Newsletter May 2012


German Property For Sale – May 2012 Update


     

May German Property Update

 

Welcome

Welcome to our German Property market update. In this edition, in addition to a selection of our latest property offerings, we take a closer look at the city of Magdeburg and the investment potential to explored there.

The topic of a German Property Bubble has been in the news recently – our view is that this bubble is just starting. We also offer you our guide to cashflow positive property investment to download.

As ever – please contact us if you would like any more information.

 

The German Housing Bubble

As everyone and his dog missed the coming over the greatest housing and financial crash of our times, economists and central banks are keen it seems to spot any asset bubble first, perhaps to say "told you so" this time around. The German housing market, one of the few in the developed world to be increasing in value, is seen by some early commentators as signs of an early "bubble" which will burst.

True enough, Germany has perhaps going to have lower interest rate policy than it needs in the coming years as it is saddled with the weaker Euro countries and this will add to growth. As will its perception of a safe haven for property investors, those that have any money left to invest after the collapses from around the world. We thought we would bring together some articles to explore this notion of an impending bubble, for your interest.

The graph above from the OECD is interesting. It shows since 1990 that real german housing is at 90% of its value now as compared to 22 years ago. Looking at nominal values, after the euphoria period of the re-unification, nominal values still stand at just 30% higher than 22 years ago. Hardly a bubble when looked at markets like UK that have expanded by 250% or so in the same period, even after recent losses.

A selction of articles and video are below, to explore this issue further. Our view is that, with low interest rates and inflation coming Germany’s way, the price increases have only just begun.

German macroprudential reforms – The Economist

Bloomberg – Germany Grows Robust from Sick Man With Demand at Home

Wall Street Journal – ECB Rescue Means German Boom and Inflation

The Local – Investment firm ‘buys 22,000 German flats’/A>

CNBC – Why Have German Property Prices Stayed Flat? /A>

Reuters – German inflation angst returns in new threat to Europe


Cash Flow Positive

A common aim of all of our investors in "a strong yield delivering a positive cash flow". So when all is said and
done, how much can you expect to be left with at the end of the day, after finance payments and other
deductions? This is a question we frequently get asked by our clients and is one that this guide will hopefully
help you determine which investments will be truly "cash flow positive"
What Factors Determine Cash Flow?
Well, clearly the are some obvious factors, and perhaps so not so obvious factors which are to be considered:
1. Rental Income, or yield of the property
2. Level of finance taken, ie what percentage of the value
3. Prevailing Interest rates
4. Finance type, repayment or interest only
5. Likely maintenance costs
6. Management fee
7. Income tax
Lets take in each turn and discuss what factors could be modelled…

Download our guide to Cashflow (PDF)


It is Time to Invest in Magdeburg

Whilst international investors in Germany have been busy over the last 3 years or so chasing ever diminishing yields in the big markets such as Berlin, there are still pockets of value within Germany which should really enjoy the upswing in the economy. Magdeburg can be said to be one of these pockets, being the capital city of its state, a good size city which has been growing for the past 8 years, one of the top cities in terms of growth across Germany and some really beautiful housing stock.

Why do we think that the time is right to invest in Magdeburg?…find out here


Latest Property Offers


Leipzig

PV219 – Plagwitz-Lindenau offering


450,000€ | Leipzig
Potential Yield: 8.3%
Type: Residential
Approx. Size: 703 sqm

This superbly-located property offers much value and potential to an investor, being priced at
only 640 Eur per sqm. In terms of unlocking this potential, the first task should be to review the
rents which fall far short of the market rent of 4,5-5 Eur per sqm in this area.


PV196 – Fully Let in Connewitz


720,000€ | Leipzig
Potential Yield: 8.3%
Type: Residential
Approx. Size: 1074 sqm

A fantastic opportunity at a very low price per square meter in the popular area of Connewitz, Leipzig. 10 fully let residential with a long standing commercial tenant in place also.


PV446 – 545.000 Euro Investment Opportunity


545,000€ | Leipzig
Potential Yield: 9%
Type: Residential
Approx. Size: 940 sqm

Located in the “up and coming” district of Plaqwitz to the west of Leipzig is this large apartment
house with 1 commercial unit [Insurance agent] and 18 apartments.
The area of Plagwitz is formerly the industrial heart of the city, and now is undergoing regeneration
of its warehouses and canal system into some of the most demanded residential property in the
city. The property was built in 1902 and refurbished fully with new roof, windows, heating and electrics
in 1995. The property has been steadily maintained since.
The property has a generous ground and garden area, with 3 parking spaces to the rear of the
property. Currently, 18 out of the 19 units are let.


PV427 – Leipzig – Markkleeberg Centre


320,000€ | Chemnitz
Potential Yield: 8.57%
Type: Residential
Approx. Size: 440 sqm

This multifamily house is based in Markkleeberg, an extremely attractive area south of Leipzig.
Consisting of 7 residential units and 1 small commercial unit, with sizes around 55sqm, it is fully let,
with residents paying in an average of 4.60 EUR psm. The building was refurbished in 1997 and
most recently in 2010 with roof and front facade being renewed. Markkleeberg is an affluent and highly sought-after area in Saxony. Used frequently by the
residents of Leipzig during weekends and holidays for leisure purposes, the town is appealing for
its convenience of shops and amenities such as shops, good schools and art galleries, as well as
its environment; such as the closeby Markleeberg and Cospudener Seas, and the lush floodplan
forest.


Leipzig Singles

Zuckelhauser Strasse 3


21,000€ | Leipzig
Potential Yield: 13.36%
Type: Residential
Approx. Size: 45 sqm

Single unit is Stoetteritz. 2 Rooms. Current net rent 2820 Eur.


George Schumann Strasse 127


21,000€ | Leipzig
Potential Yield: 14.34%
Type: Residential
Approx. Size: 39 sqm

Lovely single unit is Gohlis-sud. With 2 rooms and a net rent of 2,079 Eur- this property yields at over 14%.


Gutsmuth Strasse 5


20,300€ | Leipzig
Potential Yield: 10.79%
Type: Residential
Approx. Size: 43 sqm

Single unit in Lindenau with a yield of over 10%



Chemnitz Single Apartments

Chemnitz – Kassberg – 66 Sqm Apartment


46,300€ | Chemnitz
Potential Yield: 9.4%
Type: Residential
Approx. Size: 66 sqm

Kassberg
46.300 Eur – 9.4% yield

Located in Kassberg, 66 sqm apartment with balcony, lift and renovated in 1995. Very nice property, offered vacant for a new tenancy. Price of 700 Eur per sqm


Chemnitz – Kassberg – 68 Sqm Apartment


38,500€ | Chemnitz
Potential Yield: 8.3%
Type: Residential
Approx. Size: 68 sqm

Kassberg

38.500 Eur – 8.3% yield

A 68 sqm apartment on the 3rd floor presented in a high quality condition


Chemnitz – Kassberg – 57 Sqm Apartment


31,000€ | Chemnitz
Potential Yield: 10%
Type: Residential
Approx. Size: 57 sqm

Kassberg

31.000 Eur – 10% yield

Attractive ground floor apartment with 57 Sqm


Magdeburg

PV600


500,000€ | Madgeburg
Potential Yield: 14.15%
Type: Residential
Approx. Size: 779 sqm

This building, a mixture of six residential and eight commercial units, is based in Sudenberg. Magdeburg, a well sought-after area just a few kilometres to the-south west of the city centre. All but one of the units are let – the residential units sport laminate flooring;large, bright living rooms; and good quality bathrooms which are to a modern standard. The building itself is on a popular shopping street, and tenants enjoy easy access to doctors, schools, bars and restaurants as well as excellent public transport links. This excellent investment opportunity is priced at an attractive 641€ psm, and yields an impressive 10.02% yield on delivery.



PV608


575,000€ | Madgeburg
Potential Yield: 8.31%
Type: Residential
Approx. Size: 1005 sqm

This investment is a fully let property in the district of Altstadt, Magdeburg. Constituting nine residential apartments and one commercial unit, it presents a very under-rented prospect with significant potential. Aside from the ground floor unit, half of the residential units are of the larger family-size of 122sqm, with the other half offering a smaller 90sqm option. All units have been undergone recent refurbishments, with laminate flooring and upgraded bathrooms. There is excellent public transport – although the city centre is well within walking distance – via the trams and the nearby Hasselbachplatz S-Bahn station. There are plenty of amenities in the area, including shops, school as well as the attractive open spaces in the form of Klosterbergegarten and the Stadtpark Rotehorn, adjacent to the River Elbe.



PV612


630,000€ | Madgeburg
Potential Yield: 10.3%
Type: Residential
Approx. Size: 1050 sqm

This investment opportunity is for two adjoining buildings in Alte Neustadt. in the heart of Magdeburg. It constitutes 18 fully-let residential units spread across four floors, ranging in size from 30 sqm to 78 sqm and is located conveniently close to the city centre, the leisure areas of the River Elbe and the nearby Nordpark. It is also close to the Magdeburg University and the area is popular with students. The property has been fully refurbished, including laminate flooring and renovated bathrooms. All units have balconies and there is plenty of parking available to tenants. Priced at an attractive 600 EUR psm, this is an appealing property with a strong rent profile and good yield upon delivery.



PV617


480,000€ |
Potential Yield: 5.35%
Type: Residential
Approx. Size: 862 sqm

This eight-unit property is located in Sudenberg, Magdeburg in the Saxony-Anhalt region. With an immaculately-presented facade, this building constitutes of seven residential units, a single commercial unit, and three garage spaces. All residential units are let, and have been recently upgraded with laminate flooring and refurbished bathrooms. The residential units are sized between 68 and 92sqm, ideal sizes for families seeking accommodation in this area. Well supported by public transport for travel into the city centre, tenants enjoy the convenience of the shopping and amenities provided by the nearby Halberstädter Strasse.


Wuppertal

PV806 – REDUCED! Res Building, Wuppertal


255,000€ |
Potential Yield: 11.1%
Type: Residential
Approx. Size: 505 sqm

Situated in the bustling city of Wuppertal, this residential property, set over 5 floors, contains 9 apartments. is located close to the famous cable car, numerous green areas and in the central location of Wuppertal-Elberfeld. Built in 1957 it underwent renovations to the façade, electrics, flooring and some bathrooms in 2010. The apartments all have decentralised gas heating.



PV819 – Wuppertal–Modern Residential Building


475,000€ |
Potential Yield: 8.84%
Type: Residential
Approx. Size: 640 sqm

Situated in the bustling city of Wuppertal, this residential property, set over 4 floors, contains 11 apartments is located in the central area of Wuppertal-Sudstadt. Built circa 1957, the apartments are very modern in style, with up to date bathrooms, communal areas and a well presented façade. In addition, the property comes with 6 garages and an advertising space. In the immediate vicinity of this very centrally located multi-family house are the University of Wuppertal, kindergartens, schools and shopping facilities., Bus connections are just a few metres and a playground is just a few minutes.



PV821-Wuppertal – Beautiful MFH in top location


365,000€ |
Potential Yield: 9.86%
Type: Residential
Approx. Size: 510 sqm

Situated in the bustling city of Wuppertal, this residential property, set over 5 floors, contains 7 apartments. is located on the border of Wuppertal’s most affluent neighbourhood, Brill. Built in 1910, this apartment building is the perfect example of an old Wilhelmina style property, renovated to modern living stands, whilst keeping its original features.




   
 


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