Real Estate

Real estate investments in Germany – positive outlook for 2014

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By Dr. Justus Westerburg & Christopher Blumenthal, Nörenberg • Schröder

With an estimated transaction volume of EUR 26bn, the market for commercial real estate in Germany continued to grow in 2013. The estimated transaction volume of housing real estate amounted to EUR 15.8bn, reaching a 10-year high.

Key data for real estate investments in Germany:

  • With over 40 % of the transactions, office properties accounted for the largest part of the transaction volume in 2013
  • Around 50 % of the real estate investments in 2013 took place in one of the "Top 5 Cities" (Hamburg, Berlin, Dusseldorf, Frankfurt or Munich). However, there is a noticeable trend towards other cities, particularly in eastern Germany (such as Leipzig and Dresden), where prices have not yet "heated up" much
  • As regards our clients, we have observed that large investment funds as well as private clients are attracted by major assets located in the suburban centres of the "Top 5 Cities" where prices are still attractive and are expected to rise as the urban population continues to grow

Based on the predicted growth of the German economy of about 2 % in 2014, the commercial transaction volume is expected to keep rising to approximately EUR 30bn.

Regarding recent legal developments, there are some new matters to be considered by investors and consultants in connection with real estate investments in Germany:

1) Partial increase of real estate transfer tax (RETT) rates
The German federal states have the competence to determine the RETT rate for their respective regions. Several states increased their tax rates with effect from 1 January 2014. For instance, the tax rate in Berlin has been raised from 5 % to 6 %, and in Schleswig-Holstein from 5 % to 6.5 %. The lowest tax rate applies in Bavaria (3.5 %).

2) New regulations concerning the law of notary fees
On 1 August 2013, new notary fee regulations came into force. Transfer of real estate requires notarisation by a notary public under German law. In general, fees depend on the transaction value. According to new provisions, a choice of law clause in a contract is treated as a separate subject to charge, with an additional 30 % of the transaction value. Fees for the notarisation of a transfer contract can therefore be significantly higher. This is solely due to the inclusion of a choice of law clause. In light of these new regulations, the necessity of such clauses should be assessed closely.


Westerburg Dr JustusDr. Justus Westerburg, Attorney-at-law, Certified tax advisor, Partner
Nörenberg • Schröder Rechtsanwälte Wirtschaftsprüfer Steuerberater Partnerschaft, Hamburg, Germany
T: +49 404 419 60 01
E: This email address is being protected from spambots. You need JavaScript enabled to view it. ; W: www.noerenbergschroeder.de

 

 

 

 

Blumenthal ChristopherChristopher Blumenthal, Attorney-at-law
Nörenberg • Schröder Rechtsanwälte Wirtschaftsprüfer Steuerberater Partnerschaft, Hamburg, Germany
T: +49 404 419 60 01
E: This email address is being protected from spambots. You need JavaScript enabled to view it.; W: www.noerenbergschroeder.de

 

 

 

 


published: January 2014

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