you can get 2-3% of the rental income.

In the case of buying boarding houses, experts predict a yield of 4-7% per annum.

“Business apartments are a new real estate format for Germany. In Munich, they began to actively build a few years ago. And judging by the fact that interest is growing, new projects are appearing, this idea justifies itself,” says Regina Borger. “We manage several such facilities ourselves. Due to flexible planning, low entry threshold and higher rental prices compared to conventional apartments, it is possible to achieve such profitability. But keep in mind that these figures do not take into account additional costs.

Expenses that await the owner of a business apartment:

Land tax. It is calculated individually for each apartment. For such apartments, the annual tax will be €100-200.
Utilities (electricity, water, internet, insurance, cleaning, etc.) – approximately €5 per sq. m. per month. As in a hotel, these costs are borne by the owner, but they are included in the amount paid by tenants for each day.
The management company, depending on the volume of services provided, will take 3-7% of the rental rate.
Tax on rental income in Germany. Calculated according to the table. The tax base is income minus expenses. The rate is from 0% to 35%, depending on the amount of profit, as well as the owner (individual or legal entity).

Example: apartments in Munich for short-term rental

Бизнес-апартаменты в Мюнхене

  • Type of property: guest business
  • Location: Munich, Riem district (international exhibition venue)
  • Cost: €227,400
  • Number of bathrooms: 1
  • Number of balconies / terraces: 2
  • Commercial area: 32.35 sq. m
  • Furnishing type: standard
  • Total number of floors: 5
  • Type of heating: central heating
  • Barrier-free environment: suitable for wheelchair users
  • Elevator: yes
  • Construction phase: under construction
  • Year of construction: planned commissioning – November, 201

 

Regina Borger: “Is this business idea popular among Russian investors? Not yet. Boarding houses are a new phenomenon, few people know about it. All available proposals are either under construction or were launched just a year or two ago. But someday, probably, there will be a glut of the market with similar objects, because of which the current profitability will decrease. Therefore, it is now important to pay attention to the location of the object so that it is in demand among tenants. Moreover, to evaluate it precisely from the point of view of the target audience, and these are not typical tourists, but those who come to Germany to work, be treated or study.”

April 24, 2018
Text: Anastasia Faley

Mortgages in Germany for foreigners? Issued…

We are afraid of mortgages. There are no official statistics, but realtors say that nine out of ten clients from Russia who are considering buying a home do not initially think about a mortgage in Germany. Either they do not trust banks, or they are afraid to get into bondage. In vain! What is “Mortgage in Germany for foreigners”?
FACTS-2018 – MORTGAGE IN GERMANY FOR FOREIGNERS.

Yes, mortgages are issued in Germany. And more and more active. The annual growth in the level of mortgage lending in the country is about 4%. In 2016, the volume of issued mortgage loans in Germany amounted to €231.6 billion. This is a quarter more than in 2009. Germany is the largest mortgage market in the EU after the UK; when Brexit is over, it will become the largest.

Mortgages in Germany are usually issued at a fixed percentage, which is fixed for 5-10, and in rare cases for 15 years. Loans with a floating interest rate are not popular in the country: they are 1% in total (in the UK 72%, in Spain – 75%, according to a Research Gate report).

Now it’s good. Why? A floating interest rate is beneficial to the borrower when it starts to decline – the longer the better. In Germany, the change in the floating rate is carried out on the basis of fluctuations in the European Interbank Offered Rate (EURIBOR). But at the moment it is at a very low level, and there is nowhere for the floating rate to fall, only to grow. And it will obviously begin to grow, the question is when exactly.

From 2009 to 2018, mortgage interest rates in Germany fell by 40%. Now the average rate is about 1.65%, but it is better for the Germans themselves to be guided by this figure. Foreigners receive loans on less favorable terms. “For example, this year we received loans for our clients at 1.83–2.06%,” says Regina Borger.
Regina Borger, WIP Immobilien GmbH: Mortgages in Germany for foreigners.

“Low mortgage rates lead to paradoxes. In Germany, one of the important players in the mortgage market is Landesbank, which, through government assistance, traditionally provides more favorable conditions for poor Germans, single mothers and fathers. So, in recent years, the number of people who applied to this organization for a mortgage loan has decreased – conditions in ordinary banks have become more attractive than preferential ones from Landesbank. And the allocated funds became unclaimed, which led to a glut of funds. Now they have started issuing loans at 0.5–0.8%.”

In Germany, the loan-to-value ratio (LTV) is the lowest in Europe. According to this indicator, stricter rules are only in South Korea, where the maximum cost of a loan is 75%. In Germany, it can be 80%, but only for residents. If you do not work in the country, then the maximum that you can count on is 60% of the property value, but in reality – half.

The question of whether or not to take out a mortgage in Germany is partly emotional (if you don’t like living on credit in principle, nothing will convince you), but mostly economic and mathematical. In simple terms, by investing €100,000, you can make a 200,000th investment and make a profit of 2 times more from the invested €100,000.

Conditionally: taking a loan for €250,000 at 7-8% per annum (such rates were 10 years ago), you will repay about €17,000 annually (excluding the loan body). Having received a mortgage at 2% – only € 5 thousand. The calculation is rough, even very, but in this case it is important to understand the order.

Communication with the bank

The interest rate and loan amount depend on two factors. The first is your ability to pay, which will be assessed according to the submitted documents. The second is the state of the object. The minimum amount that can be received depends on the particular bank and the place where the housing is located.

Regina Borger, WIP Immobilien GmbH: Mortgages in Germany for foreigners.

“The option in Munich and its environs, where it is very difficult to buy “the wrong thing”, will be considered more willingly. On the other hand, in Bavaria it hardly makes sense to apply for a mortgage of less than €100,000. Most banks do not even bother with such figures, but in general they issue loans only from €250,000. But, I repeat, this is a Munich story. In northern Germany, the situation is different.”

There is no official confirmation that Russians or citizens of other countries have recently been denied mortgages when buying a home. Single examples and the hype around them only confirm that there are no mass failures. They were before, they are now. What has definitely changed is that banks have become more picky, more often request additional documents.

It is worth contacting several banks, especially since they have about the same set of documents. The initial set: a 2-NDFL certificate translated into German, a passport and documents for the property being purchased. Of course, it is good if you have a positive credit history. You will also have to fill out a questionnaire to show how you will repay the loan with current income. The bank will begin reviewing the request and will almost certainly require additional documents from you. And do not flatter yourself until the contract is signed.

“My advice: provide exactly as many securities as the bank requests, no more and no less. You will conduct the initial communication with the credit institution in absentia – usually by e-mail. Only when signing a financing agreement is a visit to the bank with a passport required,” says the specialist.

It usually takes four to six weeks for the bank to process a request, but no timelines are guaranteed. In case of refusal, the bank will inform about it by phone. Even if he sends a written answer, under no circumstances will he indicate the reason.

Do you need a partner

Why do they usually turn to a partner to get a loan and what is his mission? The main problem with the first contact is that the bank does not know you. So, a loan refusal is more than likely. Appeal through an assistant is designed to “melt the ice.”

Regina Borger, WIP Immobilien GmbH​: Mortgages in Germany for foreigners.

“Banks know us, and not only as buyers of real estate, but also as a management company. We are developing, last year we received four more houses for management. Two of them had accounts opened in banks with which we had not worked before. Accordingly, now two more organizations know us from the best side. And when a request from a client comes through us, and the bank understands that we will also control mortgage payments, there is complete confidence.

We cannot guarantee that the bank will give a loan. If one bank refuses, we turn to another. Each client has received a loan from us.

Residence permit in Germany on the basis of financial independence

WE OBTAIN A RESIDENCE PERMIT IN GERMANY ON THE BASIS OF FINANCIAL INDEPENDENCE. A DOZEN FACTS!

 

A residence permit in Germany – desire and opportunity are two conditions under which a foreign citizen has the right to a residence permit in Germany. The first is no less important than the second… Experts on investment immigration talk about what you need to remember and know if you plan to get closer to the “anchor economy of Europe.”

 

 

Regina Borger, CEO
WIP Immobilien GmbH Herman Moizhes, Lawyer Partner of WIP Immobilien GmbH

1. Current programs in the European Union for granting a residence permit or citizenship – through the purchase of real estate, securities or investments – are in the nature of a sale. At the same time, they are not consistent with the real desire of a person to move to a particular country: the applicant may not have such a desire. From the point of view of European legislation, this is a dubious practice that does not like the European Commission and such large countries as Germany and France.

That is why in recent months we have seen a process when countries are forced to either completely close the program (like Hungary) or show statistics and specific people who have “purchased” citizenship.

2. Germany is not developing a special law to attract wealthy people to the country. The country does not have a special program, and this is its great advantage. Because, among other things, the country can ensure the anonymity of people who have received a residence permit on the basis of financial independence. This is important for our clients right now.

3. The first and main argument for obtaining a residence permit in Germany is the desire to transfer the center of vital interests to the country in the future. That is, you must WANT to live in Germany.

To obtain a residence permit in Germany are welcome, including indirect confirmation of the desire to move to Germany in the future

4. For wealthy people, the easiest way to get a residence permit is to prove the availability of capital. That is, to confirm their financial capabilities in Germany, Russia or in any other third country.

Buying real estate, starting a business, investing in the economy is not required. The presence of real estate, however, is not mandatory, but a positive factor. It indirectly helps to confirm the availability of funds and motivation to live in Germany.

5. German laws and regulations do not provide for a minimum amount of capital sufficient to obtain a residence permit. But, according to our practice, we are talking about a total fortune of at least €1 million per family. The asset is valued based on the value of real estate, shares in enterprises, bank accounts (not necessarily German), etc.

In addition to property, the applicant must have a regular passive income of €4-5 thousand per month for each family member. It does not matter in which country the applicant receives this income. But it needs to be confirmed.

You also need to purchase or rent a home and pay for private health insurance.
Read the application process here

The presence of real estate is not mandatory, but a positive factor

6. Regarding regular income, there are no clear recommendations in the legislation of the country either. This can be income from renting out real estate, remuneration for work as a member of the supervisory board or board of directors, dividends, etc. You can also take into account the potential income that the applicant can only receive from renting real estate.

Requirements for the right of ownership – that is, to whom the property is registered – are flexible. The main thing is that in fact the applicant has it.

See also: What about housing loans in Germany? Issued…

7. The source of income must be obvious, plausible and understandable from the written statement. Indeed, at the time of submission of documents, the applicant has only the desire and the opportunity to obtain a residence permit. Without any guarantees.

Indirect confirmation of the desire to move to Germany in the future is also welcome. It can be real estate and an account in a German bank. Although there are many cases when people received a residence permit in the complete absence of any assets in Germany. Everything is individually and subjectively assessed by the competent authorities.

8. In order not to be in a bad position during the submission of documents, it is worth using the services of an investment immigration consultant. Why?

Firstly, it will help to realistically assess financial opportunities. Secondly, prepare a package of documents. It is quite voluminous, although there is nothing complicated in it. As there are no special requirements, such as certificates from the tax office or a document on the absence of a criminal record. You just need to correctly complete all the information as much as possible – financial documents and documents of a personal nature.

The consultant accompanies the entire multi-stage process, from submitting an application to issuing a residence permit. The applicant is only required to personally arrive at the embassy or consulate general once – during the submission of documents. The next time is to come to Germany to apply for residence permit cards.

9. The application is submitted to the foreign representation of Germany. It can already at its level accept or reject it. Further, the documents and the application are sent to the local self-government body for foreigners. In the district department (in the region where the applicant would like to move in the future), the documents are considered and a response is issued. In case of a positive decision, the applicant receives a so-called national visa, enters Germany and receives a residence permit.

The duration of the process depends on the applicant: how quickly he is ready to provide all the documents. After they are submitted, it takes an average of six months for a final decision to be made.

10. There can be two reasons for refusal: objective – a person overestimated his property – and subjective. In the second case, everything depends on the specific official in place, simply because in Germany there is no clear law or special immigration program. But even in case of refusal, it is possible to achieve the opposite decision by arguments and negotiations. Here the help of a consultant will be invaluable.
11. A residence permit in Germany is issued for a year, less often for two. And already from the first day of its validity, you can permanently stay in Germany, move around the Schengen zone, and receive private health insurance. Children receive the right to free education in public schools and universities in the same way as German citizens if they finished school there.

12. Extending a residence permit is easier. This is a one-step decision that is made at the municipality level. In our experience, a residence permit is extended in 100% of cases if the applicant has housing (even rented), medical insurance. And he can also present a bank account, which will have enough funds for the family to live in the country for six months or a year.

The fact is that it is easier for the state to extend the residence permit for a candidate. Not to do this means dooming government agencies to many years of litigation, a complex procedure for expulsion and deprivation of rights.

Hotel investment in Germany. Overview of the hotel market 2018.

Hotel investment in Germany

 

Closed objects: Business, City, SPA and resort hotels. Leverage. Tenants are well-known chain hotels. Hotel investment in Germany

 

VOLUME OF OPERATIONS
The turnover of the German Hotel Investments market last year amounted to just over 4 billion euros and thus crossed the 4 billion mark for the fourth time in a row. Although it outperformed the five-year average by 7%, the share of the hotel asset class in the total investment market remained at nearly seven percent.

The predominance of retail sales over the past year has further increased. This is clearly influenced by the lack of goods, primarily in the TOP-7. In the first half of the year, “portfolios” almost did not enter the market. The share of “portfolios” in the volume of transactions decreased from 31% in the previous year to 16%, that is, almost by half, to 650 million euros. Retail sales, by contrast, amounted to almost 3.4 billion euros. However, last year’s largest deal, with the Hilton Hotel on Gendarmenmarkt in Berlin – which was acquired by an Israeli manager for almost 300 million euros – also relates to retail sales.

SUPPLY AND DEMAND
The trend towards increased involvement of buyers of German investors, which emerged already in the previous year, continued in 2018. Their share increased from 54% to 57%. In absolute terms, this corresponds to a transaction volume of 2.3 billion euros. Foreign investors, on the contrary, have become more reserved, their share has decreased from 46% to 43%.

For sellers, this trend was even more pronounced last year. The share of sellers of German investors increased to 71% with a transaction volume of almost 2.9 billion euros. In contrast, the share of foreign sellers decreased to 29%. German sellers were especially active in the last quarter of the year.

FACTS

Investments 2018 2017
Volume of transactions (in million euros) 4.020 4.186
“Portfolio” transactions 16% 31%
TOP-7 67% 69%
Foreign buyers 43% 46%
Foreign sellers 29% 41%
Average profitability 3.75% 4.10%

Hotels in the 4-star segment were able to take the lead again, with a share of 46% compared to 52% in the previous year. In absolute terms, the volume of transactions amounted to almost 1.9 billion euros. This also applies to 3-star complexes, they can be awarded a silver medal for 22% and almost 900 million euros. Significantly, than in the previous year, luxury hotels were represented on the market. The market share in the 5 star segment increased from 10% in the previous year to 17%, which corresponds to a volume of operations of more than 650 million euros. Along with the Hilton Hotel, this includes the Kempinski Hotel in Berlin, as well as the Frankfurt InterContinental and the INNSIDE Frankfurt Hotel in the Euroteum high-rise building. Houses in the category “1” and “2 stars” and boarding houses did not give up their positions this year, with turnovers of 220 and 240 million euros they repeated the results of the previous year.

 

After being the most active buying group over the past three years, investment funds have fallen from the top spot to second place this year. Their trading volumes of approximately EUR 875 million correspond to a market share of 22%, six percentage points less than in 2017. First place was taken by property management companies. Their purchases amounted to more than 1.2 billion euros and a share of 30%. Typical real estate agencies, which closed the top three in the previous year, showed less purchasing power and dropped to 6th place. Instead, private investors and family-owned firms moved up to the third rank, with a market share of 11%.

 

The largest group of sellers, as expected, were project developers and construction contractors. Their volume of transactions of almost 1.2 billion euros (29%) is stable at the level of the previous year. As in the previous year, open-ended real estate and special funds ranked second, followed by corporations and homeowners. The market share of the former has decreased from 18% to 15%, while the latter is stable at 13%.

PROFITABILITY

The TOP-7 turnovers amounted to almost 2.7 billion euros or 67% of the market share, which is less than in the previous year (2.9 billion euros and 69% respectively). A persistent lack of suitable properties and a significant increase in prices already last year led to an increase in investor interest in attractive B and C class territories.

 

Similarly, the “compression” of incomes continued, although it almost ceased by the end of the year. The upper limit of yield lay at around 3.75% in Munich to 4.70% in Berlin.

 

Small changes have also taken place in terms of development. The EUR 2.5 billion of operations in existing buildings reached the level of the previous year, while the share of design developments decreased from 19% to 15%, while the share of operations with objects under construction increased from 5% to 10%. Finished new buildings remained at the same level of 7%.

 

CONCLUSION AND FORECAST

Although the lack of a hotel investment market meant that the record of 2016 could not be repeated, in 2018 the German hotel investment market was at a very good level of the previous year. Individual objects and “portfolios” remained equally attractive, as before, investors preferred ready-made and objects under construction. Long-term design developments, by contrast, were increasingly struggling to find a place in the market.

 

In 2019, due to stable market conditions and strong general economic conditions, the result is expected to be at the same level as last year. Whether attractive investment opportunities are found for the high demand will be the deciding factor. Hotel investment in Germany.

 

Commercial real estate in Germany, supermarket.

INVESTMENT IN RETAIL FACILITIES
COMMERCIAL REAL ESTATE OPERATIONS IN GERMANY – SUPERMARKET

For the whole of 2018, transactions with retail facilities, most of them “supermarket”, amounted to 9.8 billion euros. It was a little short of the 10 billion euro mark, which was exceeded over the past 10 years in 2015 and 2017. Against the backdrop of the extraordinary rise in the German investment market across all property classes, the decline in the retail sector compared to 18% of the previous year is striking. The market share was reduced to only 16%. This is one of the lowest rates in a long time. On average over the past 10 years, it was about 28%. Despite this, retail facilities are in second place compared to other asset classes. Commercial real estate in Germany, supermarket.

SUPPLY AND DEMAND FOR SUPERMARKET
Along with an unusually large number of high-end office properties sold, structural changes in the retail space have led to a below-average result. The negative effects of digitalization and the growth of online sales are affecting retail more than any other asset class. Dramatically changing consumer behavior will bring about major changes for sellers, owners and real estate investors. In line with this, the awareness of risks in relation to commercial real estate has increased significantly over the year. Market participants are increasingly avoiding certain retail locations and types of organizations that are more affected by structural changes. This includes rarely visited shopping centers with goods that are widely available online (fashion, media, electronics) or located in less attractive small towns or on the periphery of class A cities. The same applies to commercial buildings within the city. On the contrary, retail trade objects, the main direction of which are food products, are gaining more and more popularity. This may include individual specialized markets, specialized or hybrid centers.

COMMERCIAL REAL ESTATE IN GERMANY, SUPERMARKET.
Thus, this type of organization, which also includes supermarkets, discounters and hypermarkets, tops the list in terms of the number of transactions. It is followed by real estate on the main shopping streets and commercial buildings with 31%. Deals with shopping centers have gone far to third place with 17%. Judging by the smaller amounts of investment pouring into specialized markets and market centers, a slightly different picture emerges when determining the volume of transactions. The format of retail facilities accounts for a third of the invested capital, about 18% for shopping centers. In the first place with an indicator of 48% is real estate on the main shopping streets and commercial buildings. This result was largely driven by the largest ever German commercial real estate transaction in 2018: Signa Prime Selection’s equity acquisition of 59 Kaufhof properties for just under 2 billion euros.
As in the previous year, the share of “portfolios” at 55% or 5.5 billion exceeded the share of single purchases. They amounted to 45% or 4.4 billion euros. Geographically, the main point was again outside the seven large investment centers of the country. Outside the TOP-7, two thirds of the volume of purchases are noted.

The share of foreign buyers increased by 7 percentage points during the year to 44%, which is slightly larger overall than the share of asset classes of 40%. Austria, as the home country of Signa, tops the list with a 22% volume share. The United States (more than 6%) and Great Britain (almost 5%) are far behind.
Real estate agencies in the group of buyers, having reached the mark of 2.8 billion euros or a market share of 28% due to the market-defining transaction with Kaufhof, outpaced open-ended real estate funds (2.0 billion euros or 21%) and became the largest investors. Asset managers are in third place (1.7 billion euros or 18%). Leading among the sellers were “opportunity” funds with their 20% share, such as Joint Venture, which is behind the Kaufhof deal. They are followed by open real estate funds with 18%.

Yield COMMERCIAL REAL ESTATE IN GERMANY, SUPERMARKET.
The upper limit of the yield has largely stabilized during the year. In contrast to the office or logistics markets, the growth potential in the rental sector as a whole has been exhausted. This primarily applies to commercial properties with a prestigious location and shopping centers. Sales per unit area are in a state of stagnation. The share of retail food products is growing, as well as catering concepts that increase attendance. All this partially leads to a reduction in the volume of rent of supermarkets.
The upper limit of profitability for supermarkets with a prestigious location in the seven investment centers of Germany in December was between 2.75% (Munich) and 3.30% (Düsseldorf, Cologne). Shopping malls provide 4.50% on average. In search of decent interest, most investors highly value specialized markets and market centers with their yields sometimes well over 5% and a solid influx of funds.

CONCLUSION AND FORECAST
Against the backdrop of profound changes in the structure of retail facilities, the selective behavior of investors when purchasing retail facilities will continue in 2019. Many cautious investors in this cycle may be waiting for the long overdue revival and repositioning of malls and commercial buildings within the city before turning their attention to non-core products. With this development, shopping malls can provide revenue growth throughout 2019. The specialty market segment, dominated by food retail, will continue to lead the way in operations, resulting in stable, slightly higher purchase prices. Due to the limited number of objects, despite the large number of transactions, it must be assumed that this year the milestone of 10 billion euros will not be passed. Moreover, the corresponding product “Commercial real estate in Germany, supermarket” is becoming scarcer.

Stages of real estate acquisition

  • Selecting an object

So, among the huge number of cities you have chosen Munich, and turned to us, because we will help you in all stages.

It is very important to understand what you want your future home to serve: commercial or personal.

What do you want to give preference: new construction or secondary construction? You should take into consideration the fact that an apartment in a new building will cost less, but you will be able to see your future home only in the project, because the apartments in the houses under construction are still sold out at the stage of the foundation stone.

  • Layout and drawings will help you understand what your future home will be like.
  • Reserving an object.

Once your choice of property is made, we apply to the seller or builder.

  • Explanation of the features of the project, the contract of sale

We gather the full package of documentation required for the transaction and explain to you all the specifics. You will not have any unclear points – we guarantee this.

 

  • Signing of documents at the notary.

Real estate registration always takes place before a notary, who is an independent person and explains all the points of the contract in detail.

 

 

  • Payment for the facility. 

How we pay for our future home in Munich. As a rule, the first payment is 25%, the subsequent payments are broken down into several installments, the last of which is paid after we receive the keys to the new apartment.

  • Selection of sample finishes.

It is always nice to think about the future arrangement of the house. At the same time, you should not forget for what purposes the purchased housing will serve.

  • Choosing a fireplace and a kitchen

It is an important and troublesome thing to choose your kitchen among a huge variety of proposals. Always bring your kitchen wiring plan with you, and the experts are always ready to help.

  • Richtfest. Time to experience an old German tradition: Feel like a Bavarian!

The mid-construction celebration, when the walls are already in place. Residents and builders celebrate together. It is a good opportunity to get to know your future neighbors.

  • Pre-acceptance of the apartment.

Together with us and the builder, you inspect the almost finished apartment and draw up a list of defects that the builder must eliminate before the final acceptance of the apartment. If you cannot personally attend this stage, we will carry out the inspection ourselves meticulously and meticulously, just be sure to give us a power of attorney to carry out such work.

  • Final acceptance of the apartment.

Transfer and Acceptance Act. Receiving the keys. The penultimate stage – you are standing in your new apartment, now it is not just a plan on paper – it is a beautiful reality with walls, windows and doors.

When did I become a full owner?

Your new apartment is completely transferred to your ownership after completing three important steps:

– The last part of the payment is transferred to the builder’s account, you have paid 100% of the price!

– The apartment-house is commissioned and the acceptance report is signed,

– The Land Registry is updated and the title deed is registered in the buyer’s name.

Now the notary sends you all the necessary documents – now is the time to sigh easy and celebrate. Congratulations, you are now the owner of a property in Munich

We will be immensely happy to help you every step of the way, and if you need help managing your new property, our acquaintance will continue, hopefully to everyone’s satisfaction.

Explosive wave of real estate prices in Munich

“Many people in Munich don’t know where to put their money.

There is construction on every corner in Munich, like the Arcada Shopping Center in Pasing. But who can afford to buy a new home at the prices they are asking for today? Over the last ten years property prices in Munich have increased by 141%! A square meter today costs 7,070 euros – and that is the average price.

We talk to Mr. Rudolf Sturzer, chairman of the “Society for the Protection of Owners’ Rights”, about this and much more.

Munich.  It has long been an open secret, but one can still only throw up one’s hands when looking at the constantly rising prices: Whoever wants to buy an apartment in Munich has to pay double what they would have paid ten years ago. According to immowelt.de, the price of property in Munich has risen since 2008 by 141 percent to €7,070 per square metre. That is the average price.

For new buildings in a sought-after neighborhood, developers are asking and 16,000 euros per square meter and even more. In this Munich is beyond competition, the remaining 13 cities in the country lag behind. However, on the heels of Berlin (129 percent increase in cost), but in Cologne, prices are in no hurry to soar to the sky – they rose “only” by 68 percent.

Should the average citizen of Munich even bother buying real estate? Who can afford such luxuries? We talk about this with Mr. Rudolf Sturzer.

The experts are certain: “Prices will continue to rise.

AZ: Mr. Sturzer, from 3,000 euros per square meter to 7,000 euros – and that’s in ten years. Will this whirlwind of rising prices ever stop?

Rudolf Sturzer: No, I don’t see any reason for that.

AZ: What makes you so sure?

RS: Thousands of people every year want to move to Munich. And those who live here have enough money to afford to buy more and more spacious and comfortable apartments. On average every Munich resident wants to expand by a quarter of a square meter per year. This is helped by the fact that, since 2008, people are no longer frightened by the financial crisis.

This is the increase in real estate prices in Munich and other German cities.

AZ: In addition to the increase in real estate prices?

RS: That’s right. But at the same time, nobody has failed yet, unless, of course, they behave very foolishly. And one more thing: we happen to have low interest rates. You can get a 10-year mortgage loan super cheap, with an interest rate of only 1%. And 10 years ago the interest rate was 7%, 8% or even 9%.

AZ: Give an example, please.

RH: For example, in 2008 you took a loan to buy a 250,000 euro apartment. At that time you had to pay 17,000 euros annually which is just the interest. Today you only pay 2,500 euros. And you save 150,000 euros on the installment payment.

AZ: . . but you have to pay twice as much for the apartment.

RSH. Right. But in the long run it pays off. That’s because prices will keep going up.

AZ: Why do builders ask such incredible prices for new buildings?

RS: First of all because land prices are going up: half the price of a 500,000 euro property is the price of a building plot.  Also, building regulations are getting more complicated and there are more demands on energy equipment. And we should not forget Munich’s typical characteristic: Munich residents have a lot of money and want a lot of comfort.

AZ: I see, expensive bathrooms, parquet….

RS: … exactly, as well as spacious rooms, elegant terraces and balconies. If the builder offers ordinary laminate flooring, most buyers turn their nose up at it.

AZ: And why are apartments in houses built in the 1960s or 1970s so obscenely expensive?

RS: Probably because the owners invested a lot in their property before selling it.  The most common average renovation increases the value of an 80-meter apartment by 150,000 euros.

AZ: Which Munich neighborhoods have benefited the most?

RH: First of all the central ones, of course. But it’s not even the neighborhood as a whole that counts most, but a particular block. Apartments that face big streets are not in great demand, as well as apartments without balconies, mini-apartments. The most requested, even by singles, are spacious one-bedroom apartments facing quiet streets, preferably with a beautiful view of the greenery.

AZ: Who of those who bought apartments in 2008 benefited the most?

RH: Those who invested in 120 sq. m. apartments in townhouses and two-family houses in the Trudering, Zolln or Obermenzing districts. They paid 400.00 euros for them then, and today they can sell them for 900,000 euros. The gain, as you understand, is half a million. And for those who have lived in this house for 10 years, this gain is not tax-deductible.

AZ: How justified will be investing in an apartment today which costs a lot of money?

RS: It is quite justified, but only if you can afford it. After all, the rents for apartments will go up all the time. It’s always better to own a home that no one can deny you, even if your income decreases, as in the case of retirement.

AZ: What can a single person with an income of, say, 3,000 euros net per month afford?

RS: In principle, he would have to have a quarter of his own capital. Suppose he has saved, set aside, or inherited 100,000 euros. In that case, he could take out a 250,000 euro loan and buy himself an apartment for 350,000 euros.

AZ: How?

RS: We recommend taking a long-term loan of 15 to 20 years and paying back 3 to 4 percent of the amount.

AZ: Then how much does he pay every month?

RH: On average 830 euros. At the same time, the loan amount is reduced by about 170,000 euros after 10 years and that is already a big relief.

AZ: Is there any risk?

RS: You have to go to an unreliable intermediary. There are people, they calculate to the client a short loan term of 5 years – with 0.8% interest, and only 1% repayment per year, it looks very profitable. And this buyer pays only 375 euros every month. But it could end up selling the property at public auction.

AZ: Why?

RS: Because you have 90% of the debt after 5 years. And if the interest goes up by only 1%, you have a double monthly burden. Anyone who can’t afford 3% to 4% repayment should be wary of such transactions.

AZ: Can you calculate an example for us for a family?

RS: Presumably, the parents are about 40 years old, both working and receive about 5,000 euros net for two. There are two children in the family. And the mother inherits 150,000 euros.

Then they can look for an apartment in a new building of 90 square meters in the area of Sendling or Au for 750.000 euros. If they take out a 15-year loan with an interest rate of 1.5%

plus 3% payments, they would have to pay a rate of 2,250 euros per month. This is for the first 10 years more than if they had to pay rent for the same apartment. But over time the burden would be less, while the rent would increase all the time.

AZ: Wouldn’t it be more profitable to buy an apartment in an old house?

RS: You have to be more careful with old houses. They’re a great convenience: you see in advance who your neighbors are going to be. But what if the HOA meeting decides that the roof needs to be replaced? And each part-owner has to invest 20,000 euros in the venture? Before buying you should check the technical condition of the house as well as the protocols of residents’ meetings so you can find out if there are any stubborn disputants among neighbors who might spoil the whole pleasure of living.

AZ: Can you give some advice on what it is better to invest in now?

RS: An apartment in a house for four or five or six families in a green neighborhood in areas like Zolln, Trudering or Großhadern. In the future these will be very sought-after properties, much more so than high-rise buildings in densely built-up neighborhoods.

“FOR INTERNATIONAL INVESTORS, MUNICH IS A GOOD INVESTMENT

AZ: In Munich there is a growing concern that investors may lose interest in building, because the exorbitant housing prices are barely covered by the rents charged. How do you deal with that?

RH: I think that doesn’t make sense. If there is room to build on, they will occupy it and build on it. In Zurich, London, Paris and Rome they are asking three times as much for real estate – investors see this as a global process, for them Munich is still a good investment. And do not forget, many individuals in Munich have no idea where to invest their money. If they don’t figure out what to buy, they start renovating their income houses. That’s why it’s so hard to find a skilled worker.

AZ: Recently, voices have been heard again in support of changing land laws so that the state would have the right to take away some of the land profits from the owners.  What do you think about this?

RS: This is not consistent with our notion of ownership. Besides, owners of expensive real estate in Munich already pay enormous taxes: first the land purchase tax, then the land tax, after that the income tax and the income tax on the rental income. And with gifts or bequests, the state earns a lot. I find that in this situation, the owner should not hide or be ashamed of anything.

The Evening Gazette 10.10.2018

Munich is represented at MIPIM 2017 in Cannes by thirty companies.

MIPIM 2017 IN CANNES – WORLDWIDE RETAIL REAL ESTATE MARKET

mipim

MIPIM –
is the premier international real estate event that brings together the most influential real estate professionals from various real estate sectors, including offices, residential, retail, medical, sports, logistics and industry, for a 4-day exchange of experiences, deals and partnerships.

MUNICH is an expensive city, it attracts investors, developers and entrepreneurs like the light of a lamp to mosquitoes. Wednesday, March 15 at 2:30 pm. As part of the annual MIPIM exhibition, two round-table discussions were organized on the commercial real estate market and new building areas for those wishing to purchase land and build in the Bavarian capital.

At the tables of entrepreneurs, all data was discussed in detail. For example, the Bavarian real estate developer Bayerische Hausbau shared information about plans to expand apartment construction in the Nockherberg quarter, and primarily about the areas intended for sale to investors. Previously, the Paulaner Brewery stood on this site, which has been moved to Langwied. “We are going to sell all three construction sites, which will be planned for residential and partially commercial needs, to private investors,” said Jurgen Bullesbach, a representative of the company’s management. Some idea of the future construction, spread over 9 hectares, where they plan to build 1,500 apartments for 3,500 residents, is given by a recently filmed film shown as part of the exhibition.

The construction company Optima Egidius is busy, according to CEO Jens Laub, with the development of projects in Munich, Berlin and Dresden, mainly for its own capital investment. A small percentage of building space is foreseen for sale, so they come to the exhibition not with offers of sale, but with “full pockets of money”. This entrepreneur plans to invest up to 200 million euros in the purchase of construction sites in Munich and Berlin. “We have Munich in the first place, Berlin in the second. The rest of the cities are of no interest to us.” For now. Because: “In the future, we are going to invest in the United States, namely, in Detroit.”

03/09/2017 Real estate newspaper

We are celebrating Richtfest – the holiday of building the foundation of the house-07/07/2016

RICHTFEST IS ANOTHER TRADITION IN GERMANY THAT FEW KNOW ABOUT!

07.07.16 in the Harlaching district of Munich, we with our Client, who bought a 4-room apartment from the plan in December 2015, celebrated a special holiday with a reputable developer Gross Bauunternehmen GmbH

THE HOLIDAY IS NAMED RICHTFEST – THE FESTIVAL OF ESTABLISHING THE FOUNDATION OF THE HOUSE

Since December 2015, the construction of a residential building designed for 32 apartments has begun here. By the beginning of July, the walls have already been built, the roof has been installed, it remains to carry out finishing work and happy new settlers will celebrate every holiday. But yesterday, on July 7, everyone celebrated, as it should be according to an old German tradition, rooted in the 14th century.

It is always celebrated at the construction site, where all builders, architects, bank representatives are invited, the roof is decorated with a large green wreath, here it is called Richtkranz or Richtkrone (festive wreath, festive crown). This was also done on Thursday, July 7th. Glasses were raised in honor of the builders and architects, three times the representative of the builder, who uttered words of thanks from the roof of the house, broke his glass to the friendly applause of future residents. It has long been believed that a glass must necessarily break, then further construction will go well, and the house will stand forever. If the glass does not break, happiness cannot be seen at home, and the unlucky “thrower” covers himself with shame. Such an oversight did not happen on Thursday, July 7, 2016, because everyone was in a wonderful mood, and after all the speeches, tables were set with refreshments.

We are happy that we were present at this holiday, accompanying our beloved clients who are building a beautiful apartment for themselves in a new house. We wish them long and joyful years of life on the banks of the romantic Isar in one of the most comfortable and beautiful cities in the world.

MIM or Primary Property Show in Munich from 8 to 10 April 2016

Every year our company is present at several significant and interesting events dedicated to the real estate market in Munich and Germany in general. The start of this year was no exception. Exhibition of new buildings in Munich April 8-10, 2016.

выставка недвижимости в мюнхене MIM 2016

FOR OUR CLIENTS WE PREPARED A BRIEF OVERVIEW:
Projects and finished objects with a total volume of 5,000 apartments and houses within the “greater Munich” were presented.
New locations for large and infill developments have been announced in the future.
More than 60 developers, brokers and financial institutions are gathered under one roof.
Lectures and discussions were held not only on real estate issues.

All developers are looking for new places to build and actively communicate with brokers who have the opportunity to find land for development, and government agencies responsible for issuing building permits. And we are not talking about some very “elite” building sites. In Munich, in principle, almost all land with a building permit for an apartment building is considered potentially attractive.

Most developers keep prices and sell 50% of the volume of apartments at the stage of preliminary announcement (study of consumer demand and obtaining a building permit), as well as at the stage of excavation. We always recommend our clients to make a purchase decision during this period of time, as we have the opportunity to choose an apartment for which “the soul lies”.

Premium developers motivate their prices (10-30% higher than those of competitors) by the fact that they carry out infill development in more attractive places in terms of transport and pedestrian accessibility. Despite all the same, the ubiquitous “German quality”, their houses are built according to “green technologies” (with lower energy consumption). The number of apartments varies from 6 to 20 in one house, which increases, from the point of view of buyers (especially Russian), their “eliteness” in comparison with houses of “mass construction”, for example, 100-150 apartments. I would like to note, based on our many years of experience, they are right. We, as a management company, see in such houses a more “point approach” from each tenant to the common property and the surrounding area.

Financial organizations pleased us with offers for foreign investors.

We have agreed with another bank to provide our clients with loans at an “acceptable interest rate” with fixed interest rates for 5 and 10 years, as well as with full repayment of the loan up to 30 years.

The result of our three-day presence: The market has lived, the market is alive and will live and develop. We did not find any hint of an “overheated market” or a decrease in consumer demand.

Seminar in St. Petersburg on new buildings in Munich – 1.10.2015

Seminar PROGRAM

1. Investment attractiveness. Review of prices in the sales and rental market. Forecasts for the future.

2. Security and safety of investments. Notarization of the contract of sale, registration.

3. Scheme of purchase in the primary market. What are brokers for?

Accompaniment of professionals in your native language at all stages of the transaction.

Search for an object, the procedure for concluding a notary agreement, payment, mortgage, selection of interior decoration and plumbing for a facility under construction, act of acceptance and transfer of an object, provision of a mailbox …

4. Schedule of payments for new construction in accordance with the law.

Payment for real estate under construction is carried out on the basis of MaBV (Makler und Bauträgerverordnung) according to the following scheme:

· 25%, after receipt of notarial confirmation (The right of retention, according to § 632 para. 3 of the German Civil Code, is taken into account).

· 28%, after the construction of the frame, including work on the rooms.

· 18%, after the construction of the roof, drain pipes, completion of the initial installation of heating, plumbing and electrical equipment, installation of double-glazed windows.

· 20.5%, step by step when transferring ownership.

· 5%, immediately after the completion of construction work on time and without significant shortcomings.

· Last installment of 3.5%, immediately upon completion of the housing construction, also including the underground garage and infrastructure.

5. Available financing schemes for non-residents of primary and secondary real estate.

6. Asset and real estate management from professionals.

· Calculation of income from rent and calculation of costs, collection of rent.

· Drawing up an economic development plan.

· Monitoring and control of construction and repair works.

· Insurance services, including recording of damages.

· Summing up the results for the year and maintaining accounting records.

· Providing a report to the owner.

· Mail receiving services.

· Maintenance and repair services.

· Design and modernization of real estate.

· Furnishing.

· Leasing out space.

· Discussing and concluding a lease agreement, as well as its termination.

· An increase in the monthly rent.

· And much more…

7. Relocation services.

Are you interested?

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Regina Borger

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