Everybody knows: Timing is important. Developing the right strategy for the way in and the way out again is key to any investment. The investments need to be selected for the period envisaged. The exit strategy has to be clear and the business plan developed accordingly.
Economic developments
A robust development in the global economy, strong growth in the Eurozone are indicative of the current macro environment and are the driving forces behind a boom situation that Germany's economy has been waiting for years. Towards the end of 2006, the German economy experienced its strongest upturn since the New Economy boom in 1999/2000. All significant economic indicators point to a positive growth for 2007 and suggest a sustained economic revival for the following year.
In 2006, the German economy regained its role as the power behind growth in the Eurozone, the vitality of this upturn exceeded all expectations.
The German Property Market is Europe's biggest with record transactions in 2006. Figures for the first half of 2007 show no slackening in volume.Despite the high demand prices are still low in comparison to international markets, even the Eastern European ones. The potential for property appreciation is strong.
The rent level is still low and trailing behind the economic development. So buying now offers an upside on the cash flow as a good management can capitalise on the catch-up to follow.Germany is still currently one of the few major economies where an investor can expect a positive cash flow from property investments.Why now?
Global property players have been in the market for over two years now and have tied a great deal of their equity. This is where the chance lies for new arrivals in the market. Good investment opportunities require speedy decisions and ready available equity. These factors create a competitive advantage in the market. Equity is the easy part for a new arrival in the market but speedy decisions require market information and knowledge if they are not to turn out as risky or maybe wrong.
There is only one solution to this situation - Alliances with trustworthy partners already present in the market with access to off market properties and know-how in their purchase and operation.
What is the best strategy?
Developing the right strategy for the way in and the way out again is key to any investment. The properties need to be selected for the investment period envisaged. The exit strategy has to be clear and the business plan developed accordingly. Whether the sale as condominiums or as a block of rented apartments, market knowledge of the respective markets is vital for the right purchase decision and the business plan. With the right partners at the starting point a successful and profitable exit after 3 to 7 years, depending on the strategy, is easily achievable.
For more detailed information please visit the website of Berlin Portfolio Ltd or contact the author.
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