Taxation

Tax incentives given to German taxpayers are being reduced to 40%, bringing down the value of many properties. As buyer rebate/incentive percentages continue to fall, so will the market value of real estate in Germany.


The Bureaucracy

The market factors, which point to a future decline in prices, are compounded by the bureaucratic red tape associated with the perfecting of title. Hundreds of thousands of claims have been filed with the “LAROV”, which is the Office for the Regulation of Open Ended Property Questions, swamping an already understaffed administration. Not surprisingly, the bureaucratic process is extremely time-consuming, a problem which: (1) delays the liquidation of the property; and (2) allows negative market forces to erode values further.

In sum, economic and political factors are causing potential investors and speculators to re-evaluate and readjust their portfolios, resulting in a slowing of investment in commercial and residential projects. Accordingly, property owners who do not sell in the current market risk loss in equity if market prices continue their present trend.

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