The Ger­man point of view: Game over?

Financial Mirror (Cyprus) - - FRONT PAGE -

It is al­ready clear that a pro­longed pe­riod of in­creased eco­nomic and po­lit­i­cal un­cer­tainty is likely to have a sig­nif­i­cant neg­a­tive im­pact on the Bri­tish real es­tate mar­kets. This is in part demon­strated by fig­ures re­leased by the Bank of England in April, show­ing the low­est level of new mort­gage busi­ness in the last eleven months. This was re­vealed by Die Welt on June 22.

Ge­orge Os­borne, Bri­tain’s Chan­cel­lor of the Ex­che­quer, pre­dicted back in May that UK house prices could po­ten­tially fall by be­tween 10 and 18% in the event of a vic­tory for the leave cam­paign. The case for com­mer­cial real es­tate is sim­i­lar. Ac­cord­ing to CBRE, only GBP 14 bil­lion, or EUR 17.68 bil­lion, was in­vested in Bri­tish com­mer­cial prop­er­ties dur­ing Q1 2016 – 21% less than the prior year’s open­ing quar­ter. “73 per­cent of com­mer­cial real es­tate in­vestors be­lieve that Great Bri­tain will be­come a less at­trac­tive in­vest­ment des­ti­na­tion in the event of Brexit,” said CBRE’s Simon Bar­row­cliff. Now that the Brexit de­ci­sion has been con­firmed, this trend could eas­ily gain in mo­men­tum.

Rep­re­sen­ta­tives of Ger­many’s real es­tate in­dus­try ex­pressed their con­cerns for the Bri­tish mar­ket, while also now ex­pect­ing Ger­man prop­erty val­ues to in­crease sub­stan­tially.

“It’s too early for any­one to se­ri­ously pre­dict the con­se­quences of this Brexit de­ci­sion. Nev­er­the­less, as an in­vest­ment safe haven, Great Bri­tain has def­i­nitely been rat­tled and is now down for the count. This could cer­tainly fur­ther en­hance the at­trac­tive­ness of the Ger­man real es­tate mar­ket. In­vestors who have tended to­wards Lon­don in the past are go­ing to be giv­ing more se­ri­ous con­sid­er­a­tion to Ber­lin now that the ref­er­en­dum re­sults are in,” com­mented Jakob Mähren of the Mähren Gruppe.

Ja­copo Mingazz­ini from Ac­cen­tro Real Es­tate AG takes a sim­i­lar view: “This de­ci­sion won’t just have a mas­sive im­pact on the stock mar­kets, it is also go­ing to have far-reach­ing con­se­quences for the real es­tate mar­kets. I ex­pect that the de­mand for res­i­den­tial real es­tate, es­pe­cially in Ber­lin, will con­tinue to rise.”

Man­fred Bins­feld from FERI EuroRat­ing Ser­vices cau­tioned against over-drama­tis­ing the sit­u­a­tion. He be­lieves that there is still plenty of life left in Lon­don: “Of course, the Brexit vote is go­ing to put the brakes on the Lon­don prop­erty mar­ket. Cities such as Frank­furt, Düs­sel­dorf and Paris are likely to ben­e­fit. This will pri­mar­ily pro­vide a boost to of­fice mar­kets, but res­i­den­tial mar­kets will re­ceive a sec­ondary boost. How­ever, it is im­por­tant not to over­state the pos­i­tive im­pacts of Brexit on Ger­many’s real es­tate mar­kets. Lon­don will still be play­ing in the cham­pi­ons’ league as a global fi­nan­cial cen­tre. In the long-term, de­mand for hous­ing in Lon­don will re­main high, and the im­bal­ance be­tween sup­ply and de­mand will con­tinue to put pres­sure on the mar­ket. In­ter­na­tional in­vestors will soon re­alise this, es­pe­cially once the mar­kets have ab­sorbed the shock and re­turned to some sem­blance of nor­mal­ity in a few weeks’ time.”

Wert­grund’s Thomas Meyer does not be­lieve that the ref­er­en­dum re­sult will have im­me­di­ate neg­a­tive con­se­quences for Ger­many – as long as Brexit doesn’t start a chain re­ac­tion across the EU: “In the short-term, we don’t be­lieve that Brexit is go­ing to have any se­ri­ous neg­a­tive im­pact on Ger­many’s prop­erty mar­kets. Our ma­jor cities are still grow­ing, which means that de­mand for hous­ing will re­main sta­ble. It is also quite un­likely that Bri­tish in­vestors will with­draw their cap­i­tal from Ger­many. In ac­tual fact, their Ger­man in­vest­ments are now even more valu­able in terms of port­fo­lio and cur­rency diver­si­fi­ca­tion. Still, if more Euro­pean coun­tries jump on the EU-exit band­wagon, Ger­many’s hous­ing mar­ket would face se­ri­ous long-term risks.”

Ul­rich Jacke from Dr. Lübke & Kel­ber takes an op­ti­mistic view of events: “Early this morn­ing, just a few hours after the Brexit an­nounce­ment, we had al­ready bro­kered a EUR 10 mil­lion deal for a va­cant of­fice build­ing in Frank­furt. The buyer’s de­ci­sion was ex­plic­itly based on their ex­pec­ta­tion of sig­nif­i­cant growth in de­mand for of­fice space in Frank­furt fol­low­ing the UK’s de­ci­sion to leave the Euro­pean Union.”

Brexit is al­ready hav­ing con­do­minium mar­ket. This Tagesspiegel on June 21.

“Ber­lin has be­come the mar­ket of choice as an al­ter­na­tive to Lon­don. Not just be­cause res­i­den­tial prop­erty of­fers rel­a­tively good value here, but also be­cause the threat of Brexit has un­set­tled in­vestors. Over the last eigh­teen months we have ob­served grow­ing in­ter­na­tional in­ter­est in Ber­lin, es­pe­cially from buy­ers ready to in­vest be­tween EUR 500,000 to EUR 700,000 Euro in a con­do­minium in the city,” com­mented Thomas Za­bel of Za­bel Prop­erty AG.

Many in­vestors are also re­spon­si­ble for cre­at­ing new jobs in Ber­lin, as they bring part or all of their busi­nesses to the city with them. The lux­ury seg­ment of the mar­ket is par­tic­u­larly sen­si­tive to in­ter­na­tional de­vel­op­ments, es­pe­cially as wealthy in­ter­na­tional buy­ers in­vest in the rel­a­tively young mar­ket for con­do­mini­ums of EUR 5,000 to EUR 6,000 per square me­tre.

“Brexit will cause de­mand for res­i­den­tial real es­tate in Ger­many to pick up, which will also re­sult in higher prices. Those in­ter­na­tional buy­ers who have been wait­ing for the fi­nal re­sult will now turn their backs on Lon­don,” be­lieves Za­bel. an im­pact on

was re­vealed Ber­lin’s by Der

Newspapers in English

Newspapers from Cyprus

© PressReader. All rights reserved.