Investing in German Real Estate: A practical guide

Florian Hackelberg; Dirk Hennig

doi:10.34157/9783648146590

Summary

Investing in one of the most promising real estate markets in Europe offers enormous opportunities. And as with every real estate market, in Germany too, the local framework conditions must be understood and their particularities must be adequately taken into account. The authors are renowned senior executives, real estate advisors and academics, who share here their extensive experience and real life insights from countless real estate investments, covering all aspects of a successful investment process in Germany. Includes: markets, the regulatory framework and investment guidelines.

Contents:

Essentials for successful real estate investments in Germany
Macro-economic structure and dynamics of the German real estate market
Real estate investment, trends and strategies
Diverse submarkets: residential, offices, retail, hotel and nursing homes
Real estate legal, tax and audit frameworks
German REITS and ESG in real estate investments
Real estate M&A, financing, due diligence and valuations

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Bibliographic data

Edition: 1/2021
Copyright year: 2021
ISBN-Print: 978-3-648-14657-6
ISBN-Online: 978-3-648-14659-0
Publisher: Haufe Lexware, Freiburg
Language: English
Pages: 380
Product type: Edited Book

Titelei/Inhaltsverzeichnis No access Pages 1 - 16
1. 1. 1.1 German Macroeconomic Key Indicators No access
  2. 1.2 Geographic Structure of the German Real Estate Market No access
  3. 1.3 German Real Estate Indicators No access
  4. 1.4 German Real Estate Investment Structure No access
  5. 1.5 Conclusion: Attractiveness and Complexity No access
  6. Bibliography No access
2. 1. 1. 2.1.1 Germany’s stable investment framework No access
    2. 2.1.2 Polycentric real estate markets No access
    3. 2.1.3 Foreign investment No access
    4. 2.1.4 Demand shift towards niche markets No access
  2. 1. 2.2.1 Risk profiles with current yield expectations No access
    2. 2.2.2 Strategies for existing estates No access
    3. 2.2.3 Earlier entry into the real estate value chain No access
    4. 2.2.4 Countercyclical investment strategy No access
  3. 1. 2.3.1 Major buyers and sellers No access
    2. 2.3.2 Acquisition strategies No access
    3. 2.3.3 Local partners: investment managers No access
    4. 2.3.4 Collaboration: joint ventures and club deals No access
  4. 2.4 Conclusion No access
  5. Bibliography No access
1. 1. 3.1 The Provider Structure in the German Housing Market No access
  2. 3.2 Rental Accommodation in Germany – The Most Common Form of Housing, High Quality and Stable Demand No access
  3. 3.3 Housing Construction in Germany and Demand for New Housing No access
  4. 1. 3.4.1 German capping limit ordinance (Section 558 (3) of the German Civil Code (BGB)) No access
    2. 3.4.2 Rental price brake (Mietpreisbremse) No access
    3. 3.4.3 Berlin rent price cap No access
  5. 3.5 Price Developments in the Sale of Residential Real Estate No access
  6. 3.6 Conclusion No access
  7. Bibliography No access
2. 1. 4.1 Introduction No access
  2. 4.2 Germany Is Not Paris No access
  3. 4.3 Smaller Is Liquid No access
  4. 4.4 GDP Growth Is Not Alone No access
  5. 4.5 Low Yields: Small Margins of Error No access
  6. 4.6 Co-working Revisited No access
  7. 4.7 Sustainability Matters No access
  8. 4.8 The World According to Covid No access
  9. 4.9 Summary No access
  10. Bibliography No access
3. 1. 5.1 Introduction No access
  2. 1. 5.2.1 Large-scale retail No access
    2. 5.2.2 Small-scale retail No access
    3. 5.2.3 Commercial buildings No access
    4. 5.2.4 Retail area definition No access
    5. 5.2.5 Structure and aspects of rental contracts No access
  3. 1. 5.3.1 Economic framework and consumer markets No access
    2. 5.3.2 Purchasing power index No access
    3. 5.3.3 Retail locations and location factors No access
  4. 1. 5.4.1 Development of retail rents No access
    2. 5.4.2 Development of prime yields No access
    3. 5.4.3 Transaction volumes No access
  5. 5.5 Challenges for the Retail Sector and Changing Shopping Behaviour No access
  6. 5.6 Summary and Outlook No access
  7. Bibliography No access
4. 1. 6.1 Introduction No access
  2. 1. 6.2.1 Transhipment centres No access
    2. 6.2.2 Distribution properties No access
    3. 6.2.3 Fulfilment centres No access
    4. 6.2.4 Corporate real estate warehouse and production No access
  3. 1. 6.3.1 The logistics market No access
    2. 6.3.2 Structure of the German logistics market No access
    3. 6.3.3 Investment market No access
    4. 6.3.4 Development of logistics rents No access
    5. 6.3.5 Rent contract conditions and durations No access
  4. 6.4 Trends in the Logistics Real Estate Sector No access
  5. 6.5 Summary and Outlook No access
  6. Bibliography No access
5. 1. 7.1 Introduction No access
  2. 7.2 Supply and Demand in the German Hotel Market No access
  3. 7.3 German Hotel Investment Market No access
  4. 7.4 Types of Hotels No access
  5. 7.5 Definitions of the Most Important KPIs for Investors in Hotels No access
  6. 7.6 Hotel-specific KPIs and German Market Characteristics No access
  7. 7.7 Operator Models No access
  8. 7.8 Summary and Outlook No access
  9. Hotel Data and Addresses No access
  10. Bibliography No access
6. 1. 8.1 Introduction No access
  2. 1. 8.2.1 Inpatient care/nursing homes No access
    2. 8.2.2 Assisted living No access
    3. 8.2.3 Selected aspects of rental contracts No access
  3. 8.3 Demographics No access
  4. 8.4 Market and Location Analysis for Nursing Homes No access
  5. 8.5 Structural Requirements for Nursing Homes No access
  6. 8.6 Regulatory Framework No access
  7. 8.7 Consolidation and Concentration in the Nursing Home Operator Market No access
  8. 8.8 Transaction Market and Prime Yield Development No access
  9. 8.9 Opportunities and Risks of this Asset Class No access
  10. 8.10 Summary and Outlook No access
  11. Organizations No access
  12. Market Reports Databases No access
  13. Bibliography No access
1. 1. 9.1 Introduction No access
  2. 9.2 Accessibility No access
  3. 9.3 Acquisition Structure No access
  4. 1. 9.4.1 Property No access
    2. 9.4.2 Public law No access
    3. 9.4.3 Leases No access
  5. 9.5 Acquisition Process No access
2. 1. 10.1 Overview No access
  2. 1. 10.2.1 Resident companies and individuals No access
    2. 10.2.2 Non-resident companies and individuals No access
  3. 10.3 Withholding Tax Regime No access
  4. 1. 10.4.1 Extended trade tax deduction (Erweiterte Gewerbesteuerkürzung) No access
  5. 10.5 Real Estate Transfer Tax (Grunderwerbsteuer) No access
  6. 10.6 Value-added Tax (Umsatzsteuer) No access
  7. 10.7 Land Tax (Grundsteuer) No access
  8. 10.8 German Anti-hybrid Considerations No access
  9. 1. 10.9.1 General remarks No access
    2. 10.9.2 Reportable arrangements No access
    3. 10.9.3 Reportable persons No access
    4. 10.9.4 Procedures and deadlines for reporting No access
    5. 10.9.5 Sanctions for breaches of the reporting obligation No access
  10. 10.10 Tax Summary No access
3. 1. 11.1 Introduction No access
  2. 11.2 Components of Accounting and their Functions No access
  3. 1. 11.3.1 Allocation to fixed assets or current assets No access
    2. 11.3.2 Acquisition or production costs No access
    3. 11.3.3 Depreciation and appreciation No access
  4. 11.4 Conclusion and Meaningfulness of the Valuations No access
  5. Bibliography No access
4. 1. 12.1 Introduction No access
  2. 1. 12.2.1 Specialists’ (dedicated real estate investors’) view No access
    2. 12.2.2 Generalists’ (equity funds managers’) view No access
  3. 1. 12.3.1 Qualifying activities No access
    2. 12.3.2 Residential real estate constructed before 2007 does not qualify for REIT status No access
    3. 12.3.3 Trading of properties: Disposals limited to 50 % of the average investment portfolio within five years No access
    4. 12.3.4 Gearing: Limited to 45 % of the immovable property (valued at IAS 40 Fair Value Method) No access
    5. 12.3.5 Payout ratio No access
    6. 12.3.6 Taxation of profit at REIT level No access
    7. 12.3.7 Taxation at shareholder level No access
    8. 12.3.8 Possible double taxation for investors paying corporation tax No access
  4. 12.4 The German REIT Sector No access
  5. 1. 12.5.1 Abstract and outlook No access
  6. Bibliography No access
5. 1. 1. 13.1.1 Sustainable development goals No access
    2. 13.1.2 EU Action Plan on Financing Sustainable Growth No access
    3. 13.1.3 The European Green Deal No access
    4. 13.1.4 EU Taxonomy Regulation No access
    5. 13.1.5 EU Disclosure Regulation No access
    6. 13.1.6 German energy regulations No access
  2. 1. 13.2.1 Stakeholders’ demands No access
    2. 13.2.2 Market tools and industry initiatives (i.e. voluntary requirements) No access
  3. 1. 13.3.1 Measurement methodology of ESG criteria No access
    2. 13.3.2 Environmental, social and governance criteria No access
  4. 1. 13.4.1 Transactions and project development No access
    2. 13.4.2 Capex investments No access
    3. 13.4.3 Challenges No access
    4. 13.4.4 Best practice guidance No access
  5. 1. 13.5.1 General considerations No access
    2. 13.5.2 Common understanding of the parties No access
    3. 13.5.3 Clauses on data exchange No access
    4. 13.5.4 Adaptation to new regulatory requirements and/or market trends No access
    5. 13.5.5 Recommendations for different life-cycle phases No access
  6. 13.6 Outlook No access
1. 1. 1. 14.1.1 Introduction No access
    2. 14.1.2 Auction and off-market process No access
  2. 1. 14.2.1 Avoid NDA breaches No access
    2. 14.2.2 Understand buy-side transaction costs No access
    3. 14.2.3 Pay attention to potential broker fees No access
    4. 14.2.4 Understand the transaction and communicate with the sell-side No access
    5. 14.2.5 Avoid exiting the process right before submitting indicative offers No access
    6. 14.2.6 Stand by your indicative offer No access
  3. 14.3 Conclusion No access
  4. Bibliography No access
2. 1. 15.1 Sources of Capital No access
  2. 1. 15.2.1 Land charge and mortgage No access
    2. 15.2.2 Other security No access
  3. 1. 15.3.1 Characteristics No access
    2. 15.3.2 Mortgage loans No access
    3. 15.3.3 Linear-payback mortgage loan No access
    4. 15.3.4 Interest-only loans No access
    5. 15.3.5 Building societies No access
  4. 15.4 Conclusion No access
  5. Bibliography No access
3. 1. 16.1 Introduction No access
  2. 1. 16.2.1 Value definition and concept No access
    2. 16.2.2 Purpose of valuation No access
  3. 1. 16.3.1 Immobilienwertermittlungsverordnung No access
    2. 16.3.2 Committee of valuation experts (Gutachterausschuss für Grundstückswerte, GAA) No access
    3. 16.3.3 Standard land value (Bodenrichtwerte, BRW) No access
    4. 16.3.4 Valuation experts and organizations No access
    5. 16.3.5 Valuation process No access
    6. 16.3.6 Fundamentals for determining the value of land No access
  4. 1. 16.4.1 Market approach No access
    2. 16.4.2 Income approach No access
    3. 16.4.3 Cost approach No access
    4. 16.4.4 Non-standardized valuation methods No access
    5. 16.4.5 Derivation of the market value No access
  5. 16.5 Fundamentals for Determining the Mortgage Value No access
  6. 1. 16.6.1 National vs. international valuation methodologies No access
    2. 16.6.2 Use of the valuation report and related requirements No access
    3. 16.6.3 Clear definition of valuation subject: asset vs equity No access
    4. 16.6.4 Qualifications of the valuer No access
    5. 16.6.5 Plausibility of the valuation and reasonable valuation assumptions No access
  7. 16.7 Conclusion No access
  8. Real Estate Data and Addresses No access
  9. Bibliography No access
4. 1. 17.1 Introduction No access
  2. 17.2 Definition, Timing and Goals of FDDs in Real Estate No access
  3. 1. 17.3.1 Buy-side financial due diligence No access
    2. 17.3.2 Vendor financial due diligence No access
    3. 17.3.3 Vendor assistance No access
  4. 1. 17.4.1 Subject and goal of asset deal FDD No access
    2. 17.4.2 Considerations regarding the type of use No access
    3. 17.4.3 Assessment of data No access
    4. 17.4.4 Analysis of rental income No access
    5. 17.4.5 Analysis of service charges and service charge leakage No access
    6. 17.4.6 Analysis of quality of earnings No access
    7. 17.4.7 NOI projections No access
    8. 17.4.8 Obligations in an asset deal No access
  5. 1. 17.5.1 Considerations for real estate deals No access
    2. 17.5.2 Assessment of database No access
    3. 17.5.3 Review of the balance sheet – quality of net assets No access
    4. 17.5.4 Impact of the FDD on the sale and purchase agreement No access
  6. 17.6 Conclusion No access
  7. Bibliography No access
The Editors and Authors No access Pages 371 - 380