Newsletter November 2009

Posted on January 25, 2014 by Gareth in Newsletters







 
 

November 2009 Update
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.

 
Please click on the following titles to read the content or scroll down to read the whole newsletter

  
 

 
  
 
FX Update

 

 
 
 
 

 
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
  

 
German Economic Outlook

Eurozone economic prospects brightened last week as a closely watched confidence indicator rose for the seventh consecutive month and German unemployment fell unexpectedly in October.  The European Commission’s "economic sentiment" indicator jumped from 82.8 in September to 86.2 this month, beating market expectations and reaching its highest level in more than a year.

Data from the German labour agency showed 26,000 fewer unemployed in October than September, bringing the jobless total to 3.4m, or 8.1 per cent, its lowest level this year.
 
Little by little, the sky brightens over the horizon. Six months ago, Germany’s government and main economic institutes forecast its economy would shrink 6 per cent this year, with pallid growth in 2010 of 0.5 per cent. Last week they revised the numbers up to a 5 per cent decline this year, with 1.2 per cent expansion next year. The change reflects improved outlooks for exports and unemployment. The fortunes of Germany and its export-driven economy are impacted from the global economic outlook and it is still early days in this bounce back.
 
 

The German government will not cut public spending until the country has safely emerged from the downturn, the next finance minister has warned.

In his first interview since his appointment last week, Wolfgang Schäuble, a close ally of chancellor Angela Merkel, cemented the new coalition’s central message that boosting growth, not fixing the burgeoning budget deficit, would be its top priority. He told the Welt am Sonntag weekly: ”It would make no sense to start talking about savings measures in a phase when we want to concentrate on growth stimuli. It would have the opposite effect.”  Mr Schäuble’s admission came a day after Ms Merkel’s Christian Democratic Union and her future ruling partners unveiled their policy agenda for the next four years, promising substantial tax cuts for businesses and consumers. The new ruling partners – the CDU, its Bavarian Christian Social Union sister party and the liberal Free Democratic party – agreed to cut taxes for companies and individuals by €24bn (£22bn) a year.

 
 

 
 
Finance Update     
 
We now have an fx update from Gary  Field – Senior FX broker at Cornhill FX:
"Sterling once again left the markets battered and bruised after two large moves one up and one down. After an October opening at around 1.6000 GBPUSD slipped to a month low of 1.5728 by the 12th.But following a un- official statement by a BOE MPC member that finally quantative easing was beginning to make an impact, the rate raced up to the month high of 1.6630. However UK GDP figures released on the 23rd showed a 4% contraction in the economy contrary to the 0.2% expansion forecast, a massive disparity. This lead to a sell off and within a few hours we were trading at 1.6200. All eyes now turn to the BOE rate announcement on the 5/11 and the UK quarterly inflation report released on the 11th, both of which could indicate an increase in quantative easing and further pressure on sterling.  All the afore mentioned moves were mirrored in the GBPEUR rate. After opening the month at 1.0900 the next few days saw a decline to a 6 month low of 1.0650 by the 12th and then a strong a rally to 1.1110 after the above comments. However following the GDP figures we witnessed a reversal down to 1.0850. With the Euro continuing to strengthen against a basket of currencies sterling struggles to break the 1.1111 (90p) barrier and market sentiment indicates that any further poor economic indicators for the UK may see a testing of the lower reaches of the recent range."
 

 If you wish to contact Gary to discuss any foreign exchange trades – please call him on
+44 207 337 8679

 

 

 

 
ProVenture Activity   
 
This month saw the Proventure and Kuenne team (along with a representative from Deutsche Bank) exhibit at the London Property Investor Show from 21-23 Oct. Not knowing what to expect in this current financial crises, we were all pleasantly surprised to meet so many investors over the 3 days, many of whom knew the German market well and were focused on investment in cities such as Berlin or Leipzig. Thanks for all you who called by the stand! To meet anticipated demand, a number of new properties were brought to the market which are included on this mailing.

Currently 3 dates for inspection trips in November are planned by ProVenture staff in the cities of Berlin, Leipzig and Halle, although meetings outside these times are normally feasible.

 

  
Focus on Leipzig 

 
This month, we provide a focus on one of the most exciting cities for investment at the moment – Leipzig.  We will give some economic overview of the city, an interview with a leading property manager in the city and some useful links.
 
City Overview for Investors 

 
What makes Leipzig such an interesting area for investment across Europe today?  Well clearly, the prices in the city make it currently one of the cheapest cities in Europe to buy quality, refurbished property.  Prices for fully let apartment blocks can start at around 400 Euro per sqm, and provide net yields on purchase between 8-14%, depending on location and type of property chosen.  Single apartments can be purchased from 20,000 Eur upwards making an easy market to enter for all types of investors and finance for good property is still available in the 70-80% range.  So, at first glance, this is an area meriting further investigation.  But all this is irrelevant if a city is unpopular and depopulating, making finding tenants increasingly difficult.  Population statistics are of vital importance to investors when conducting an overall feasibility study for investment in any particular area. Increasing population clearly will underpin demand for property rentals whilst a decreasing population will tend to lead to a driving down of rental levels and an increase in the standard of accommodation expected by over-supplied tenants.
 
According to a study conducted by the Saxony state, the number of inhabitants in the Eastern part of Germany continues to decrease , however the population of Leipzig has increased now every year since 2001. The Leipzig population in 2008 stood at 517,000, with moves into the city totalling 25,600 alone last year. The population growth rate has increased year-on-year and latest growth estimates for the population by 2028 range between 540,000 and 580,000 inhabitants. New inhabitants rated the high quality of life and cultural variety that the city offers as positive reasons to move. Coupled with the increased number of newcomers to the city, the birthrate has increased by 20% in the last 4 years, counter to the overall trend in Germany. These trends should continue to drive demand, particularly in quality areas of the city, with rental levels continuing to broaden from their current narrow range.
 
So, perhaps Leipzig should be an area worthy of further research, alongside other cities such as Berlin and Dresden.  Most investors have not any detailed knowledge of Leipzig and have difficulty researching further.  Below is an interview with Marko Kuenne, Director of Kuenne Immo based in Leipzig.  In the interview, Marko shares his experience of the area and provides some local information.
 
Interview with Marko Kuenne
 

 
“Hi Marko, thanks for taking time to conduct this interview for the ProVenture Newsletter. Can you tell our readers what your background is”

I have been in the property industry for 15 years now, starting off as a trainee in 1994 and starting my own business in 2000. Now after 9 years, I have built the business to a staff level of 35 and we are involved with all aspects of property including sales, property letting, property management and development of property including full renovations. Our HQ is in Leipzig but we have operations in the surrounding area in such cities as Chemnitz, Halle.

“It sounds like your business has grown very quickly. What is your core business and what makes you different?”

I would say the whole team have a very pro-active approach to the business and are not afraid to try new things and voice their ideas. Our core business remains to be property letting and this is where our chief experience lies. We have around 4,500 units under management and this is continuing to grow fast. Our lettings team are always busy, thanks to some pro-active marketing of property for lease, and we have made around 80 new tenancies each month in the last 3 months.

“It sounds like you have a good hold on the local market, by the number of tenancies you deal with. What areas would you say should be of interest to our investors?”

Good areas around the centre of Leipzig are experiencing rental increases at the moment as the city population continues to grow. Areas such as Gohlis South, Sudvorstadt and to the west of the city centre around the Music Quarter and Forest Quarter are always popular and demand is greater than the supply we have. Tenants tend to look for good links to transport, access to quality commercial outlets nearby and in proximity to parklands such as the Clara Zetkin park is highly favoured. Property to purchase is these areas is of course not always the cheapest – and I know your clients look for high yields!! This being the case, areas to the west such as Schleussig, Plagwitz and parts of Lindenau are currently very popular to new tenants and not too expensive to purchase at present.
"Is there a hotspot in the local market, and if so where is it?"
The area of Plagwitz in particular is well-documented as an emerging cultural centre of the city, with old industrial property being developed into loft-style residences along the Karl Heine Kanal. Developers are still benefitting from tax subsidy to undertake such works and many developments have been completed. It is this area that perhaps is my “top tip” for the forthcoming years, along with the surrounding locations of Lindenau and Schleussig.
To research the city further, below are some links:
 
 
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:

enquiry@proventureproperty.com

 



 
 
 
 
Latest Property Offers
 

 

Below are links to some of the new property brought to the market during October. More property in Leipzig, Halle and Berlin will be brought to the market during November so please monitor the website.

 

 
Happy investing and good luck,
 
Mat
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 

 

 

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