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Published by the CIPS Network of the National Association of REALTORS®
Second Quarter 2002
The Euro: A View from Germany
By Hans Eberhard Langemaack
Two month after the introduction of the euro it is too early to rate the effects of the common European currency on the real estate markets. Reliable surveys will not be published before early 2003. In the run-up to the introduction of the euro the trade expected a higher demand for real estates, but it did not occur.
At present the Europeans show confidence in the new currency. Existing contracts kept their validity. The conversion of liabilities into euro did not cause any difficulties. Banks automatically converted payment orders and debit entries. Short-term rises in prices in the sectors of consumer goods and services will sort out soon due to the though competition in this sectors.
The property market in Germany is characterized by a restrained attitude on behalf of the consumers, which is caused by a measurable uncertainty towards job opportunities and income. Prices for property, houses and flats in Germany have been almost stable during the last year.
On a long-term basis, the euro will further open the property markets for cross-border transactions. New consumers will be attracted by the direct comparability of prices and offers. In Germany a higher interest in foreign property investments can be observed which in parts seems to be an effect of low expectations on the stock market. Office buildings enjoy the greatest popularity among investors followed by mixed portfolios and retail property. But these kinds of investments are chosen for their higher interest rates. There usually exists no direct relation or interest in the property.
An immediate effect on the property market through the common currency might take place in the area of holiday flats and houses. But the main part of cross-border property transactions will remain with the sale of companies and commercial property-a trend that will be further strengthened by the globalization of business.
In general it can be stated that the European property market is still and will stay mainly a national if not regional market. The fact can be easily understood considering that demands for real estate emerge and are met on the spot. Different conditions and habits within the European community concerning housing and property as well as greatly varying laws and regulations for property, contracts and construction works still stand in the way of a common property market. A number of national laws and regulations are still suited to seal off the national markets.
The European Union strives for a standardization of the laws and regulations. This was proved by a number of regulations set in place by the European commission but an effective standardization will certainly still take another couple of years.
On the part of the real estate agents and the property business first steps for cross-border information and business exchanges are taken. Through the European organizations, such as the European Council of Real Estate Professions CEPI (www.cepi.be) and its subsidiaries the European property Agents Group (EPAG) the Confédération Européenne des Administrateurs des biens (CEAB) and The European Group of Valuers Associations (TEGoVA) efforts are taken to establish European standards and to improve the knowledge of estate agents and property managers as well as valuers of different markets. CEPI represents more than 100.000 professionals. Its purpose is to study and inform its members of all regulations current in the European Union affecting the real estate sector. Experts work on a standardization for the valuation of property. Which time these contacts will take to result in lively business relations and commonly accepted standards remains to be seen. |
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