Newsletter June 2010
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| June 2010 Newletter | ||
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May-busy month for the Germans! There are plans to hike beer prices this year for the Oktoberfest 200 year anniversary, the German Captain Michael Ballack has been ruled out of the World Cup with injury and who can escape the fact that Germany’s Lena won the Eurovision Song Contest! However, despite the Euro bailout package, Germany’s economy continues to be on the up: Please click on the items on the left to read the content or scroll down to read the whole newsletter
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Positive Indicators |
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Unemployment Drops as Retail Sales ReboundFrom May’s Official Data:Data showed German unemployment falling sharply and retail sales picking up, as Europe’s biggest economy pushed on despite the eurozone financial crisis. Germany had more good news to report meanwhile, as the national statistics office said shoppers headed back to the high street in April, pushing up retail sales for the first time this year. Export-orientated Germany has been pressured by European Union neighbours to boost domestic consumption and help those who do not manage to achieve Berlin’s constant trade surpluses. Berlin’s latest unemployment figure was the lowest May reading since 1992 and the 11th monthly decline in a row. The seasonally-adjusted number of jobseekers fell by 45,000 or nearly three times more than a forecast of 17,500 compiled by Dow Jones Newswires. German officials have subsidised shorter working hours so companies did not have to lay off as many workers amid the country’s worst post-war recession, and can be brought back to full-time status as orders for German wares bounce back. The recent substantial drop reflects a true rise in demand for labour and that prospects for the jobs market continue to remain favourable for the time being.
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Economy Grows |
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German Economy Unexpectedly Grew in First QuarterRising ExportsGermany’s economy unexpectedly grew in the first three months of the year as rising exports and company investment outweighed the effects of the cold winter. While the harshest winter in 14 years suppressed construction, latest reports suggest the German economy, Europe’s largest, came roaring back to life when building sites reopened with the arrival of spring. Germany has also found a silver lining in Europe’s sovereign debt crisis. The Euro’s 16 percent decline against the dollar since late November is making its exports more competitive abroad. Foreign sales rocketed 10.7 percent in March, the biggest jump in 18 years. The growth momentum is much better than the figure suggests as harsh weather conditions restrained expansion, however very strong growth in the second quarter is expected due to catch-up effects and the reviving global economy. A weaker Euro is the icing on the cake. The statistics office said exports and capital investment made positive contributions to first-quarter GDP. Rising inventories and government spending also supported growth, compensating for the negative impact of construction, weaker private consumption and imports. Cold weather kept consumers at home and closed building sites over winter, weighing on economic growth. The spring thaw released pent-up demand. Industrial production jumped 4 percent in March, driven by a 26.7 percent surge in construction activity. Deutsche Post AG, Europe’s biggest postal service, has raised its full-year outlook after package and freight volumes increased. Germany’s Adidas AG, the world’s second- largest sporting-goods maker, expects to double its profit this year as the soccer World Cup boosts sales. Growth across the 16-nation Euro region may be uneven this year as governments rein in spending to cut budget deficits as finance ministers recently announced an unprecedented aid package worth almost $1 trillion to counter the fiscal crisis that engulfed Greece and undermined confidence in the Euro. Contact Us for more Information
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Currency & Finance |
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Sterling Recovers3.25-4.35% Fixed Rate FinanceThe Greek economic crisis continues to weigh heavily on the Euro, with it now trading at 1.22 USD:EUR. Politics dominated the news in the UK throughout May since the formation of the new coalition government. Since then, Sterling continues to recover surpassing recent highs against the Euro, trading at 1.20 as I write, whilst the Australian Dollar hit an all-time high last month of 1.62 EUR:AUD. In terms of finance for investment, we have opened up new lines for credit to give clients more of a range in securing finance most suitable for them. Mortgages for clients were agreed last month at an average rate of 4.35% for fixed rate products over 10 years. This work remains on-going during June. Please get in contact if you are looking to finance any deals in the very near future.
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Poor But Sexy Berlin |
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“Berlin is Poor, but sexy”Reads the German Capital’s advert“Berlin is poor, but sexy” – a catchphrase that appears to be working as Berlin bucks the trend in the crisis-hit global tourist industry. Playing on its reputation as a cheap, yet cool, destination for holidaymakers, Berlin lured 7.9 million tourists in 2008, breaking its own record for the fifth consecutive year with a gain of 4.2 percent from 2007. Tourist numbers have soared since the early 1990s, when a mere three million visited the recently reunified city. Most of these were visitors from the former East Germany, rediscovering half a city they were banned from seeing under Communist rule. Berlin’s hotels also report a roaring trade, with the number of people spending the night in hotels rising in 2008 to 17.8 million, a gain of 2.8 percent from the previous year. The main reason for the boom: low prices. A four-star hotel room in Berlin will set you back less than 150 euros (188 dollars), less than half of what a similar hotel in Paris or London would cost. The new trend appears to be short term apartments; these can be cheaper than a hotel room, in just as good a location, with people enjoying the larger space and the perks of home, away from home. Most visitors come for a weekend break, with the average tourist staying 2.6 days, the tourism office said. So how does this benefit you as an investor? Is the short term lettings market a sure fire way to get a good return on your money, whilst owning your own crash pad in town? Next time you are booking an inspection trip to Berlin, look into staying at a short term apartment and see for yourself the potential of this ever increasing market. Read the full article on the pros and cons and how to make the most of investing in this modern market here
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ProVenture Activity |
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Busiest Month to DateMay proved our busiest months to date, hosting 11 visits and resulting in 8 Letters of Intent. Clients continue to look for yield investments and mainly target Leipzig for their focused search. We are experiencing a higher demand for quality property and yield property in Berlin, where value is improving and rent levels are increasing. Single apartments can easily attract 7% with full blocks up to 9%. Due to a combination of increased demand from international and domestic clients in Leipzig, yields continue to be under pressure but still remain in the 9-12% range. All deals brokered this month attracted 60-80% loan-to-value finance. An increasing emphasis on finding new markets will be made in the coming months, to ensure a good range of options are in place for our clients. We have a couple of investment books available
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