Germany
by: Manfred Chemek, CIPS
Manfred Chemek - Germany
Geographically Germany is on the western edge of the European Union. But economically it is considered to be the central, key stone state of the European Union having the largest Economy, GDP and population. The largest Economic base for commerce and trade. Natural resources are limited, but Intellectual resources and work ethic are what drives this economy.
Germans generally speaking are very detailed oriented. They want to know all the facts about an investment including the down side and negative aspects. They will respect you more if you do. Most people know some of the history of Germany. Some facts that may be helpful are that Germany started a social security and government health care system in the 1880s under Bismarck which has continued successfully to this day. Until the end of the First World War Germany was governed by an Emperor. The reparations and restrictions following WWI caused the massive inflation and unemployment that brought Hitler to power. Germany rebuilt economically in the 50s and was instrumental in developing the European Union. Communist Eastern Germany was unified with Western Germany in 1990. Part of the old Germany before 1945 remains as part of Eastern Poland. There was a justifiable feeling of guilt since WW II. The scars and feelings of remorse for the victims of WW II remain, but since the success of the World Cup Soccer events held in Germany in 2006 public pride in Germany and displaying and waving of the flag has returned. This is useful to know in dealing with Germans. As always treat everyone as an individual and with respect, but understand some of the underlying general dynamics. Religion, Southern and Western Germany are predominantly Catholic, Northern and Eastern Germany are predominantly Catholic. They make up 70 % of all religions. Muslims 4%. There are large foreign ethnic groups that have come to Germany for Economic reasons; the largest group is from Turkey.
GDP about $ 3 Trillion. GDP/Capita $ 35,000 4th largest economy in the world.
Manfred Chemek
(USA, China, Japan, Germany). GDP 1.8% growth in 2008, expected to be flat in 2009. Population 82 Million slightly negative population growth – 0.05 %. Excellent savers, saving about 20% per year. Highly educated 99% of the population. Generally speaking travel a great deal and are excellent candidates for overseas second homes and Investments World Wide. For more details on Germany or updates go to the CIA World Fact Book Web Site.
www.cia.gov/library/publications/the-world-factbook/geos/gm.html Germany has a parliamentary Government similar to the UK. Usually a coalition of parties are in power. Conservatives are the CDU/CSU their leader Angela Merkel is the current Chancellor, elected in May of 2004. Next largest party are the liberals SPD Social Democratic Party, Centrist is the FDP, the Greens and the left party. There will be new elections on May 23, 2009.
Regardless of Socialist or Conservative leadership the government is generally pro business. There are no restrictions on foreign ownership or repatriation of money.
Germany has no Capital Gains tax if property is held for over 3 years to avoid flipping and speculation. There are numerous trade agreements including with the USA.
There is single payer health care coverage for all. Reducing the cost of health care to about half of what it costs in the USA, making German Business more competitive. There have been a number of cost cutting measures by both the liberal past government and the current conservative government under Angela Merkel to cut government spending and social costs. These seem to be effective. Largest GDP in Europe, 4th largest economy in the World.
Unemployment is still high at 7.8% but this is misleading because it includes the vast number of Unemployed in Eastern Germany, which was not competitive from its communist days and still has areas of 20% unemployment. Conversely there are areas of almost 0 unemployment in parts of Western Germany like the state of Bavaria. The modernization and integration of the eastern German economy is a costly long-term process, with annual transfers from west to east amounting to roughly $80 billion. Corporate restructuring and growing capital markets have set strong foundations to help Germany meet the longer-term challenges of European economic integration and globalization, Germany’s export-oriented economy has some difficulty now because of its strong export base and traditionally strong positive trade balance. This should improve once global demand improves. The Euro has continued to stay strong vies a vie the Dollar at about $1.30 to 1 Euro.
Germany has an excellent infrastructure of roads, rail, water and air transport. The total infrastructure is excellent, water, power, sewer, and communications. There could be a problem in the future because most of the natural gas used in Germany comes via pipeline from Russia. Petroleum has to be purchased on the world market no domestic production. There are a lot of local and national restriction on land use, because of the size of the country and population density. Political influence by the Green and Socialist parties.
But generally still pro business, few restrictions on foreign ownership or JV’s.
Real Estate has no licensing requirements. Almost all industries in Germany require a state license from painter to bricklayer, auto mechanic to doctor. Not real estate.
Consequently 60% of home sales are for sale by owner. The remaining 40% half or 20% is done by banks and 20% by professional realtors. The largest Real Estate Trade organization is the IVD Immobilien Verband Deutschland with head quarters in Berlin. www.ivd.net
