January 2009 Update
Welcome
 
Happy New Year fellow property investors!
 
With newspapers full of dismal predictions for 2009 it is difficult not to be filled with gloom. It would appear that, due to the financial crisis, the world is about to end and it is difficult to find optimism anywhere... recently on the BBC website:
 
“How do you define optimism?...
 
...A banker who irons 5 shirts on a Sunday.”
 
It is difficult to know who to listen to these days as the pundits making their predictions now were all completely wrong about 2008 and we are in truly uncharted waters in our inter-connected global finance system. So what to do? Find a bigger mattress to put your money under?
 
My response in these times is to focus on the fundamentals of the market and try to minimise my exposure to the various forms of risk to my capital and cashflow. Looking at the statistics of our website over Christmas (30% increase on usual traffic), it would seem I was not alone in searching for opportunities over the holiday period. With yields of 10-14% and 80% finance at low rates, Germany is still fitting the bill for me and will do so for 2009 and beyond. I suppose the biggest challenge to investors outside the Eurozone is the current strength of the Euro. More on this below.
 
Anyway – I hope this Newsletter provides some interest to you as an investor as you plan your activity this coming year. Best of luck in your investments this year – try and make it your best yet, despite the doom-mongers!
 
All the best,
 
Mat
 
Please click on the following titles to read the content or scroll down to read the whole newsletter
 
 
 
 
How is the strong Euro affecting your investment.
 
 
 
Some positive outlooks for 2009
 
 
 
 
Preparation for 2009
 
 
 
Routes to Leipzig and links to travel sites
 
 
 
 Recent Property deals available
 
 
Coming next month
 
 
 
 
  
 
 
 
 
Strength of the Euro
 
Of most concern for investors outside the Eurozone has been the strength of the Euro since our last Newsletter in December.
 
The exchange rate against the British Pound for example has dropped from around 1.20 Eur:GBP to around 1:06 Eur:GBP (5 Jan 09). So what effect is this likely to have? Well, all those who exchanged their hard-earned currency last year to make investments are probably feeling very happy with themselves. Additionally, the rents they are receiving on their investments are now worth more if repatriated to their own countries.
 
For those looking to make an exchange in the next 6 months, it would seem your timing is critical. A number of currency experts, including the foreign exchange team at Goldman Sachs, consider the pound to be oversold and expect a return to a "true value" level of around 1.30 in the next 3-6 months. With the Eurozone lagging behind the UK and USA with regards to the effect of the global financial crisis, this seems logical. Of course, only time will tell.
 
I suppose it is useful to remember that for those raising finance in Euro through a mortgage, the effects of currency fluctuation are balanced off fairly well. Often 80% of the purchase price will be in Euro so only 20% will need to be exchanged.
 
Finally, if you have not caught sight of it, please ask for our currency fact sheet which provides some guidance as to how to exchange your funds most effectively including methods such as "booking a rate" when they hit a pre-determined level. We also have contact details for foreign exchange specialists, one of which also offers a hedging option which would allow you book a minimum rate and then benefit if the rate changes in your favour; which would be useful if you do not have to make an exchange immediately.

 
 
 
 
 
 
Finance Update
 
Some good news from the financial sector!!
 
I spoke with our friendly German banker this morning and he looks forward to another good year working with our investors. The ability for the banks to finance our investment objects at up to 80% loan-to-value will remain for the foreseeable future which is good news for those who need to gear their finance to best effect.
 
A tour of other websites offering property in Germany will demonstrate that 60% loan-to-value is often the best that is achieved. How have we secured this higher loan-to-value ratio in these difficult times for credit?
 
We have brought a good volume of business to our favoured bank in Germany and they have recognised the high level of security that our properties offer with such good rental yields. This is demonstration of a genuine win-win outcome for all.
 
The latest rates (5 January, 2009) were given at 4.5% for a 5-year fix and 4.9% for a 10-year fix which are competitive for the market and ensure excellent cashflow after all costs on our properties which usually have net yields of above 10%.

 
 
 
 
 
 
Activity on the Ground
 
It has been a fairly quiet period since the last Newsletter in December over the holiday season. This has given us a good opportunity to catch up on some existing deals and prepare for the New Year.
 
Attached are the latest 2 deals we are bringing to the market this month. Please get in touch in you need more information.
 
In terms of our activities in January, please see our website for dates when both UK and German staff will be in town and able to show property that may be of interest:
 
http://www.german-property-for-sale.com/property-inspection-visits.htm

 
 
 
 
 
 
Top Tip – Getting There
 
This month and next month we will be looking at travelling to and staying in Germany.

For those of you who haven't visited Berlin or Leipzig yet, here are a few helpful links and some information that should help you on your journey.

There are 2 main airports in Berlin and 2 that serve Leipzig. For most investors from the UK, the budget airlines EasyJet and Ryanair provide cheap and regular flights to Germany from many airports in the UK. Both carriers fly to Berlin Schonefeld and Ryanair also makes a daily flight to Altenburg, which is near Leipzig (but not every day during the winter months).

In our experience, the easiest route to Leipzig is to fly to Altenburg, and then you can take the short bus ride from outside the airport to Leipzig city centre.
 
The other route to Leipzig is to fly to Berlin and then take the fast intercity train, the ICE, from Berlin's main train station. For the English amongst us – German trains put ours to shame; they are to-the-minute on time, clean and very fast. It is best, and significantly cheaper, to book on line in advance – click here to visit the Deutsche Bahn English page.

Easy Jet and Ryan Air often have sales where the price drops to 1p or even to zero (you just pay taxes) and EasyJet often have discount codes that reduce the costs further. We will keep you informed as we hear of them.
 
Outside of the sales - we always use SkyScanner - which finds the cheapest routes and lists them in  price order - with so many departure airports across the UK, this can be helpful.  Your return trip should not cost you more than £50.

The final airline tip is that EasyJet will let you on to an earlier flight if there is a space available, for free; just turn up at the airport. If you don't mind risking flying back late, you can book a cheap off-peak flight and then chance it with an earlier one.
 
 




E-Book

As a new support measure for our clients, we are developing a short E-Book which will cover all the general aspects of property investment in addition to some hard facts regarding investing in Germany.
 
We hope to lauch the Ebook (which will be FREE) around end of Jan.
 
Please let us know if you would like to be sent a copy.

 
 
 
 
 
Latest Property Offers
 
This 10 unit property is located on the borders of Leipzig Centre (West) and Plagwitz, around 3km from the City Centre. The area enjoys very high tenant demand from the range of tenant sectors. Transport into the centre is by tram lines which stops 100m from the building. The property is in one of the best city centre locations, bordering the river Weisse Elster and the popular Clara Zetkin Parkland. Currently 9 of the 10 apartments are currently let at between 3.6 and 6.6 Euro per sqm. The sizes of the apartments range between 25 to 64 sqm, sizes which lend themselves well to single occupancy or professional sharers and typically attract higher than average rentals. The condition of the property is superb having undergone recent and extensive renovation with details such as hi-spec fitted kitchens.
This residential offer is located in the suburb of Kleinzschocher, around 5km to the south west of the centre of Leipzig. The area is characterised by a mix of mainly residential property with a number of smaller commercial outlets. Significant development and renovation of buildings has taken place in the area in recent times and augers well for the future rental and capital potential. Being located next to the affluent area of Schleussig where rental levels are around 50% higher, the area of Kleinzschocher offers good-value to the range of tenant sectors and is well supported for demand. The area is well-served for public transport with trams stopping adjacent to the property. The offer consists of 13 residential and 2 commercial outlets spread over 5 floors. The average size of the residential apartments is 49 sqm, a size that is in high demand. There is just one unit remaining available for rental. Of benefit is the very large plot that the property sits on which is well laid out for recreational use. The construction and maintenance standard of the building is good with no apparent signs of work required in the medium term.
 
 
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