Newsletter January 2010
| January 2010 Update |
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Welcome
I’d like to welcome you to the monthly update from ProVenture, especially if this is your first issue. We hope you find this short newsletter of interest and that it keeps you up-to-date with the property investment scene in Germany.
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FX Update
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German Economic Outlook
The Ifo Business Climate Index for industry and trade in Germany rose once again in December. The current business situation, according to the survey responses, is again somewhat more favourable than in the previous month. The business outlook for the coming half year has been assessed similarly as in November. After the dramatic economic collapse last winter, these survey results should bring some New Year cheer.
In manufacturing the business climate has further improved, after having clearly brightened in November. The manufacturers are less dissatisfied with their current business situation than in the previous month.
Additionally, data published by the Federal Labour Agency showed unemployment fell by 3,000 in December, the sixth consecutive decline, leaving the jobless rate unchanged at 8.1 per cent for a third month in a row.
Forecasters are watching export and job figures keenly in the coming months as the German recovery starts to take root. With Germany being the biggest exporting country in the World, stronger global demand should help drive the economy forward in 2010 above other EU countries.
Finance Update 
2009 ended with some extreme volatility during the last half of December, GBPEUR moving from the lows at the beginning of Dec of €1.0920 up to just below €1.13 on the 17th Dec. With further fears for the banks in Austria, the market had been shaken by the sudden move back in to the US Dollar (from the Euro) and the net result was that the price against the single currency moved higher. The markets have calmed down a little since and are looking more like the situation that we were in before the holiday season started.
There is some potential of further gains if we continue to see positive data from the UK following the encouraging house price data in the U.K. (released Jan) which has pushed the pound around half a cent higher above €1.1250
We had suggested that this target may be reached by the end of December and it now seems that the rate will stay above €1.11 now and could even improve further. The market swings over the past two months has seen this rate move up from €1.06 to €1.13 before falling back to settle around €1.09 and then up again to where we are now, with this recent change in sentiment possibly indicating that we may be back in a positive trend. The general consensus is for further gains in January which could result to take the rate back up above €1.15 by the end of the first quarter.
If you wish to contact Mark to discuss any foreign exchange trades – please call him on
+44 207 337 1247
Top Tip – Using Yield to Evaluate Investments
The financial crisis has seemed to have decreased the appetite from amateur investors, and we have experienced a higher concentration of professional investors and savvy cash buyers who seek a relaible return on their money. This affect seems to be common across the international and domestic property sectors, with many properties now (for the first time) being advertised with the "yield" quoted along with the sales price and other particulars. This is a very encouraging development, as the yield of a property really helps the investor analyse the yield of an investment very quickly and determine the viability of an investment. But how should we use the property yield in the best way when comparing investments?
Like anything, we need to ensure we are comparing like with like when analysing property yield. The most common simple yield calculation expresses the net annual rental income / property price. One aspect that should be determined if a yield you are quoted represents net annual income or gross annual income. This can make a huge difference, sometimes up to 50% difference, if yield quoted does not deduct costs such as the house management (sometimes called home owner’s fee), taxes, regular maintenance of items such as boilers, elevators and the like. Additionally, the purchase price part of the equation can include all closing (transaction) costs or not. It is worth checking exactly what is and is not included, so you can determine your real cash flow each month.
The German property market has been dominated by professional investors and institutions for many years so it is no surprise that nearly all properties are quoted with the net yield. It is still worth checking what is and isn’t included, as some regions list yield in a different way. At ProVenture, our yields quoted take account of all fixed costs with running the investment such as house management, caretaking, apartment heating (if applicable) and maintenance of boilers and elevators. Therefore, the cashflow should be fairly easy to determine. We can discuss this further with you as you need.
This is a huge topic! If you have an interest in evaluating investments and using yield, please take a look at Chapter 4 of our E-Book which goes into alot more detail:
ProVenture Activity
ProVenture had its busiest month in 2009 during December, despite the Christmas period. The majority of activity was centered in Leipzig but inspection visits were also undertaken in Halle, Berlin and a new location of operation at Bremerhaven. General appetite for investment seems to have increased significantly with an an 100% increase in web traffic and enquiries from Europe (UK, Ireland, Italy and France mainly) and also various countries in the Middle East. The ProVenture team are looking forward to a great (albeit cold!) start to 2010 and look forward to meeting more like-minded investors.
Free Book!!
We have a limited number of copies from the first print run of our book “Your Life in Property” available for our newsletter subscribers and can will mail out to you for free, if you are quick. The e-version of the book is at:
Please let us know by email your name and postal address should you wish to claim a copy:
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Latest Property Offers
Below are links to some of the new property brought to the market during December. More property in Leipzig, Halle and Berlin will be brought to the market during January so please monitor the website.
Happy investing and good luck,
Mat
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