Property Investment Case Study: Germany (TPI-GM-001)
Introduction:
With its 82 Million People Germany is the heart of Europe in political as well as in economical ways.
The real estate market in general is very attractive, particularly in economically strong regions like for example Munich.
What makes Germany primarily interesting for real estate investment is the fact that German economy is at a cyclical low. So there’s a lot of interesting, cheaply priced real estate available.
Because technological and medical expertise is exceptionally high, people in search of modern medical aid are attracted from all around the world (especially from the Middle East).
Location:
No data available
Economy:
No data available
Property Market:
The property market in Germany has been stagnant or worsening for some time. With little or no capital growth, a weak economy, high unemployment, bribery scandals, and a reluctance from the population to invest in property have meant that buying and selling has become a matter of necessity rather than interest. A relatively small number of Germans actually own their property (42%) in comparison to the UK (71%) and Spain (89%), Europe’s biggest home owners.
The German property market has hit rock bottom and now offers considerable opportunity for the seasoned Property Investor.
Frontline Realty is sourcing excellent German rental housing stock with proven returns in the range of 8% to 11% per annum on the initial cost of purchase.
There are no restrictions to buying property in Germany, maintenance costs and taxes are low. All our properties are in the former "West" Germany where infrastructure and services are superb. Frontline Realty can source to order properties in the former "East" Germany, where prices are lower still, but we are of the opinion that there is a higher risk involved.
Frontline Realty has been monitoring the German property market for some time, and have concluded that the window of opportunity for maximum gain is opening. That means the conditions are well nigh perfect.
Examples:
General Property Price Guide
Real Estate Prices In Germany
Range Varies, for example:
From around £80,000 / $115,000 plus for a terraced home.
Detached Homes from £140,000 - £600,000 / $200,000 - $875,000and beyond.
City apartments vary from £300,000 / $440,000 with Munich a premium
Attractions:
No data available
Transport Infrastructure:
No data available
Local Mortgage:
Mortgage rates are available at 3.2% fixed for 5 years.
You can borrow up to 70% from German banks and building societies and they would normally expect a proven track record of regular monthly savings of up to six years before it is approved. The maximum term would be up to 30 years on a fixed rate of interest.
Inflation:
2.1% as of February 2006
Economic Growth:
No data available
Sunshine Days:
No data available
Annual Rainfall:
No data available
Temperatures:
Winter: No data available
Summer: No data available
Property Price Inflation:
No data available
Local Currency:
As Germany is part of the Euro Zone the asset being purchased is denominated in euro.
Cost of Living Index:
No data available
Income Tax:
No data available
Property Tax:
Land tax is charged in Germany to cover local services and is rated usually below the current market value and would be around 1% of the rateable value. Non-residents are subject to wealth tax on property owned in Germany of around 0.5%.
Capital Gains Tax:
Capital gains tax is charged at normal income tax rates on property sold within two years of purchase.
Buying and Selling Costs:
Commissions in Germany are typically paid by the seller and range from 3% to 5% of the gross value of the transaction. There is also a 2.5% registration fee which is paid by the purchaser when the certificate of title is registered in the Book of Land Titles.
Rental Yields:
German residential property currently offers extremely strong yields. If you look at the properties we currently have for sale you will find that you can enjoy rental yields of in the region of 6% to 7%.
Report Compiled By:
To download this case study in a handy pdf format use the link below:
Download Case Study TPI-GM-001
Report ref: TPI-GM-001
Date created: 12-03-2006
