German Federal Elections 2017 and Berlin Property Market

German Federal Elections 2017 and Berlin Property Market

The German Federal elections will be held in on Sunday the 24th September 2017 to elect the members of the Bundestag and as things stand now, the CDU/CSU, led by Angela Merkel, have maintained a double-digit lead over the Social Democratic Party (SPD) since opinion polling after the 2013 election.

However earlier this year the gap seemed to close substantially due to an initial surge in support for the new SPD leader Martin Schulz.

The SPD thought that by electing the reported ‘charismatic’ Martin Schulz, they could dent the popularity of the German Chancellor Angela Merkel who has been in office since September 2005. However there has been no such ‘popular wave’ towards the rather dull Mr Schulz in recent local state elections in North Rhine-Westphalia, Saarland and Schleswig-Holstein where Merkel’s CDU won all three.

Whether one can extrapolate these local victories onto the federal level is the question everyone is asking.

For those thinking of investing in Berlin Real Estate, the results of the up-coming election are important and there seem to be two emerging views as to how the results or the impact of political uncertainty [or stability] could affect the German and Berlin property market.

Optimism or a Reserved ‘hold’ attitude to the possible election results?

An optimistic view about Berlin and the up-coming election is presented by Carla  Passino writing on-line for the American ‘Forbes’ in an interesting article entitled ‘Why Berlin is Europe’s best place to live, work and buy real estate’.  A short excert from the article; “He sees this as a sign of the Berlin market having matured: “It has really grown up. It’s very liquid, very secure and transparent, with property prices that are very stable or increasing—it’s a very healthy environment to be in. Five years ago, Berlin was seen as an emerging city but now it really is a core market where people like to place their money, like to work, like to move their companies and like to be in.”

While a more contemplative view can be found in an article entitled ‘Upcoming European elections unnerve real estate investors says report’  – an online article appearing on the British FTSE Global Markets and reflects a somewhat subdued ‘hold’ attittude. The article stated: “The majority (56%) European real estate investors say they will review and most likely delay plans to sell property assets in light of a French presidential election victory for far Marine Le Pen’s party, according to new research from Intertrust. Moreover, half (48%) of real estate investors said they would be forced to rethink their disposal strategies depending on the outcome of the German Federal Election on 24 September.”

Property investors, whether they be large international investors or small local players, anyone buying real-estate must make do with the vagaries which political change can and does provide from time to time. In Germany and Berlin this is no different than elsewhere.

While not entirely detached from politics is the question of interest rates which could directly affect Berlin’s property market in the coming months. They are and have been very low despite continuing speculations of  imminent hikes, however if the ECB increases them then the present boom may well come to an end.

I will end this article with a quote from the more optimistic Forbes article;“Whatever happens, there will be moderate changes. [If Schulz wins] I do see a little bit of a danger for the real estate industry of things becoming over-regulated. However, Berlin already has a left-wing [administration] and investors and developers in the real estate market do not seem to be afraid.”