BERLIN COLOGNE DUSSELDORF FRANKFURT HAMBURG MUNICH A guide to investing STUTTGART in Germany ísafördur Saudharkrokur Akureyri Borgarnes Keflavik Reykjavik Selfoss ICELAND Egilsstadir A guide to investing in Germany Introduction | 3 BERLIN FINLAND ME TI HT NORWAY IG HELSINKI FL COLOGNE R 2H SWEDEN TALLINN OSLO INTRODUCTION ESTONIA STOCKHOLM IME T T GH LI DUSSELDORF F IN 0M 3 RIGA INVESTING IN GERMANY R 1H LATVIA E FRANKFURT EDINBURGH IM T T LITHUANIA GH DENMARK LI F R COPENHAGEN VILNIUS BELFAST 1H MINSK IRELAND HAMBURG DUBLIN BELARUS IME HT T LIG F IN HAMBURG M 0 UNITED KINGDOM 3 WARSAW Germany is one of the largest Investment Markets in Europe, with an average commercial AMSTERDAM BERLIN KIEV MUNICH NETHERLANDS POLAND transaction volume of more than €25 bn (2007-2012). It is a safe haven for global capital and LONDON BRUSSELS DÜSSELDORF COLOGNE UKRAINE offers investors a stable financial, political and legal environment that is highly attractive to both BELGIUM PRAGUE STUTTGART FRANKFURT CZECH REPUBLIC domestic and international groups. LUXEMBOURG PARIS SLOVAKIA STUTTGART BRATISLAVA VIENNA MUNICH BUDAPEST This brochure provides an introduction to investing in German real estate. Jones Lang LaSalle FRANCE AUSTRIA HUNGARY BERN ROMANIA has 40 years experience in Germany and today has ten offices covering all of the major German SWITZERLAND SLOVENIA markets. Our full-service real estate offering is unrivalled in Germany and we look forward to LJUBLJANA CROATIA BUCHAREST ZAGREB BELGRADE sharing our in-depth market knowledge with you. BOSNIA & HERZEGOVINA SERBIA SARAJEVO BULGARIA ITALY SOFIA PRESTINA KOSOVO Timo Tschammler MSc FRICS SKOPJE HAMBURG MACEDONIA International Director ROME TIRANA MADRID ALBANIA Management Board Germany PORTUGAL Lisboa (Lisbon) SPAIN GREECE Office and Industrial, Jones Lang LaSalle Setúbal ATHENS BERLIN Germany enjoys a thriving, robust and mature real estate market which is one of the DÜSSELDORF cornerstones of the German economy. Knowledge of the details of the law, the real estate market COLOGNE and its players has been one of Clifford Chance’s core competences for decades and forms the basis of the most experienced, integrated and largest real estate legal practice in Germany. We will help you achieve your goals and minimise legal risks during the whole life cycle of your FRANKFURT real estate investments, wherever your investment strategy takes you. Cornelia Thaler Partner Head of Real Estate Germany, Clifford Chance STUTTGART MUNICH German Overview | 5 OVERVIEW OF COMPETITIVE ADVANTAGES GERMANY OF GERMANY GERMAN ECONOMY OVERVIEW 10The variety of opportunities and competitive occupational costs make Germany an excellent destination for investment. Germany is the strongest economy in Europe and one of the main trading partners include not only European countries such 1 Germany has the largest GDP and population in Europe with and strongest in the world. Small and medium-sized largest worldwide. It plays a leading role in the European Union as France, the UK, Italy, and the Netherlands, but international four cities having a population of greater than 1 million. enterprises (SME) are also an important part of the (EU) and benefits from the customs duty exemptions that this markets such as the United States, China and Russia. German economy with almost 60 % of all employees are membership provides. This membership allows Germany to take 2 First Class Infrastructure. Germany is Europe’s number working in SME’S. advantage of free trade between the community’s 27 member “Made in Germany” is a pseudonym for quality. This reputation one logistic market. A first-class transportation and states. Germany accounts for 20% of Europe’s GDP (EU-27) and is has been built on the consistent innovation shown by German communications network assures just-in-time delivery. 7 Germany is one of the big three global exporters (alongside home to 16% of the total European Union population. The German companies, making them global leaders in the development of China and the US). This supply-side strength is one of the economy is both highly industrialised and diversified – with equal new technologies. German dominance in the development of new 3 Germany has nine major international airports: main drivers in making Germany one of the top targets for focus placed on services and production. technologies continues to this day; in 2012 Germany had almost Frankfurt/M, Munich, Düsseldorf, Berlin, Hamburg, international investors. twice as many patents approved as France and Great Britain Cologne, Leipzig, Hannover and Stuttgart. The capital city of Germany is Berlin, however Germany combined. 8 Germany has one of the lowest unemployment rates in is a Federal Republic with sixteen “Bundesländer”. Every 4 Germany has highly developed economic and political Europe and worldwide. Alongside this, Germany benefits “Bundesland” has state legislatures, political institutions and Germany is the leading global force in high-tech solutions with legislation, providing the necessary legal framework for from an excellent standard of workforce, due to the quality administration. The federal structure ensures the division of German Engineering being a globally demanded commodity. the protection of investments. of education and vocational training available. authority between the Federal Government and the “Länder”. This dominance looks set to continue with 11% of all university For this reason there are some differences between the graduates having an engineering degree. 5 Germany, based on a 2013 survey of more than 26,000 9 The renewable energy sector in Germany is the most administrative / legislative protocols of the Länder, such people in 25 countries, is the world’s most popular country. innovative and successful in the world. as Building Codes or certain tax levels. From an economic Environmental research and technologies are also an area perspective, this federal structure presents investors with in which Germany will continue to lead. Germany is already 6 Economic diversity; manufacturing and the provision of 10 Liquid Markets. Due to Germany’s federal nature, it has a range of opportunities due to the variety of conditions found established as a global pioneer in developing renewable and services provide two distinct, yet complementary grounds many strong cities; this variety brings with it opportunities across the German regions and cities. environmental technologies and this trend looks set to continue. from which the strong and stable German economy is for diversification (There are 70 cities with more than anchored. The manufacturing sector is one of the largest 100,000 inhabitants). German manufacturing is internationally renowned for its Germany places strong emphasis on sustainability of the quality output and leading-edge design and technology. environment and encourages big companies take part in German chemical, automotive, and machinery & equipment “Corporate-Sustainability” for a healthy world. National targets manufacturing industries are recognised globally. Germany’s are aiming to reduce CO2 emissions by 80% to 60% in 2050. QUALITY OF LIVING SURVEY Rank City Country 1 Vienna Austria 2 Zurich Switzerland 3 Auckland New Zealand 4 Munich Germany 5 Vancouver Canada 6 Düsseldorf Germany 7 Frankfurt Germany 8 Geneva Switzerland Source: MERCER Ranking 2012 A guide to investing in Germany Legal Overview | 7 LEGAL OVERVIEW 1.0 OWNERSHIP 1.2 CONDOMINIUM OWNERSHIP In Germany, ownership title is one of the fundamental individual Condominium ownership is the result of the separation of rights, protected by the constitution. The owner of an asset individual units in a building. Residential properties are such as real estate has the unlimited rights of use, enjoyment commonly held in this way, especially in larger German cities. of the fruits of their asset (rents, natural resources, interest However, this form of ownership is not common for commercial payments etc), disposal, letting, and the right to bequeath to purposes, such as offices (which are usually owned in full someone. freehold ownership). The most common form of real estate ownership title is full Condominium ownership consists of the ownership of a specific freehold title. Of lesser importance is condominium ownership part of the building, usually the rooms of the apartment (Wohnungseigentum), or quasi-ownership forms such as (Sondereigentum), and the co-ownership, together with all other hereditary building rights (Erbbaurechte) or usufruct rights condominium owners, of the communal parts of the building (Nießbrach). The ownership title of real estate assets are always (Gemeinschaftseigentum), such as elevators, staircases and registered in the land register, as are the most important gardens. encumbrances which can rest on real property (such as mortgages). The relationship between the condominium owners is governed by a contract, which governs how decisions relating to the whole of the real estate are reached, and how costs are shared. In larger 1.1 FULL FREEHOLD OWNERSHIP condominiums, there will be condominium administrator in Full freehold ownership is the ownership over a plot of land. charge of managing the affairs of the condominium owners. As a matter of law, immovable fixtures, most importantly buildings, are considered an integral part of the land. Thus, Condominium ownership is freehold ownership, albeit of only a part whoever is registered as the owner of the freehold in the land of a building, and as such can be let and sold on in the same way. register,