In an article posted a few hours ago, the Wall Street Journal's Laura Stevens shined a spotlight on the Germany real estate market. And rightly so. From our perspective here in Germany, it seems a small wonder Germany's IPO offering from one of the only four REIT's did not cause more of a stir. However, just as Stevens predicts, the future of German investment is MORE. The investment portfolio of just one of these new REITs, is impressive, to say the least.
Let me qualify my take on this development a bit, with real estate news on a personal level, and too, from a geographer's point of view too. First off, we bought a house here in Germany a couple of years ago, taking advantage of a depressed investment situation here, to a degree. Pulling no punches, even in today's topsy turvy climate, the property's value has gained substantially - at least on a comparative.
This leads me to another miniature comparative - one not to many would insinuate. There's an old Southern adage that applies very well to property in Germany (nay anywhere in Europe) - The Will Rogers words of wisdom go something like this;
Buy land. They ain't making any more of the stuff.
I know some of you out there may be thinking this old Carolina boy just jumped off the proverbial turnip boat, but Rogers could have never been more right about property than the dirt right here in Deutschland. Let's forget about history and the 3 foot thick, solid mortar walls of my house (yes the shed has kill slits from when it was a fortress), it's another concept I'm leading to (be patient damnit). Germans, the German government even, is taking really good care of Germany.
What do I mean by this? I mean that things which spoil the countryside here are either, A - being sourced from somewhere else, or B - banned for their harmful effects (to people and property). In short, the forests and Rivers of Germany have never looked better. And as for the property market?
The rules for REIT's established for Germany back in 2007, and which Stevens so efficiently outlines in her article, apply to the four big REITs operating in the country at the moment, and they are; Prime Office (€5.900 -0.017%), Alstria Office REIT-AG (€ 8.40 + 0.078 (0.94%), Fair Value REIT-AG ( € 4.15 EUR +0.165(4.14%) and Hamborner REIT AG (€ 6.281 EUR -0.059(0.93%). According to Stevens, the group has a bit less than €3 billion euro invested at the moment. Interestingly, most of this is in commercial properties, but there is a stipulation allowing for residential properties built since 2007. Old houses or office buildings, as anyone knows, both markets are inextricably linked. If you look at Alstia's Alte Post development in Hamburg, maybe you can gather more of what I am talking about.
Of course there are a boat load of variables to watch with regard to a German property bonanza. Not the least of these might be population growth or other demographics. Germany's population is actually declining, and those migration worries all in the news? A bit of fluff from the politically motivated, perhaps? Looking at the world from "inside Germany to outside" - my perception is this country will take on more the complexion Switzerland (by American perceptions) in a couple of years, than the burgeoning industrial machine that powered world conquering armies. The smart investor cannot underestimate what I am driving at. The conceptualization video, from which the screen shot below was taken, shows not only the expertness with which Alstria Office REIT is going forward, but the money behind their projects too. In brief, these people are no fly by night types.
Well, you can ignore what you will, but we talk each and every day about living in paradise. Villages full of laid back people and almost no crime? This whole Luxembourg side of Germany is like a vacation playground. When we first arrived I thought; "Good God! The house prices are unbelievable!" Yeah, and they don't go down. Even more interesting (check this out) - in America it might be commonplace for someone to ask a Realtor; "Hey, is there a listing for some farm land around here?" Well, let me tell you, ask the same question here. The surprise comes when the agent looks at you as if you have lost your damned mind!
Why am I being so "familiar" and a bit homespun here? Maybe I know something you don't? I will give you a hint, try and harm the bark on a tree in Germany. While harvesters and developers burn a swatch of the Brazilian Amazon the size of Connecticut every day, you need a special permit to chop a Christmas tree here. What does this have to do with property investment? Well, if I have to answer this, put your money in CD's and pass the Yogurt Ethel.