100Billion Euros gives German Property Investors Hope

The German Government is about to unveil a multi-billion Euro fund to assist businesses that can't obtain finance from the banking system, Chancellor Angela Merkel has revealed.

The package -- worth some 100 billion Euros (135 billion dollars) -- is aimed at helping to tide healthy firms over until normal levels of bank lending can be resumed, she said in an interview with Bild am Sonntag to appear Sunday, adding: "We do not need 100 billion Euros of new money because this is about guarantees."

Liam Bailey, chief market analyst for overseas property portal Property Abroad gave his views on the plan:

"Germany has been one of the most robust economies in Europe, but it is beginning to fall victim to the financial crisis; recently recording its first unemployment hike since 2006. Less people own their own home in Germany than any other EU country, so people investing in German property do so because of the solid residential rental market. The down-side to this is that the government is forced to impose and maintain strict controls over the raising of rent in Germany.

"When the German economy was extremely strong, was hoped these controls may be eased. If unemployment was to continue rising these controls could become more severe. Therefore overseas property investors looking at Germany will be hoping the new fund, staves off unemployment before it has a chance to become a problem, and helps Germany make it through the credit-crunch without taking any drastic measures to further restrict rent rises."

Property Abroad have some solid investment properties in Germany, including a tenanted apartment in Spandau, Berlin offering a 6% rental yield. The apartment has been rented out to the same person for ten years, thus the person has a reliable income. A 6% yield is very good for Berlin, though it is likely because the price of the apartment has been dropped for a quick sale. The good thing is: rents in Berlin are so common and so regimented that even if the tenant was to become unable to pay the rent, or was to move out for any other reason, the new tenant would be found quickly without dropping the rental rates.

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Credit Crunch Could Boost German Property Market

According to a survey by travel portal kayak.co.uk 60 percent of Britons have no intention of cancelling their winter holiday plans because of the economic downturn. Meanwhile, Grahame McKenzie of tourism website Travel Mole, has predicted that the global downturn will cause Britons to holiday in locations within Europe, such as Spain and Italy, naming France, Italy and Germany, he added:
"Potentially there may be an upsurge in ferry bookings, so people will be able to shove all their stuff in a car and just jump in with their kids and everything."

Liam Bailey, chief market analyst for overseas property portal Property Abroad gave us his views on the reports:

"Firstly, it is possible that the findings from the Travel Mole survey go against Grahame McKenzie's predictions -- for this winter anyway -- of course depending on whether or not some of the 60 percent have made their winter holiday plans to go further afield than Europe, which I believe is a fairly safe bet. McKenzie's statements give no indication of whether he meant this winter only or winters for however long the 'credit crunch' lasts." While it is highly likely that some people will decide to holiday in Europe, most Britons already do holiday in Europe, so I can't see there being a 'massive upsurge', but even a slight upsurge could generate a boost in European property markets."

"McKenzie being right would make the biggest difference to Germany, because German property traditionally has very low rental yields, because of government restrictions, and because of the fact that very few Germans own their own homes meaning that most rentals are residential. This would -- possibly very quickly -- give Germans the ability to raise their rental rates on short-term leases only, because the government would see the positive effect this could have on the economy combined with the increase in tourism."

Property Abroad has over 300 properties in Germany , with prices starting at just over £29k on a tenanted 1 bedroom Berlin apartment . Untenanted German apartments are always priced slightly higher; for example a 1 bedroom untenanted apartment in Berlin -- though in a different area -- is priced at £46,405.

About Property Abroad
Property Abroad is rapidly growing into one of the best known, trusted and most successful overseas property portals in the U.K. With a slick dynamic site and very reasonable rates Property Abroad currently has among the most extensive worldwide property listings on the net.

To find out more contact the team at: les@property-abroad.com

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