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Berlin municipality plans to invest 28 billion euros in improving public transport

The Berlin senate has decided to invest an additional budget of 28 billion euros in public transport over the course of the next 15 years

At the end of February 2019, a debate was held in the Berlin senate on the state of public transport in the city, at the end of which a plan was adopted for the next four years, and a decision to invest a budget of just under € 2 billion per year for the next 15 years.

The ruling coalition of the state guarantees transportation that is “cleaner, more attractive, more convenient and more reliable.”

For public transportation users in Berlin these are not solely good news due to the fact that travel costs are expected to rise. The Berlin Transport Company (BVG) expects to raise its revenues by 3 billion euros by 2035, which means that prices of all types of tickets will probably climb up.

The BVG said at this stage that they expect their revenues to increase an average of 3.4% per year. This figure is based on an estimate of a 1.8% increase in ticket prices and an additional 1.4% due to an increase in the number of users.

The changes that are expected to occur include innovations and improvements in the existing subway, tram and bus systems, as well as the addition of new services and lines.

Berlin’s subway is expected to expand significantly. The U5 line will be extended by 2020. In addition, BVG are soon expected announce the extension of the U7 line in the direction of West Berlin, the extension of the U8 line and two additional extensions to facilitate access to the city’s airports: to the new airport from Rudow on U7, and to Tegel from U6.

Berlin’s tram will be the center of reform, because the costs of adding electric railways are significantly lower than the construction of subway lines. Altogether, 16 new construction projects are planned on tram tracks.

Finally, the plan includes, inter alia, a promise to reduce the use of buses running on fossil fuels for the addition of buses running on electricity.

Posted by Tanya Yujelevski  |  0 Comment  |  in Berlin, Development and growth
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Real estate investors in Germany are trapped between two opposing trends

While Berliners are pushing for a referendum to lower rents, investors are in no hurry to leave the market

On the one hand, trends in the global economy indirectly lead to the fact that the annual interest rates remain low and the financing conditions in Germany are very attractive.

On the other hand, due to significant increases in rental prices throughout the country, residents continue to try to apply pressure against large companies that own a considerable number of housing units in order to ease the rent burden.

Recently, it has become increasingly difficult to ignore the atmosphere of a trade war hovering over Washington and Beijing, which has a great impact on the world economy, and Germany is no exception in this respect. In the current situation, many international giants are experiencing new restrictions such as imposing a customs duty of 25%, fearing the immediate future and therefore exercising more caution in other arenas.

This could mean that existing agreements or future transactions will not materialize. It is a matter of time before Germany, as a giant exporter of machinery and industry, will feel the consequences.

Accordingly, many economists are forced to change their prognosis for the coming year for Germany. The stock market in Germany took this into account and for a time real estate stocks experienced a certain decline, but since then they have strengthened and returned to the upward trend. If the ECB had to change its forecasts so abruptly downwards, it probably will not raise interest rates quickly.

In contrast to this positive trend for German real estate investors, there is a trend that is rapidly gaining momentum – the local tenants are unwilling to remain silent in the face of the drastic rise in prices in the real estate market, and therefore call on the government to intervene.

According to them, tools designed to protect consumers in Germany are no longer enough, so waves of protest have recently swept cities such as Berlin, Frankfurt and Munich.

The main call is heard against the huge companies in Germany that hold large amounts of apartments and do not allow the lowering of housing prices, and the request to the government is to return to its ownership apartments from companies that hold more than 3000 housing units. Public unrest in recent months has reached a level where politicians find it difficult to ignore it, which could hurt the giant companies including Deutsche Wohnen, Vonovia and Akelius, whose common market share is 33 billion euros.

Therefore, with the relatively optimistic forecast in the area of interest rates, it must be taken into account that today’s public resistance is well organized and ready to defend its rights.

Posted by Tanya Yujelevski  |  0 Comment  |  in Berlin, Development and growth
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Elderly housing: a real estate market in Germany that hasn’t been fully explored

The population in Germany is growing older. This is due to a combination of factors such as low birth rate and improved medicine that is constantly improving life expectancy.

And while most of the retiring generation is living in their own housing being assisted by family members or professionals, 29% of them (as of 2013) are moving to specialized nursing homes. In addition to that, the socio-economic status of the currently-retiring population creates a previously unexplored demand for more luxurious housing.

The baby boomers generation born in Germany between 1955 and 1969, and it currently constitutes the population segment that drives the demand for better solutions for elderly housing. This generation grew up during the post-war economic expansion and it has been raised on values of individualism and self-reliance, and as a result they are considered to be relatively well off in terms of finances.

Therefore, in case they opt for assisted living facilities instead of an at-home solution, they are able to afford a more luxurious option that is currently quite scarce on the German real estate market.

Investors tend to rely on payments from German insurance companies for building such housing since it is very reliable and easily predicted. When, however, an elderly housing complex offers more services and amenities than required by law, it is up to the customers to pay for those extras and the investors are fearing the risk.

At the same time the demand for such facilities continues to grow, creating a gap in the market that has not been filled yet due to reluctance of both German and international real estate investors. Thus, it might be a good time to keep up with the demand and offer a more varied supply of elderly housing in Germany.

Posted by Tanya Yujelevski  |  0 Comment  |  in Berlin, Investing in the city

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