After the boom: real estate trends 2023

Good morning dear readers,

In the past 15 years, it has been incredibly easy to earn money with real estate in Germany – provided you have at least 20 percent equity. Then it was just a matter of finding any property (everything went up in price anyway), borrowing the remaining purchase price from the bank at almost zero interest and sitting out the ten-year speculation period. You could already collect the profit from the sale. Tax-free, of course, and social-democratic finance ministers have never tampered with this privilege.

If you, as a real estate investor, now feel compelled to point out your high entrepreneurial risk, your lived social responsibility towards your tenants… that’s clear. But we’re on our own here.

The golden age of the real estate market is now over. Mortgage rates have tripled in 2022, and asking prices have fallen in many places, as our chart shows.

If you still want to earn money with houses and apartments, you actually need commercial skills: For example, knowledge of lucrative market niches and the right timing for entry. For example, energy-optimized properties are largely stable in price, drafty old buildings in the country have recently fallen into the category of difficult to sell. And cash-strapped property developers have recently started bargaining.

Our weekend title shows seven real estate market trends that buyers and sellers need to know about in 2023.

Now subsidized back: Federal Minister of Economics Robert Habeck wants to have his “own European industrial policy agenda” respond to US President Joe Biden’s multi-billion dollar Inflation Reduction Act (IRA). Specifically, Habeck proposes a “European program for the promotion of transformation technologies”. According to Handelsblatt information, this emerges from an internal, five-page paper from the Ministry of Economic Affairs.

Commission chief Ursula von der Leyen had already proposed a solidarity fund financed with EU community debt on Sunday. However, the Ministry of Economics is skeptical about it. According to Habeck’s paper, the additional funds “must be raised primarily nationally”.
My impression: Two questions are often mixed up in this debate that urgently need to be kept separate:

1. Does it make sense to provide more state support for the development of green industry? You can talk about it – but the decision should be made independently of the IRA.
2. Should producers from their own economic area be given preference, as the IRA envisages? Absolutely not, because then you don’t get the world’s best solutions for tax money – not to mention the violation of trade rules.

Holger Görg, President of the Kiel Institute for the World Economy, wishes one thing above all: “Europeans should now keep a cool head.”

The IRA is far less dangerous than von der Leyen assumes. The 370 billion euros in subsidies correspond to less than 0.2 percent of US economic output.

The planned 49-euro ticket for German public transport has come a big step closer. Yesterday evening, the Federal Government and Prime Minister agreed on joint financing, the network card for buses and trains should now be introduced “if possible by the end of the first quarter of 2023”, said Lower Saxony’s Prime Minister Stephan Weil after the agreement. Berlin’s Governing Mayor Franziska Giffey does not expect an introduction until May.

When journalists write about female entrepreneurs, managers or politicians who are the subject of criticism, they would do well to take an additional step of reflection: Would one take this criticism just as seriously in the case of a man? For example, when Carla Kriwet resigned from her top position at Fresenius Medical Care after only two months on Monday, the company said: She stepped on too many people’s toes and failed because of her lack of political skills. Would you have interpreted the same behavior in a man as a healthy assertiveness?

Conversely, it must not be the case that we treat women in high positions out of misunderstood solidarity. And so the Handelsblatt today – after careful reflection – is dedicated to one of the most powerful managers in the German economy: Simone Bagel-Trah, head of the supervisory board at the detergent, cosmetics and adhesives group Henkel.

Business and industry circles accuse the 53-year-old of neglecting long-term personnel planning for board members – which is part of the primary task of a chief inspector. Henkel denies the allegations. However, four weeks after the announcement of the imminent departure of board member Jan-Dirk Auris, the group has still not presented a successor. Until the end of January, he will be responsible for Henkel’s adhesives division, which accounts for half of Henkel’s sales and 60 percent of its profits.

It’s not the first time that Bagel-Trah, the great-great-granddaughter of the Henkel founder, hasn’t had a lucky hand when it comes to personnel planning. After the departure of ex-Henkel boss Kasper Rorsted in the summer of 2016, she installed the then cosmetics director Hans Van Bylen. But he had to stop after three unlucky years as boss.

In corporate circles it is said: Bagel-Trah is now definitely weakened. The next few weeks would show whether she still had the trust of the Henkel owner family.

And then there is the designated co-editor-in-chief of “Bild”, who, according to the will of his future employer, should take a drug test before starting work. This is what the colleagues from “Spiegel” report. Involuntarily one asks oneself: Is that still up to date – drug use as a prerequisite for access to the top post in a tabloid newspaper? We’re not living in the 90s anymore!

Then you read on and are reassured: The previous “Focus” boss Robert Schneider should prove that he does NOT take drugs. So apparently a completely normal legal protection for the Axel-Spinger-Verlag, if the newcomer to “Bild” should afford any escapades.

I wish you a day that passes every test.

Best regards

Her

Christian Rickens

Editor-in-Chief Handelsblatt