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Where is America headed?
By Dr. Rainer Zitelmann
In Germany, perceptions of the election campaign in the United States are largely being shaped by the occasionally alarming statements made by Donald Trump. In my opinion, Trump is nothing more than a counter-reaction to the political correctness that has hindered free political debate in the United States, and elsewhere, for years, if not decades. One reason for Trump’s success is that he doesn’t care if he uses language deemed taboo by proponents of political correctness. Many view this as liberating, particularly those for whom political correctness, invented by left-wing intellectuals, has long been a source of annoyance. Unfortunately, Trump doesn’t really care about humane of libertarian values either. His repeated calls for a strict ban on Muslims entering the United States are what appear in the media most often. His thinly veiled justification of torture has also drawn a great deal of attention.
In light of Trump’s provocative statements, we in Germany often lose sight of the fact that America’s election represents a choice between two opposing economic and political paths. On the one side, the Democrat’s Bernie Sanders, and on the other side the Republican’s Trump and Ted Cruz, embody two mutually exclusive courses the United States could follow in its economic and tax policies.
Bernie Sanders delivered the biggest surprises of the first two primaries. Hillary Clinton struggled to eke out a wafer-thin lead over Sanders in the first primary, before he dealt her a substantial defeat in the second. Sanders openly describes himself as a socialist. Sanders’ campaign has been churning out the same kind of anti-capitalist slogans we last saw from France’s President Hollande when he was on the election trail. Donald Trump and Ted Cruz represent a diametrically opposite position, with Cruz very close to the Tea Party.
Taking tax policy as an example, it is clear that the gulf between Sanders and Trump (or Cruz) couldn’t be greater. Sanders wants to increase taxes, particularly for high earners. The top income tax rate in the United States is 39.6%. Sanders wants to increase this to 43% on incomes between $500,000 and $2 million, with even higher rates of 48% and 52% on incomes above that level. In stark contrast, Trump is calling for the top rate of income tax to be cut to 25%. The rate should apply to single persons with incomes over $150,000 and couples with combined incomes over $300,000. Cruz has even called for the introduction of a flat income tax for all Americans, irrespective of earnings. As far as their economic policies are concerned, the Republicans pursue libertarian ideals. Corporation tax, currently 35%, has been targeted for an increase by Sanders, whereas Trump and Cruz both want to lower it to 15%.
In the USA, the fight is over which path the country should take. But it is not a new fight. The dominant image Europeans have of America is a distorted one. We see the United States as the embodiment of unfettered capitalism. This image is just as unrealistic as the one some Americans have of Germany as the land of beer, lederhosen and the Oktoberfest.
It is sad but true that America turned its back on a pure capitalist doctrine decades ago. Calculations have shown that American states increased their social spending between 1940 and 2007 by a factor of 472. Even when inflation is stripped out of the equation, they spend 35 times more than they used to. Taking population growth into account, social spending is still 15.3 times higher.
As early as 2013, the author Samuel Gregg published a very readable book, “Becoming Europe,” in which he warned of a growing Europeanisation of the American economy – along with all of the consequences that would entail. Above all, this is a question of political and economic culture, in particular of people’s attitudes to market economics. America stands at a crossroads: “Do Americans want to embrace modern European economic culture? Do they want to live in a set of economic expectations and arrangements that routinely prioritize economic security over economic liberty; in which the state annually consumes close to 50 percent of gross domestic product; where the ultimate economic resource (i.e. human beings) as ageing and declining in numbers; where extensive regulation is the norm; and perhaps above all, where economic incentives lie not in hard work, economic creativity, and a willingness to take risks, but rather in access to political power? Or do Americans want to embrace the opposite? Do they want to live in an economy in which economic entrepreneurship is rewarded; where the government’s economic responsibilities are confined to a number of important but limited functions; and where the stress is upon economic liberty, rather than remorseless efforts to equalize economic outcomes though state action?”
Obama was, and always will be, convinced that he needs to correct America’s path and steer the country towards a European-style welfare state. Edward Klein wrote about Obama in his book, “The Amateur,” and his belief “that he was chosen as president to save a wayward America from its dependency on free-market capitalism. This has led him to push clumsy and unpopular far-left policies – universal healthcare, Wall Street bailouts, cap and trade, green jobs and renewable energy – at the expense of rational policies aimed at putting America back to work.”
Sanders is committed to maintaining Obama’s course, but wants to be even more radical. In direct contrast, Cruz and the other Republicans want to reverse America’s march towards a welfare state – a development that did not only begin with Obama. Beyond the shrill slogans, there are important questions being asked: Which direction should we take? More free market economics, or more state intervention? More economic freedom, or more regulation? Higher taxes for high earners and the wealthy, or tax cuts?
Read also Rainer Zitelmanns Finance Blog.
Higher Prices for Condominiums in Frankfurt
On 11.02.2016, the IMMOBILIEN ZEITUNG reported that prices for Condominiums in Frankfurt increased sharply in 2015. According to Frankfurt’s IHK chamber of commerce, buyers of newbuild apartments were being asked to pay up to €8,000 per square metre. This compares with a maximum of €6,900 per square metre twelve months earlier, according to the IHK’s figures. At the top end of the terraced-, town- and semi-detached housing market, prices rose to between €725,000 and €750,000. Buyers of detached houses are now parting with up to €1.4 million. In Frankfurt’s most expensive quarters, such as the Westend, there were a number of even more expensive exceptions. “New apartment projects in Frankfurt: The 10 most interesting developments”: is the subject of a special FRANKFURT REAL ESTATE ROUNDTABLE on April 14, 2016 in the Hotel Steigenberger Frankfurter Hof. Request your programme by email today: info@immobilienrunde.de
Mayor Scholz Plans 10,000 New Apartments Per Year in Hamburg
The IMMOBILIEN ZEITUNG on 11.02.2016 reported on calls from Hamburg’s Mayor, Olaf Scholz, for the construction of 10,000 new apartments per year in the city. These would be supplemented by the 5,600 apartments for refugees already planned across the city. The plans do not involve the construction of any large housing estates. From 2013 to 2015, between 6,000 and 7,000 apartments were completed per year. At the same time, steps need to be taken to stimulate the local economy. The city’s population is growing and new jobs desperately need to be created. For this reason investment in offices and commercial properties also needs to increase: “We need to react to our population’s growth with economic growth. The economy is growing at an average of 1.7%, which is simply not enough to create the additional 40,000 to 50,000 jobs we require,” said Scholz.
Higher Rents for Apartments in Germany’s Largest Eastern Cities
According to a report in the IMMOBILIEN ZEITUNG on 11.02.2016, advertised rents in around three quarters of eastern Germany’s largest cities have increased ahead of inflation over the last five years (6.9%). This was the result of a study of 268,000 apartment listings in 23 cities released by the online platform, Immowelt. Berlin led the field with advertised rents up by 40% (to €9.10/m²/month). The strongest growth in advertised rents in eastern Germany (excluding Berlin) was seen in Dresden, at 20% (€7.10/m²/month) and Leipzig (€5.90/m²/month). In Erfurt (€6.90/m²/month) and Weimar (€7.00/m²/month), advertised rents rose by 19%. Outside the large cities currently enjoying strong economic growth, rents and prices in the remainder of eastern Germany have stagnated since 2010, often at very low levels.
Investors Keen on German Holiday Properties
As reported by the SÜDDEUTSCHE ZEITUNG on 08.02.2016, there has been continuous growth in demand for holiday properties in Germany to serve as investment vehicles. Prices for attractive properties in the tourism sector are currently increasing strongly, said Hans-Joachim Beck of the IVD real estate association. Many investors are looking to hold on to their properties as investment objects, making use of the resulting tax benefits, before eventually using the properties themselves when they retire.
Russians Driven to Sell by Weak Rouble
The BÖRSEN ZEITUNG on 10.02.2016 reported that a growing number of Russians are selling of their overseas real estate as a result of the economic crisis and subsequent devaluation of the rouble. In order to dispose of their properties as quickly as possible, many are offering discounts of between 15% and 40%. According to the real estate industry service provider Savills, this trend is primarily limited to the mid- and low-range price segments. Acquisitions are still being made, although not to the same extent as previously and with a new strategic focus. A total of $743 million flowed into international real estate acquisitions in the first three quarters of 2015. This represented just 50% of the total for the corresponding period in 2014. The investment trend is now towards commercial real estate and apartments.
International Retailers Identify Germany as Top Expansion Target
According to the IMMOBILIEN ZEITUNG on 11.02.2016, four out of ten international retail chains are targeting expansion in Germany. This was one of the key results presented in Quantum’s study on the internationalisation of the German retail landscape. Munich and Berlin are by far the most important German cities for international brands. A majority of the retailers come from Italy, the United States and Great Britain, with Italian retailers forming the largest contingent. The 29 Italian retailers with stores in Germany belong primarily to the luxury segment (e.g. Gucci, Armani, Dolce & Gabbana). The Italians are followed by the United States’ 26 brands and the United Kingdom’s 17. H&M is the only international retailer with stores in all of the 40 most important retail locations in Germany. Investors are largely drawn to Germany due to its relatively high per capita spending power, which averages €5,700 per annum.
Sales Record for Logistics Space in Berlin
As revealed by the IMMOBILIEN ZEITUNG on 11.02.2016, the trade in light industrial halls and storage space in the Berlin region set a new record in 2015, totalling 470,000 square metres. This more than doubled the sales volume of the previous year, largely thanks to large companies such as the online fashion retailer Asos, who is currently having a 44,000 square metre site constructed at Großbeeren’s freight centre. Berlin’s excellent result places it second in the national ranking, behind Hamburg. Almost a third of the sales volume is attributable to trading companies, approximately 30% to logistics providers and just under a quarter to manufacturing companies.
Rhine-Main Region: Logistics Tenants Target Surrounding Areas
As reported in the IMMOBILIEN ZEITUNG on 11.02.2016, the chances of fully letting speculative logistics developments in the Rhine-Main region are very good. This applies equally to logistics developments beyond the direct vicinity of the airport. Demand is also high for sites in Rodgau and Erlensee. NAI apollo has calculated logistics space take-up of 629,000 square metres for the Rhine-Main region in 2015. The logistics service provider Rhenus was involved in the year’s biggest deal, the 44,000 square metre VGP-Park in Rodgau. The region’s prime rents are €6.30/m². This puts Frankfurt in second place in the national ranking, behind Munich’s €7.00/m².
Bundesbank Reports Strong Property Price Rises
The FAZ, BÖRSEN ZEITUNG and the SÜDDEUTSCHE ZEITUNG on 16.02.2016, along with DIE WELT and the SÜDDEUSCTHE ZEITUNG on 17.02.2016 and the IMMOBILIEN ZEITUNG on 18.02.2016, all reported that property prices in Germany’s largest cities rose sharply last year. According to the Bundesbank’s monthly report, “condominiums in the country’s largest cities are the most overvalued,” with prices 6.5% higher at the end of 2015. The biggest increases in asking prices for condominiums during 2015 were recorded in Stuttgart (18.5%) and Berlin (14.4%). Taken together, asking prices in Germany’s largest cities rose by an average of 6%, picking up momentum again after the rate of increase had slowed from 7.5% to 5.5% one year earlier. In the five biggest cities, Munich, Hamburg, Berlin, Stuttgart and Düsseldorf, the price index has risen by 45% since 2010, with prices up by around 35% in the next group of 127 large cities. This upward pressure on prices is now also being felt in more rural regions. At the same time, vacancy levels in many of Germany’s major cities have dropped below 1.5%. New contract rents for existing apartments increased by 3.3% in 2015, a similar increases to 2014, whereas rent increases for newly built apartments slowed noticeably. This last development could well be connected to the recently introduced Mietpreisbremse (rental price brake). According to an IVD survey, 59% of German real estate companies expect a growth in demand for buy-to-let condominiums. This is due to the positive outlook for wages and employment, the fact that mortgages remain cheap and the high demand for housing continues to outstrip supply. It is also expected that the influx of refugees will continue to drive prices higher. Wrongly targeted tax incentives could lead to market distortions and irresponsible speculation, warned Lars Feld, member of the government’s Economic Advisory Council. Although mortgages are underpinned with a high proportion of equity, an economic downturn could lead to price corrections. Feld does not see any sign of systemic risk: “Higher wages and salaries, combined with investors restructuring their investment portfolios to include more real estate, continue to have a positive impact on the real estate economy. A bubble of the kind which would pose a threat to the overall economy could only develop if a disproportionate number of apartments were built.” This is, however, not the case.
In any case, under these conditions it will become more difficult to generate yields, wrote the HANDELSBLATT on 19.02.2016. Should plans to extend the assessment period for rent indexes from four years to ten be approved, the consequences for the housing market would be extremely serious, as demonstrated by a recent study commissioned by the IVD. Rents could be pushed down by more than €1/m²/month. “This would remove any leeway for rent increases over the next few years,” said the IVD’s President, Jürgen Michael Schick. “Effectively a rent increase ban, this will prove unacceptable for landlords as they won’t even be permitted to compensate for inflation.”
Two Million Vacant Apartments
As reported by the HANDELSBLATT on 17.02.2016, there are approximately two million empty apartments in Germany, most of which are in rural locations. 600,000 apartments are currently ready and waiting for new tenants. The Federal Institute for Building, Urban Affairs and Spatial Research in Bonn has called for processed refugees to be distributed to specifically designated locations in order to relieve pressure on housing markets in major metropolitan areas. Many German regions have large numbers of both empty apartments and job vacancies.
Classic Estate Agents Versus Startups
The Bestellerprinzip, introduced in June 2015 to ensure that residential letting agent fees are paid by the party who commissions their services, has fuelled competition in the low-cost marketing of residential real estate, wrote the SÜDDEUTSCHE ZEITUNG on 16.02.2016. A number of established rental agents have withdrawn from the residential letting business altogether and startups are increasingly working online to offer the same letting agent services at much reduced rates. However, classic rental agents are not surrendering to their digital competitors without a fight and have recalculated their rates and are now offering better value customisable service packages, said Sun Jensch of the national IVD real estate association. “Half a year has passed and it is now possible to say that a majority of the service packages chosen by property owners cost in the region of 1.5 net monthly cold rents.” Increased competition in the market has relieved tenants and driven agents’ commissions lower.
€500 Million of Real Estate Projects in Hamburg
Construction on real estate projects with a gross floor area of 156,000 square metres is set to begin during 2016 in Hamburg’s Hafencity, with a further 170,000 square metres of space also ready for development.
Both figures appeared in an article in the IMMOBILIEN ZEITUNG on 18.02.2016. Most of this activity is unfolding in the eastern sector of Hafencity, in the Baakenhafen quarter, where the quarter’s heart, including 436 apartments and a supermarket, is being constructed around Lola-Rogge-Platz. Further developments in the neighbourhood include commercial space and an additional 800 apartments. In total, between 1,800 and 2,000 residential units are planned for Baakenhafen. The tender process will begin for the remaining three parcels of Baakenhafen land in 2016, along with the first parcels in the Elbbrücke quarter. The locality offers unique opportunities for the construction of high-rises, which are banned in Hamburg’s more central districts. From the Elbbrücke quarter, it is just a short step to connect to the Kleiner Grasbrook island quarter and its port facilities, even if this does not form an element of the plans conceived by the Mayor, Olaf Scholz, who initially wanted to drive development of the city’s eastern districts. In the view of Andreas Wende of Savills Germany, Hamburg desperately needs to make the most of its current unique opportunities: “We are losing out on international investments because we’re not big or expensive. We don’t have enough outstanding architecture, there’s a lack of the tall and expensive buildings that would draw investors to Hamburg – such as the sketches we saw at the 2006 workshop on Hamburg’s Chicago Square. Those are the kinds of project international investors want to be involved in.” The last vacant prime location in the western Hafencity will be made ready for the construction of 500 rental apartments and condominiums by the end of 2016, and work is scheduled to have started on the southern section of the Überseequartiers in the central segment of Hafencity.
Rhineland Benefits from Large Numbers of Academics and Highly Skilled Workers
The Rhineland region has become more and more popular, particularly among high earners, academics and students, reported the IMMOBILIEN ZEITUNG on 18.02.2016. According to a new study released by Feri Euro Rating, “Rhineland Real Estate Investment Opportunities,” the pace of the economic development in the region’s three major metropolises, Cologne, Düsseldorf and Bonn, is much higher than the average among Germany’s top fifteen economic centres. This is especially true for Cologne, rated B+ for economic power and expected to enjoy “extremely strong population growth” as a result. With just a moderate increase in new apartment building, Cologne’s population is expected to increase by 19.4% between now and 2040. The population of Düsseldorf is forecast to grow by 13.1% and Bonn by 12.1% over the same period. The rental housing markets in Cologne and Bonn were accordingly awarded the highest grades, A, while Düsseldorf received a B. Feri, expects that the cities’ office and retail real estate markets will also benefit directly. “Knowledge-based businesses are able to find the talents they are looking for here. The region’s highly-qualified workforce is a key factor in strengthening the local economy.”
Real Estate Transfer Tax a Burden for Buyers and Tenants
Germany’s federal states have repeatedly raised real estate transfer tax (Grunderwerbsteuer) rates and receipts climbed by 20.4% last year, reaching a record total of around €11.2 billion, as reported by DIE WELT on 18.02.2016. House prices have been increasing at the same time as the tax rates, representing a double hit on property buyers and tenants. A real estate transfer tax of 6.5%, as is currently the case in Saarland, Schleswig Holstein, North Rhine-Westphalia and Brandenburg, and will be the case in Thuringia from 2017, pushes ancillary costs up to around 15.6% of the total cost of acquiring property. Based on a €400,000 house, this amounts to €62,560. In combination with VAT/sales taxes, this is a significant burden for housing development, despite the fact that hundreds of thousands of new apartments are so desperately needed across Germany.
New Record for Logistic Investments
Almost €4 billion, a total higher than in any previous year, was invested in logistic real estate in Germany in 2015. This figure was reported by the IMMOBILIEN ZEITUNG on 18.02.2016. Take-up of space within the sector also set a new record, amounting to around six million square metres (+15% on the previous year). Almost two thirds of the take-up was attributable to tenants. In comparison to 2014, this represented an increase of 5%. Logistic investments may not have increased their overall share of around 7% of the total commercial real estate transaction market (€55 billion in 2015), but the result shows that the transaction market has, “undergone a fantastic development,” according to Rainer Koepke from CBRE at the 16th annual Euroforum Conference. Increasing levels of investment are primarily driven by the fact that Germany is one of the world’s major manufacturing and exporting nations, it has the largest economy in Europe, and levels of domestic consumption are going from strength to strength. All-in-all, these factors combine to enhance the attractiveness of the country’s logistic market for international investors. “Taking a more international view, construction activity is relatively low and the number of solvent tenants is high, both of which raise the prospect of secure income streams for investors for years to come,” said Jan Linsin of CBRE. The digitalisation of the workplace and production chains in industry and manufacturing, combined with continued growth in online retail, “mean that logistic networks need to be reorganised and new logistic real estate needs to be built, including small-scale distribution centres within cities and closer to consumers.” CBRE’s 2015 figures reveal that international investors accounted for 62%, or €2.4 billion, of investment. Almost €1 billion of that total, or more than a quarter, came from the USA, €485 million (12%) from the UK, €238 million (6%) from South Korea and €198 million (5%) from Malaysia. According to Kai F. Oulds from CBRE, Asian investors in particular are increasing their focus on logistic real estate. CBRE reported prime yields of 5.2% for objects with long-term leases and modern facilities in the five top logistic centres of Berlin, Hamburg, Düsseldorf, Frankfurt and Munich.
GERMAN REAL ESTATE NEWS
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Feri Real Estate Market Rating
The Feri Real Estate Market Rating provides a forward-looking assessment of potentials and risks for investment return on regional real estate markets. Ratings are based on detailed econometric forecasts of regional real estate markets including regional economic development. The rating currently includes more than 150 cities in Europe, in the United States and in Asia.
In this issue:
Real Estate Market Rating for Copenhagen
Copenhagen, the Danish capital, is one of the biggest cities in Scandinavia and anchors a dynamic Northern European region. Its harbor, airport, and direct train connections to several European metropolises provide outstanding transport links. When the Öresund Bridge, which connects Sweden and Denmark, opened in 2000, Copenhagen became the major hub for road traffic between Northern and Central Europe. The Copenhagen stock exchange is Denmark’s most important financial center. Along with the service sector, especially business services, the public sector is the biggest contributor to total output. In recent years futuristic fields of enterprise – such as biotechnology, pharmaceuticals, environmental technology, computer science and telecommunications – have expanded rapidly. After dynamic growth in the past decade, regional production is expected to increase at slightly under the urban European average during the years to come.
Feri rates Copenhagen as a business location “A”, which is unchanged compared to the 4th quarter 2014. It translates into “high potential, low risk”. With this rating result the city ranks 21th in the comparison of European Metropolises.
Office Real Estate
Regarding office real estate Feri rates Copenhagen “B+”, which is upgraded to the 4th quarter 2014. The city ranks 1st among office locations of European Metropolises. Feri awards the office top locations “B+” and the side locations “B”
Copenhagen is Denmark’s commercial center, with around 9 million square meters of office space, making it the third largest Scandinavian office market after Stockholm and Oslo. Prime locations are in the vicinity of the old harbor. Other attractive locations are Österbro, Nörrebro, Frederiksberg, Hellerup, Herlev/Ballerup, the western corridor, Sydhavnen, and Amager/Örestad. In Copenhagen, as in other Nordic capitals, most demand comes from financial and business-related services and a relatively large public sector. The market is not particularly transparent, but volatility of total returns is relatively low.
Although Denmark went into recession relatively early in 2008 due to an overheated housing market, rents did not react to the delayed weakening of the job market until the following year, when they declined by around 7 percent. The vacancy rate started to increase in 2007, but it did not exceed the equilibrium rate until around mid-2009. At that point high vacancies combined with weak demand put noticeable downward pressure on rents. The Danish economy, which stagnated in 2012, is expected to perform only weakly for the time being. That is why office rents are expected to post only slight increases. For the forecast horizon, we expect rents to rise at an average rate of 1.5 percent per annum, slightly above the long-term trend.
Net initial yields for office properties in Copenhagen began their correction as a reaction to the looming recession in the second half of 2006, out of phase with most European markets, which at the time were still in the final phase of what is known as “yield compression.” Since then this adjustment has led to an average increase in rental yields of around 80 basis points. As rents will rise only moderately during this year due to continued uncertainty about the overall economic situation, further compression of rental yields is not anticipated at this time. For the years ahead we expect rising interest rates leading to slight increases of rental yields.
After the crisis-driven price correction at the end of 2009, rental yields in 2010 compressed to the level of “fair value”. At this level, they remained stable due to the prolonged recessionary economic development by the end of 2014. During 2015 Investors entered the market again providing a surge in transactions, causing yields to move inward by about 50 Basispoints. The medium-term outlook is favorable since the rental cycle is yet in its beginnings. Furthermore, valuation I relatively fair in comparison to the leading European markets. Total Return Expectations should be exceeding European averages.
Retail Real Estate
In the comparison of European Metropolises regarding retail real estate Copenhagen placed 6th with a rating result of “A”, which is unchanged compared to the 4th quarter 2014. Feri awards the retail top locations “A” and the side locations “AA”.
Around the turn of the century, strong demand for retail space in Copenhagen enabled the market to post sharp rent increases. Copenhagen is an attractive shopping location, drawing customers from surrounding areas, while tourists supply much additional purchasing power. Particularly in the “Stroget” pedestrian area, the main shopping street, retail space is in high demand and short supply, and rents are quite high. In coming years, retail rents at top locations are expected to begin rising steadily once the present economic downturn is over – but, due to growing competition from new peripheral shopping centers, they will not increase at a high rate. Retail rents in secondary locations should trend modestly upward, too, after a somewhat longer delay.
Residential Real Estate
When it comes to residential real estate, Copenhagen placed 3rd among European Metropolises with a rating result of “A”, unchanged compared to the 4th quarter 2014.
Throughout the recent as well as medium-term past, Copenhagen’s apartment market has been characterized by continuously increasing rents for both existing and new dwelling units. Supported by a consistent (though moderate) increase in the number of new residents ever since the mid-1990s, demand has far exceeded supply, with the most acute supply shortages in the inner city. In order to help ease the tight supply situation, Copenhagen’s administrative authorities have announced initiatives to build new apartments in so-called development areas. Nevertheless, during the forecast period one can expect ongoing rent increases in the region, with respect to both existing and new apartments.
Copenhagen’s recent population growth also boosted prices on its residential property purchase market. In a trend that began in the mid-1990s, demand outpaced supply. Rising preference for home ownership has further supported the market. Cumulatively, prices in all segments – detached single-family houses, town houses, and condominiums – almost doubled in just several years. But the upturn peaked in 2005. Prices then stagnated, respectively fell. At present, there is some degree of oversupply; moreover, higher interest rates may be upcoming. Thus, while residential property sale prices in Copenhagen should begin rising again in coming years, the rate of increase is projected to be only moderate.
Contact:
Franz Wolfgang Kubatzki, wolfgang.kubatzki@feri.de, phone +49 (0) 6172 916-38 11
Feri Real Estate Market Rating
The “Feri Real Estate Market Ratings” issued by Feri appraise the value potential of regional real estate markets, taking into account the attendant risks. The methodological approach underlying Feri Real Estate Market Ratings is rooted in the empirical observation that the performance of a given real estate market depends essentially on the economic power of the respective city. Before this background, Feri develops a separate prognostic model for each city, mapping the regional economy as a system of independent equations.
For the purpose of compiling its ratings, Feri uses a detailed regional forecast to analyse the socio-economic development, the economic structure, as well as the ten-year indicators specific to the respective real estate market. The forecast findings are evaluated using a mathematical rating algorithm.
The objective behind the ratings is to make the markets more transparent, and thereby to support pending investment decisions of private and institutional investors. Feri ratings are updated on a quarterly basis, and are currently available for 67 German cities and counties, as well as for 60 European cities outside Germany, and 45 cities in the United States.
Feri EuroRating Services AG
Feri EuroRating Services AG is a leading European rating agency, specializing in the analysis and valuation of investment markets and investment products. Feri is also a major economic research and forecasting institute. At present, Feri employs a staff of around 60 professionals to manage about 1000 customer accounts. The company is headquartered in Bad Homburg near Frankfurt, Germany, with sales offices in the United Kingdom, France, and the United States. In addition to its global industry analyses and ratings of companies, countries, capital and real estate markets, Feri regularly appraises the investment funds registered in each country. Annual market surveys on institutional and mutual funds as well as on closed-end participations provide an overview of the perspectives and actions of institutional investors. In the real estate sector, Feri conducts global real estate research, performs real estate valuations, and provides ratings of companies, REITs, real estate, real estate portfolios, and indirect real estate investments (open-end and closed-end real estate funds).
For more information on Feri EuroRating Services, please go to http://fer.feri.de/en/about-us/portrait/.
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