We added the Ernst & Young Real Estate Trendbarometer Germany in German language to our research database.

You can get the report online here, or from our database.

Key Findings for Berlin:

42% of the residential investors put Berlin on there top priority destination, followed by Hamburg with 24%.

Akelius Germany, subsidy of Akelius Fastigheter AB, the biggest swedish property owner (33.000 units) has acquired an apartment building in Berlin disrict Mitte according to Thomas Daily. The property consist of 117 units on 7,427 sqm of living area. Akelius GmbH currently owns more than 12.000 apartments and is planning to acquire more residential property in Germany. Angermann Investment Adivsory accompanied the transaction.

The research attached has covered Israeli investors who had invested in at least one property overseas during 2011. Which raises the question what type of investors in terms of budget spend have been asked. Its a big difference to ask 100.000 Euro investors who mainly invest in flats or 500.000 Euro investors who typically go for a multifamily residential. However the average expectation of the Israeli investor of at least 7% annual yield seems high if this excludes the capital gains, which typically doesn’t occur annually.

The research findings

The top investment destinations for investment are:

1. New York City, US
2. Berlin, Germany
3. London, UK
4. Barcelona, Spain
5. Various islands, Greece

Berlin is perceived as under priced market, with high yields on rental properties. The robustness of the German economy in the lagging European economic environment was one of the top factor which have affected the choice. Direct flights and positive attitude toward Israelis have also encouraged investors to operate in this market.

New York City led the list due to strong belief that the US market in general and NYC in particular will continue to demonstrate strong demand for rental and commercial properties. The direct flights and lack of language barriers as well as the traditional good relationship between the countries were the top positive factors affected the choice. The multifamily residential market and university expansion, along with the The Technion and Cornell win in building a two-million square-foot applied science and engineering campus on Roosevelt Island, drew positive attitude toward investment in this market.

London is another popular market among the Israeli investors, with direct flights, strong business ties , familiarity with the market trends and the Olympic games were stated as the main reasons.

Barcelona is a relatively new destination for the Israeli real estate investor. The coastal city has become one of the most popular destinations, and has seen record-breaking numbers of incoming tourists from all over the world. Together with the price reductions due to the economic crisis, Barcelona offers great return on investment mainly through short term rentals on small apartments in the city center.

Unlike many European real estate investors, the Israeli investors demonstrate lower interest in purchasing leisure properties, but rather view real estate as a yield baring investment channel. The average expectation of the Israeli investor is at least 7% annual yield.

Residential and commercial properties are considered as the most interesting vertical investment opportunities. Focusing on urban centers is dominant across the board. The Israeli investor believes in cities and its ongoing tourist attraction to lower the perceived risk in investing abroad. With many uncertain factors involved in international investment, the fear of empty properties while maintenance costs continue to take its toll is the top investment barrier.

The research was conducted by TLV Expo, in order to study the motives, preferences and priorities of the Israeli investor when engaging in overseas real estate activities. The research has covered Israeli investors who had invested in at least one property overseas during 2011.

About TLV Expo

TLV Expo, held in Tel Aviv, Israel, is the premier event for international real estate aimed at Israeli investors. The event focuses on networking with the leading Israeli investors, presenting investment opportunities around the globe and delivering valuable content.

Dozens of exhibitors and speakers are taking part in TLV Expo, providing them with smart reach and positioning in front of the Israeli audience. The Israeli investor is very business oriented, making TLV Expo an ideal platform for yield baring offerings in the retail, office and residential properties sectors.

TLV Expo participants are arriving from the various sectors of the real estate industry: corporate and private investors, fund managers, high net-worth individuals, project developers and managers, consultants and agents.

The event is accompanied by a two day conference program covering current trends and shifts in the real estate investment markets, providing added value and thought leadership talks to the audience.

www.tlvexpo.com

Berlin used to have  3 airports, but is now following another strategy. The idea is to bundle all in- and out-bound flights in one location. Therefore the little but super central Inner-City Airport Tempelhof was closed down in 2008. This year (2-3-June of 2012) the second airport which is still really close to the center is Berlin-Tegel will be closed down as well. The third airport is the old GDR airport location, which will be closed as well because the new airport is built just next to the old one (still in use).

Image via Wikipedia

What if the property is located in an area called “Sanierungsgebiet“?

Positive: tax benefits & infrastructure improvement

Owners who invest in their houses for rehabilitation/modernisation typically qualify for tax benefits due to german income tax law § 7h EkStG.
Hint: Don’t start the rehab before you are the legal owner, otherwise you risk not to be able to collect the tax benefits, at least not fully.

What is the main activity of the infrastructure improvements

new sidewalks, mew street surfaces, new street light, more trees, schools refurbished, new kindergardens and new playgrounds. Maybe not all but some of those things.

Negative: fees for re-development

The municipality puts money in the infrastructure, and at the end of the status “Sanierungsgebiet” the owner has to pay a fee based on a appraisal which tries to show the value increase by the “Sanierungsgebiet”

When to pay the fees

Typically the area changes a lot, and at the end of this status (typically running for 10-15 years) the municipality collects a fee that is attached to the relative value increase due to this infrastructure and overall modernisation of the housing in the area.

How to pay in advance or post bone payments

The payment to the municipality can be payed advanced (e.g to avoid a provision of the municipality if you like to sell the building (over a certain amount)) or post boned by a dispute of the administrative decision.

How to avoid the fees at all

One of my lawyers even told me that one could argue that the value increase typically used by the municipality to justify the fees could be neglected at all, because the value in an area without this status went up in the same way.
If you like the contact to this laywer, call me.

How to collect the tax benefits, if you don’t pay tax/small tax

The argument that you don’t have to pay tax (due to your fancy holding structure) leads in the wrong direction, as european tax laws say that the land in which the rental income is produced has the right to collect the tax.

On top the tax benefits have a value and could be collected by another investor, so there is an option to sell the property to this investor, as the tax benefits could be prized in.

The end is near

If the termination of the re-developemt area is near, you should talk with the municipality about a special contract called “Städtebaulicher Vertrag” in order to be able to save the possible tax benefits for the future, or for a future owner.

The construct “Sanierungsgebiet” should be known by every Berlin property investor, as it opens potential as well as possible financial damage to your investment.

All things related to this status are published in the “Berliner
Gesetz- und Verordnungsblatt“.

Our real estate knowledge, network and experience as well as our execution and deal closing powerare the main reason to work with us. But after I have listen to the latest story of one of my contacts about a property manager cheating on a overseas client, I realized:

The most important asset is integrity.

What are your thoughts and experience while investing abroad.

from 23. to 25 of June 2011
at abba Berlin Hotel , Lietzenburger Str. 89, 10719 Berlin.

This is not foreclosure, put public privat auction.

We hire / job offer:

Part-time, Berlin Senior Property Management Owner Representative

For one of our clients, a midsized fund invested in Berlin (mainly in residential and office buildings in the center) we are looking for an experienced individual, part-time, English speaking,

Senior Property Manager
as
Owner Representative

to supervise, coordinate and improve all property related activities and the efficiency of the property management- and letting-team.

Frequent visits of the property are required.

Please contact:
Alexander Korte
Alexander Korte Immobilien
Tel.: +49-30-27572080 or
send an email to:
property@berlininvestment.com

Equity partnerships are a business model completely new to me. As pension funds, insurance companies and other institutional investors need to maximise their investments in real estate, but nor have any know-how neither a track record, the opportunity for developers is obvious.
The size of the development and the location is the biggest hurdle.

Quite attractive to flip a property development of sizes starting at 10.000 sqm within 6-12 month. Returns are attractive, so we decided to open a new field of business, we now search equity partners for developers whom we know and trust.

If you are interested to put equity into such projects give our managing director Alexander Korte a call (+49-177-8946272) or send us an email.






Please keep asking questions in 2011.

All the Best.
Alexander Korte