Look out, London. Berlin’s startup scene is ready for a Brexit bonanza

Startups that previously looked to London are being wooed by Berlin’s fast-developing scene. But can Germany capitalise on Brexit uncertainty?

At a co-working space on Friedrichstraße, Berlin’s startup economy is getting ready for Brexit. Mindspace’s first location in Germany, opened in April 2016, sits in the heart of Berlin’s Mitte district, flanked by high-end fashion shops and perfumeries. Its walls are adorned with hand-stencilled signs directing people, in English, to the “yummy kitchen” and “awesome offices”. It feels exactly like the startup scene in London – and that’s deliberate. What London stands to lose after Brexit, Berlin hopes to gain.

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“Berlin is starting to be considered as a startup ecosystem, particularly targeting the tech startup scene,” says Nijvenko. The company’s “official language”, she explains, is English. All signs, documents and posts on the community’s private Facebook group are auf Englisch. Its co-working spaces bare an uncanny resemblance to a template Silicon Valley, faux-hipster style – superfluous clocks; plush, well-worn armchairs; Communist-era televisions; and work from local artists adorn almost every remaining inch of space. Around 760 members pay between €250 and €450 per month (£215 and £390) to use the space, with the two additional sites in Berlin upping capacity to more than 2,000 people. Business is booming. “The political incentives right now are targeting the startup ecosystem. Berlin is very affordable, so for startups it’s the best place to be,” says Nijvenko.

Link to the article

Berlin identified as the top five ‘opportunity’ markets for expansion of the serviced apartment sector across Europe

Dublin ranked Globally for serviced apartment sector

International real estate advisor, Savills have identified Dublin, Stockholm, Amsterdam, Berlin and Barcelona as the top five ‘opportunity’ markets for expansion of the serviced apartment (also known as the ‘Extended Stay’) sector across Europe.

Dublin, Stockholm, Amsterdam, Berlin and Barcelona were all ranked highly due to them having sizeable corporate and overseas visitor markets with strong outlook in terms of GDP and employment growth. But more importantly they also had very constrained stock levels relative to their overnight visitor market.

According to Savills, €416.5m was invested into Europe’s Extended Stay sector in 2015, a year-on-year increase of 32.9%.

The majority share (90%) was invested into the UK, with Germany (7%), Switzerland (2%) and Belgium (1%) at the forefront of activity within what is a relatively immature asset class on the continent.

In order to identify the new opportunity markets for this sector, the Savills research team analysed the following factors within a matrix of 35 European cities – the presence of large corporates, GDP and employment growth forecasts and overnight visitor market and supply drivers (current stock relative to overnight visitor including that of hotels) for the sector.

Commercial research director at Savills, Marie Hickey says, “We anticipate that evolving consumer trends of millennial business travellers and the success of AirBnB in highlighting alternative accommodation options, such as Extended Stay, across Europe will help the sector further tap into existing unmet demand.”

Source: Link to the Business World’s article

Colossal Nazi holiday camp converted to luxury seaside apartments

With estate agents waxing lyrical about the “smell of the sea, the scent of pines and panoramic views of nature” you could almost be forgiven for forgetting the sinister past of the luxury Baltic seaside apartments at New Prora, which were purpose built for 20,000 members of Adolf Hitler’s Aryan “master race”.

Comprising a single and monstrous five-storey concrete housing block stretching almost three miles along the sand dune and pine-studded coast of the east German island of Rügen, the former Prora holiday camp is one of the longest buildings in Europe. It was designed as the Nazis’ answer to Butlin’s.

Now, 76 years after it was built,  the first full-time tenants are moving in to the so-called “Colossus of Rügen”. After decades of inaction and shame about its Nazi past, the complex is being gradually turned into luxury flats. Fifty-seven have been sold, the lowest priced costing €176,000 for  a small three-room apartment.

The knowledge that the site of his flat was meant to provide “quality time” for the German masses under the Nazi “Strength Through Joy”  recreation programme did not seem to worry its new owner Roland Glöckner.

“It may sound peculiar, but it was love at first sight,” said the 51-year-old Berlin advertising executive after moving in to his 60sq metre flat.

(Read more – http://www.belfasttelegraph.co.uk/news/world-news/colossal-nazi-holiday-camp-converted-to-luxury-seaside-apartments-31226643.html)

Low German Inflation Continues to Hide Underlying Economic Strength

German inflation figures may be low, but stronger than expected growth rates, rising confidence indicators and an ever tighter labor market make the ECB’s monetary policy look too expansionary for the Eurozone’s largest economy. With diverging economies within the Eurozone, German is poised to expand at a rapid rate as the European Central bank waits for Germany’s neighbors to catch up.

The first wage deal for this year suggests the strongest rise in real income for many years and above average increases in labor costs are set to undermine German competitiveness in the medium term. At the same time the risk of a property bubble is also rising.

German Q4 GDP growth was confirmed at 0.7% quarter over quarter, confidence indicators are climbing higher, with especially consumer confidence rising sharply. The labor market is already tight and Thursday’s jobless numbers showed another stronger than expected dip in headline rates. Inflation may be low at the moment, but mainly due to the impact of lower oil prices and from a German perspective, monetary policy clearly is already looking too expansionary even before the ECB starts its bond buying program.

The trend will boost consumption and domestic demand as exceptionally low interest rates are limiting the willingness to save. The German GfK consumer confidence numbers Thursday, showed a sharp rise in income as well as an improvement in the willingness to buy. This ties in with the details of German Q4 GDP numbers, which showed that in this recovery consumption and not exports, is a key driving factor.

For many Germans, urged to build up private pension portfolios property investment is looking increasingly attractive. Apparently safer than stock markets, but with considerably higher returns than bonds. While the price of the average property transaction is rising, the share of income private homeowner’s use for interest rates and repayments has fallen over the past years.

The current low interest environment won’t last forever and we have seen in countries such as Spain, Ireland and Portugal what happens when investors are unprepared for a rise in financing costs. The ECB argues that safeguarding against the risks of a property bubble are up to national central banks and governments. Germany has been promising measures to limit the trend and the Bundesbank is keeping a close eye on developments, but with the ECB preparing for even more easing measures, this is an area of risk that should not be overlooked, especially considering the devastating effects of the property crashes elsewhere. IF Germany should face the same problems, who would be there to bail out the largest country in the Eurozone.

With the ECB poised to begin its bond purchase program on Monday and sovereign bond hard to source, prices will continue to move higher which in turn should weaken the European currency. (Source)

Dublin second only to Berlin for property investing – PwC

Dublin is still one of the most desirable places in Europe to invest in property, with only Berlin a better place to put money, say PwC.

According to its ‘Emerging Trends in Real Estate’ report for 2015, PwC believe Dublin is the second best city on the continent in which to buy property. The report lists the capital’s strong rental market and resurgent capital values as reasons to invest here.

“Dublin remains in the number two spot for the second year running for real estate investment and development in Europe,” the report states.

“This follows a strong year which saw a wide range of investors jostling for opportunities. Dublin has strong rental growth potential based on low supply, coupled with employment growth. Business confidence has returned and Ireland’s GDP growth is expected to continue in 2015.

“A huge amount of capital has poured into Dublin…€2.2 billion in the first three-quarters of 2014,” according to Real Capital Analytics. “Though office rents and values are recovering strongly, they still have some way to go before they regain their pre-crisis peak,” the report adds.

PwC Ireland’s head of real estate, Enda Faughnan, said there had been a “heightened interest in Dublin as a property investment centre, particularly from foreign investors”.

“There is still a lot of supply to come onto the market which will appeal to a wide range of buyers,” he added.

Berlin replaces Munich as the most desirable location in Europe for investing, with PwC citing the strong media and tech industries in the German capital as reasons for pushing up values.

Madrid, Hamburg and Athens complete the top five.

Source – http://www.independent.ie/business/commercial-property/dublin-second-only-to-berlin-for-property-investing-pwc-30908328.html

German property market hot after deals of $59 bln in 2014

Record low interest rates and investors’ search for higher yields will heat up Germany’s real estate market in 2015, after more than 50 billion euros ($59 billion) of property changed hands last year, several large brokers said on Wednesday.

The lion’s share of last year’s activity involved offices, commercial space and hotels, where investment volumes rose by almost a third to nearly 40 billion euros, the fifth consecutive annual increase, property investment manager JLL said.

Transactions in the residential market reached 13.3 billion euros, broker CBRE said, pointing out that its data referred to portfolio sales of at least 50 units and not individual properties.

Residential investors such as Deutsche Annington, Buwog and LEG Immobilien took advantage of cheap financing conditions to make acquisitions last year.

However, volumes in this segment fell 3 percent short of those in the prior year due to a limited supply of properties.

“Demand on the part of large residential property and institutional investors is being only insufficiently met by the supply on hand,” said CBRE’s head of residential investment Konstantin Luettger.

A number of investors have found the prices in major metropolitan areas too high and are branching out toward smaller cities where margins may be higher.

Commercial real estate, on the other hand, still has room to grow, with JLL predicting that transactions will surpass 40 billion euros this year, as the German market continues to draw interest from foreign and domestic institutional investors like pension funds.

The sale of The Squaire office and hotel complex at Frankfurt airport looks set to be one of the largest deals this year. Current owner IVG Immobilien is asking around 700 million euros for the complex, a person familiar with the deal told Reuters previously. ($1 = 0.8460 euros) (Reporting by Kathrin Jones, writing by Jonathan Gould; editing by Thomas Atkins and Susan Thomas) – (Original Source – http://www.reuters.com/article/2015/01/07/germany-property-idUSL6N0UM2QC20150107)

German Banks Chase Homebuyers Ensuring Biggest Profits

Commerzbank AG (CBK) is offering discounts on home loans in Germany and Deutsche Bank AG (DBK) plans to blanket the country with mortgage advisers. To keep pace, ING Groep NV (INGA)’s German unit is considering lowering interest rates in big cities.

“We’re feeling very sharp competition and we expect further competition in 2015,” said Helmut Straubinger, head of credit at Bayerische Landesbausparkasse, a Munich-based lender that lost market share this year. “A lot of banks have been pushing into the relative safety of property financing.”

Germany’s banks are trying to expand in one of Europe’s safest mortgage markets as record-low interest rates make fixed-income investments less attractive. In Germany, borrowers rarely default, employment is near an all-time high and housing prices are low compared with other European markets. Lenders earn an average profit margin of 1.2 percent from mortgages compared with yields of less than 1 percent from German government bonds, according to data compiled by Barkow Consulting.

Story: The Renaissance of Jamie Dimon

“Banks are taking market share from each other,” said Jochen Moebert, an economist at Deutsche Bank in Frankfurt. “Banks see real estate as a growth priority because it’s one segment that’s doing well.”

Lenders are competing for customers in a market that hasn’t been growing. German homebuyers borrowed 168 billion euros ($209 billion) in the first 10 months of 2014, a 0.4 decrease from a year earlier, according to Bundesbank data. The total amount of outstanding mortgages rose 2 percent from a year earlier to 1.18 trillion euros.

Loyalty Discounts

Commerzbank, Germany’s second-biggest bank, expects to increase lending this year by about 30 percent after expanding at about the same rate in 2013. The company’s market share has grown to about 12.4 percent from less than 5 percent in 2011, said Falko Schoening, head of lending at the Frankfurt-based bank. …(READ MORE)

German Residential Property Prices Rise Most in a Decade

German home prices rose at the fastest rate in at least 10 years in the third quarter as investors bought apartment buildings at a time when low interest rates make other investments less attractive.

Values climbed 5.2 percent from a year earlier, with multifamily houses gaining 7.2 percent, according to an index published today by the VDP Association of German Pfandbrief Banks. Prices for owner-occupied condominiums gained 2.6 percent as momentum in that market slowed following bigger gains in the previous three years.

Apartment buildings “continue to be sought after by institutional and private investors alike,” said Jens Tolckmitt, VDP’s chief executive officer. “The very low interest rate and the resulting search for attractive yields on investment support this trend.”

Investors are drawn to Germany’s reliable rental income and potential for further property-price gains at a time when fixed-income markets offer low yields. Low interest rates also make it cheap for buyers to take out mortgages.

Rents on new leases in apartment buildings rose 4.6 percent in the third quarter from a year earlier, VDP said.

Stocks Records

Listed residential landlords, such as Deutsche Annington Immobilien SE and Deutsche Wohnen AG, have benefited as shareholders bought the most property stocks ever this year, according to data compiled by research firm Barkow Consulting GmbH. German property companies have sold a record 4.1 billion euros ($5.1 billion) of shares this year, 15 percent more than in all of 2013, the firm said.

The FTSE EPRA/Nareit index of German property stocks has climbed about 25 percent this year, compared with a decline of about 3.5 percent on the benchmark DAX Index. (DAX) Deutsche Annington, Germany’s biggest listed landlord, has gained 39 percent this year in Frankfurt trading.

Investors seeking stable returns are also buying office properties. Office values climbed by 3.7 percent in the third quarter, while office rents rose 1.8 percent, according to VDP. Commercial properties are attracting professional investors with large cash reserves, including pension funds and sovereign-wealth funds.

Buyers acquired 25.5 billion euros of commercial properties in Germany in the first nine months, the most since 2007, according to Jones Lang LaSalle Inc. (JLL)

VDP collects price data from mortgage contracts signed across Germany by more than 30 member banks, which include Deutsche Bank AG, Commerzbank AG, Banco Santander SA (SAN) and ING Groep NV. (INGA)

(Source – http://www.bloomberg.com/news/2014-11-17/german-residential-property-prices-rise-most-in-a-decade.html)

Germany slips in world business rankings

Germany may be Europe’s biggest economy but it is only the continent’s eighth best place to do business. It’s easier to start a firm in Iran or Tajikistan than Germany, according to the World Bank.

The Doing Business 2015 report placed Germany at 14th in the world for ease of doing business, a fall of one place from its rank last year.

Germany was easily outstripped by northern neighbour Denmark, which placed fourth in the table to become the best-performing country in Europe.

The top three spots were taken by Singapore, New Zealand and Hong Kong respectively.

Other top-ten European countries were Norway, the UK and Finland in places six, eight and nine respectively.

The World Bank report analyzed how easy or difficult it was to carry out different tasks needed to start or operate a business.

They included registering a new company and buying property, construction, energy costs, availability of credit, paying tax, enforcing contract law and trading across borders.

Germany was dragged down by poor scores in certain areas. Out of the 189 countries ranked, it was placed 114th for ease of starting a business, a fall of 11 places against the previous year.

The analysts found that it took two weeks to go through all the bureaucracy needed to found a company.

That compared badly with an average of just nine days in the club of advanced economies which form the the Organization for Economic Co-operation and Development (OECD).

The costs for starting up a business in Germany were also more than double the OECD average.

And the country was in 89th position for registering property, having slipped nine places since 2013.

It took 40 days to register a German property, compared with 24 days across the OECD, while the cost in taxes and fees was 2.5 percentage points higher than the average at 6.7 percent of the property’s value.

World Bank officials put Germany in 68th place for ease of paying taxes, finding that it took companies an average of 218 hours per year to deal with taxes and that the government took in an average of 48.8 percent of profits.

The news came on the same day that researchers at the Centre for European Economic Research in Mannheim published their 2014 Innovation Index, finding that Germany remained in sixth place overall.

But the country lost ground in the ranking of economic innovation, in which it slipped from third to fifth place…..(READ  FULL ARTICLE HERE)

Berlin, the Startup City: Big Dreams and Growing Pains

There’s no shortage of emerging tech scenes labeled as the “next Silicon Valley,” and Berlin often tops that list.

When the Berlin Wall fell in 1989, it attracted an onset of artists, musicians and other creatives to the city. While housing prices in other European cities skyrocketed over the years — particularly in London and Paris — Berlin remains relatively affordable, offering young, aspiring entrepreneurs a lower-cost, lower-risk platform to jump-start both careers and companies

It’s easy for international workers to get visas in Berlin, too; especially compared to the U.S. The city is a multicultural hub, with a blend of British, French, Spanish and American expats. You don’t have to speak German to thrive in Berlin.

Google is one of the major players helping startups set up shop throughout the city. Although the tech giant’s German headquarters — with more than 400 people — is in Hamburg, and its engineering center, based in Munich (with 300 staffers) is much bigger than its Berlin presence (just 40 workers), it’s been focusing more of its efforts in Berlin in the past few years.

In fact, earlier this year, its Google for Entrepreneurs program helped open and sponsor The Factory, a co-working space for new startups that’s inside a refurbished brewery. It sits on a spot once occupied by the Berlin Wall and is the new home for both small and bigger startups, including the local offices of SoundCloud. The popular music company, with Swedish founders, famously moved to Berlin years ago to take advantage of the scene.

Source – http://mashable.com/2014/09/08/berlin-startup-hub/