[The Major]

JMBROAD,
Thank you kindly for your prompt and knowledgable reply.
Are your research skills retainable and if so, on what basis?
Regards,

The Major

Originally Posted by JMBroad

My opinions: (I research property markets for an agency )

Unmodernised property in former East Berlin is very cheap. There are benefits of buying and renovating unmodernised properties in specific areas of East Berlin (not necessarily East Germany as a whole, but some areas of East Berlin. Most of the benefits only apply to people who pay tax in Germany as you can get tax relief from investing in those properties. Brandenburg and Saxony themselves don't really appeal to me at all. Some places like Leipzig and Dresden may potentially become interesting but as things stand right now I'd not touch either until I'd exhausted opportunities in Berlin.

1) With regards to purchasing property with tenants in it the german rental laws make that seem more like a nightmare than a dream.

High rental demand - yes, most of the population of Berlin rents. High rental prices - not really, but considering property prices are cheap, the yields can be attractive. However having said that because people rent for so long, (sometimes generations) there are numerous inherent problems with purchasing property which is already rented out.

2) Generally speaking, financing in Germany is complicated. Because of the subprime crash in Berlin in the 90's and now having had several German banks who had invested in the US subprime taking a hit, the maximum a foreigner will get as a mortgage is around 60% LTV and the process is quite slow. Best to either release equity in another country or plan well ahead.

3) Some areas (recently Potsdammerplatz, Prenzlauerberg and Friedrichshain for example) have seen as high as 50% growth (properties in Potsdammerplatz which were selling at 2000 €/m2 last year are selling this year at 3000€/m2.). This is largely due to the demand for properties in these areas and the lack of supply. Other areas, such as some of the Neuköln districts or Wedding are likely to see no capital growth or very little in the near future at least. Some areas, like Charlottenberg are low risk but also less likely to show capital growth.

4) Not sure - the whole permanent tenant thing put me off so I went looking for option 3

5) Not sure about grants for developers, but the grants for tax payers in Germany is huge. The majority of the investment into property in specific areas and buildings can be claimed back over the next ten years, in addition to the rental yield.

6) As an individual investor (considering I'm not a tax payer in Germany) - I wouldn't buy a building in Berlin which needs renovation, nor would I buy tenanted properties, I'd go with the third option.

As a developer, I would have to see what grants (if any) are available to me as a developer, then see how I could make the tax benefits work for me (what the restrictions are on "tax payer in Germany" by definition) and of course which areas. I'd also have to see who the end buyer would be and if you are looking at renovating to then sell to the individual investor, you need either a good product (concept is equally important as build quality in Berlin) or the will and ability to flog a bad product.