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Buying a neubau apartment in Leipzig Zentrum Sud

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Posted

Hello there

We are looking to invest in a property on a very nice street in zentrum sud, Leipzig - a neubau apartment 139 metres, not cheap! With own private garden, floor to ceiling doors etc, really nice.

Beautiful apartment, in a lovely location overlooking clara zetkin park. Can anyone give me advice on long term investment value of property in Leipzig and in particular this region of the city?

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Posted

My suspicion is that new houses tend to lose their value, in a similar way to cars.

My justification: not a lot of difference in price between a 1990's and 1950's house price at the moment.

That said, I would prefer to live in a neubau, but if it was an investment I would only look at it if costs could be recouped in a relatively short time period (less than 20 years).

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Posted

Since you refer to an investment, I wonder if you are wanting to rent it out.

Some say Leipzig is one of the latest "In" cities in Europe, so maybe i's going to grow. But I recently saw a documentary on the German real estate market where Leipzig was featured and potential tenants were getting appointments to view apartments by themselves, no Makler was involved (because nobody was willing to pay for their services), and the prospectives were saying things like "Well, if you change the kitchen, we'll likely take it". Tends to suggest that for landlords, Leipzig is difficult.

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Posted

The property market is actually pretty healthy in Leipzig and Dresden at the moment - though the time to buy was supposedly last year.

http://immobilien-kompass.capital.de/wohnen/leipzig/:zentruminnererring-75/portrait.html#karte

("Das Zentrum gehört zu den Vierteln, die in Leipzig auch in Zukunft die Preisobergrenzen setzen werden. Die Nachfrage ist höher als das Angebot.")

http://www.wohnungsboerse.net/immobilienpreise-Leipzig/7390

http://www.handelsblatt.com/finanzen/immobilien/ratgeber-hintergrund/trendviertel-2012-viel-haus-fuer-wenig-geld/6583850.html

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Posted

Germany is traditionally no place for anyone looking to make capital gains. Property prises only rise, if at all, in local markets and then not hugely or sustainably. Germany is not the UK.

Having said that, if you were looking at buy to rent, Germany IS a rental market and interest rates are still low, so if you think you can rent out your flat at a decent return, it may be worth it. Do make sure you do the sums correctly though.

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Posted

I agree with the "not sustainably" part, but over the last few years there have been some large rises in property prices in Leipzig and Dresden. Ideally you should probably already have bought something a couple of years ago, though.

From my last link above the highest rise I see is this:

Kaufpreise für Eigentumswohnungen in den Trendvierteln

Seehausen

Veränderung 2011 tu 2010: +26,2 Prozent

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Posted

Thanks for your responses. It is a beautiful modern style block on one of the nicest streets, schwaegrichsen strasse..

I will look into rental prices in that area some more, but from what I have seen so far the rents in that spot are far more per sq metre than what we would be paying..

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Posted

Plus, is this is a ridiculously oversimplified way of looking at things, but if we are here for the next 5 years (which we will be) we would be paying at least 1K a month (prob more like 1300) in rent for all that time anyway, so we would be better off paying 60 batches of 1K into a property of our own?

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Posted

@AncientBrit - The link you have posted also shows a more recent set of data (2011) from a more reliable source (Statistisches Landesamt) showing a lower population prognosis than the Bertelsmann numbers you decided to copy. Do you have a hidden agenda?

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Posted

If you're looking German property from an investment point of view than you need to view more in terms of income and less in terms of capital gains as house prices tend to lean towards being flat. Having said that the most important thing when buy a place is to view through the numbers not through emotions. Doesn't matter whether you like it or not what matters is running the numbers. Ideally would be to calculate your rate of return but if you're not a numbers guys (and I'm not) that can be tough.

My wife and I are accidental landlords and our tenants just gave notice, and the process went so smooth that we decided to buy several more properties. The other big advantage to German property over other places is the tenant is responsible for most of the costs of running the place and if you hire a makler (which I recommend) they will do most of the leg work for you.

Main thing is the numbers, and here is an example I'm using

House price 60,000€ 20% plus costs down payment = a mortgage of 48,000 and for us a 15 year mortgage (till retirement) will cost approx 350€ plus our portion of the nebenkosten. So as long as the rent/nebenkosten cover that than I'm covered.

This means in 15 years when the property is paid for we'll have a nice (and hopefully) indexed for inflation income stream coming in.

As mentioned before if you're not German I'd highly recommend using a makler, they know the market the rules and will do all the work for you

good luck rob

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Posted

Kaufpreise für Eigentumswohnungen in den Trendvierteln

Seehausen

Veränderung 2011 tu 2010: +26,2 Prozent

That number is based on roughly 100 transactions, it probably just means that one or two new blocks were finished and sold pushing up the average. Statistically that is meaningless.

Ideally would be to calculate your rate of return [...]

So as long as the rent/nebenkosten cover that than I'm covered.

So why don't you show us your rate of return? Real examples are always better.

Your example only shows what you can afford to buy not whether it is a good investment.

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Posted

thanks Rob - thats useful.

Our mortgage is 369 plus kitchen etc so a little bit different scenario ..

we have got some advice from an estate agent and she gave us good feedback, saying the value will hold in that region if not rise (a little, perhaps) so we are enthused by that.

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Posted

an estate agent and she gave us good feedback, saying the value will hold in that region if not rise

And you listen to what a real estate agent has to say??? What did you think she was going to tell you?

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Posted

immobilienscout current rental offers (with no other filters set, other than provisionsfrei):

Munich

1421 Wohnungen available, 337 are provisionsfrei

Leipzig

7718 Wohnungen available, 5827 of them provisionfrei

Values may well be rising, but not at a rate to necessarily make your investment in an apartment to rent out a profitable venture for some time. And using a Makler in Leipzig likely means you'll sit on your property for some time.

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Posted

This chart is an analysis of real estate offers in Leipzig on Immowelt.de. It is of course not necessarily a perfect image of the prices actually payed but it is almost real-time and clearly shows no trace of rising prices.

post-10696-13826937158213.png

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Posted

Plus, is this is a ridiculously oversimplified way of looking at things, but if we are here for the next 5 years (which we will be) we would be paying at least 1K a month (prob more like 1300) in rent for all that time anyway, so we would be better off paying 60 batches of 1K into a property of our own?

You wouldn't be putting the money into the property, you'd be give it to the bank. Only a very small percentage of it (probably 1% depending on how you set up the mortgage) would be paying back the house.

I would definitely not buy property in Germany, and certainly not in Leipzig, if I was only going to stay 5 years. Getting the money back you put into it (excluding your mortgage payments) is rather unlikely. Costs associated with buying a property here are normally around 10% of its value. The chances of it going up 10% in the next 5 years to cover this are probably not great.

Also, the market is not fluid like in the UK/US etc. It could take you a long time to sell a property here. Financially, there is a lot less risk in renting. You might come out ahead by buying, but there is at least the same chance you'll come out with a loss, and in the east of Germany, this could be a substantial one.

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Posted

@AncientBrit - The link you have posted also shows a more recent set of data (2011) from a more reliable source (Statistisches Landesamt) showing a lower population prognosis than the Bertelsmann numbers you decided to copy. Do you have a hidden agenda?

Huh?

What hidden agenda could I possibly have?

I just live here and certainly don't work for the Oberbürgermeister of Dresden tasked with enticing new citizens to the city.

I don't care whether oscar 63 (the OP) chooses to invest in an apartment here, in Leipzig or indeed in Karl Marx Stadt.

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Posted

Just checking you're not that jobsworth real estate agent Oscar has been talking to.

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Posted

A quick look at my profile would have answered that particular question, I'd have thought. (It's not worth visiting otherwise, though)

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Posted

This chart is an analysis of real estate offers in Leipzig on Immowelt.de. It is of course not necessarily a perfect image of the prices actually payed but it is almost real-time and clearly shows no trace of rising prices.

The equivalent page for Dresden, however, shows a rising price per m2 for the bigger & better apartments

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Posted

And the figure for big flats in Rostock is falling... your point being?

Again, you are cherrypicking sets of numbers. You are talking about a difference of €77 based on a sample of 191 flats!

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Posted

The estate agent obviously wasnt one connected to the property developer we are buying from.

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