August 2009 Update
Welcome

I'd like to welcome you to the monthly update from ProVenture.  We hope you find this short newsletter of interest and that it keeps you up-to-date with the property investment scene in Germany.

 

Please click on the following titles to read the content or scroll down to read the whole newsletter
  
 
Positive Indicators
 
 
FX Update
 
 
 
 
 

 
 
Buying at Auction
 

 
 
 
 
 
 
  
 
German Economic Outlook
 
Most of the economic indicators coming out of Germany were positive during this month. Not only did stock markets perform well in line with other developed countries but also unemployment remained broadly stable in July as government labour market subsidies continued to shield workers from mass layoffs. The fact that the unemployment rate was unchanged at 8.3 per cent was a "small sensation" given the difficult economic conditions, said Olaf Scholz, labour minister.
 
German shoppers are showing surprising strength with consumer confidence in the eurozone’s largest economy hitting its highest level for more than a year, even as evidence mounts of a credit squeeze across continental Europe. The Nuremberg-based GfK research group has forecast its “consumer climate” index will rise from 3.0 points in July to 3.5 points in August, the highest since June last year. The unexpectedly steep increase will strengthen expectations of a significant rebound in Europe’s largest economy in the second half of this year. Last week, the German Ifo business confidence index also rose strongly, hitting the highest level since October.
 
German industrial production was 3.7 per cent higher in May against a month earlier, the fastest increase in nearly 16 years, Germany's economics ministry reported yesterday. Although overall volumes were still 17.9 per cent below levels of a year earlier, the increase surprised even economists given to bullishness after news that the level of orders received by German manufacturers in May had jumped more than in any month for about two years.
Andreas Rees, an economist at Unicredit in Munich, said what "may look like voodoo economics" was more likely the result of "signs of life in the global economy" - leading to a pick-up in foreign demand for German goods. This will prove a crucial factor in Germany's emergence from the recession.

 
 
 
 
Finance Update
 
We now have an fx update from Gary  Field - Senior FX broker at Cornhill FX:

The month of July followed a similar pattern to June. The markets were fairly range bound but we saw some exaggerated moves as liquidity was thin. Major market orders and increased risk appetite were the main market drivers and over the last week of the month the pound improved in value by over almost five cents and dealt at its highest point since last October, at $1.6770 against the dollar on the 31/7. This is mainly due to the weaker dollar, rather than a sudden interest to buy sterling, but the market seems to have shaken off most of the concerns that affected the pound during the financial melt down at the end of last year. Also helping to drive Sterling strength was the news that the BOE would review their QE policy at the upcoming MPC meeting (after spending GBP125B on asset purchases.
 
Meanwhile, data was less than impressive from the Euro zone with any better than expected PMI results out from Germany and the broader region being easily offset by the much weaker than expected German retails sales. However the pound was also range bound against the Euro trading 1.1510 as the low and 1.1756 as the high for the month. We expect the wider range is still really stuck between 1.1500 and 1.1850, but we are still of the opinion that we may see a steady move higher towards the top end of that band within the first week of August and if broken push on to 1.1900, profit taking will hinder any further progress and may instigate some downward spikes in the rate over the course of the month.
 
If you wish to contact Gary to discuss any foreign exchange trades - please call him on
+44 207 337 8679 or email garyf@cornhillfx.com

The swap rate is at:
 
http://www.swap-rates.com/EUROSwap.html
 
 
 
 
 
Activity on the Ground 

During July, we have increased our marketing effort and now have 32 offers in the cities of Leipzig, Halle and Berlin with prices from 20,000 Eur right up to 1.35 million Euro. We continue to find property in the various locations with yields in the range 5-12%, with an average of around 9-10% on delivery. We are also making initial investigations into the market in the city of Dresden and will be bringing new offers to the market during August with yields around 8% on purchase. Activity from foreign investors seems to be quieter than usual, perhaps an effect of the summer weather (not in England!) or reduced ability to purchase in response to the home property and credit markets. Demand from German investors is proportionally as high as we have experienced and we have lost deals to domestic buyers during this month. It will be interesting to see if this effect continues and what the effect on capital values will be. We have updated our calendar for inspection visits and you can view this at:

Dates when ProVenture are in Germany can be seen by clicking here
 

 
 
 
Top Tip – Buying at Auction

In addition to the usual method of property delivery (ie direct from seller) property deals can sometimes prove attractive when buying at auction. Although not an easy process for the foreign investors to negotiate, taking a look at auctions is a worthwhile activity, if only looking to gauge current market conditions. There are a number of private auctions organised around Germany as well as auctions organised through the federal state courts. In the usual case, auction at the Federal Court is necessary for lenders to clear the land register of the names of failed loans.
 
You will find many private auctions listed on the web.
 
A link to one of the federal court sites (Saxony, in German) is below:
 
 
Please let us know if you require any further information regarding the auction process or require support in purchasing in this way.


 
 
 
 
Latest Property Offers
 
Please check the website for all our new property offers in the cities of Leipzig and Berlin.
 
Below are links to some of the new property brought to the market during July. More property in Leipzig, Halle and Dresden will be brought to the market during August so please monitor the website.
 
Click here to visit our site for all the latest properties.

 
Happy investing and good luck,
 
Mat
 
 

13 Unit residential property in Weissenfels over 5 levels.

9 Residential and 1 commercial unit in popular region of Schleussig. Excellent condition - fully refurbished.

Two adjacent period buildings.
22 Units in total - 17 Residential and 5 Commercial.

Newly refurbished 10 unit property.  Excellent condition and close to city centre.

Leipzig-Schleussig.  Excellent location - single units available from 19k Euro upwards. Contact us for further details
Awaiting Picture
70 Sqm apartment in Leipzig-Connewitz.  Built in 1998 - top condition. 2 bedrooms, wooden flooring, lift, underground parking.
59.000 Euro
 
Contact us for more details

New development in Leipzig-Gohlis - A range of new apartments fitted
to highest specification in this high demand area. Prices from 60,000 Eur
Contact us for more details
 
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