In September, we will have one new member to the team, Marleen Maier who will lead on general administrative points regarding new letting and tenant matters. In addition, Mat from ProVenture has joined me this month to support on growing the business and communication. Mat is an active investor in the city as you know, and has some valuable experience to bring, giving advice on what things investors look for in getting the service right for investors from overseas. One of the first tasks Mat will be supporting me in is the quarterly property inspections we conduct to your property. This is an important check on your investment and Mat will accompany me on these inspections, looking for investment potential and maximising your property whilst I look for property maintenance and developments. Towards the end of the year, we will be looking to welcome new members to the team as we grow, focused on management of your property and rent collection.
Economy in Leipzig
Leipzig Tourism Up
Visitor number to Leipzig for tourism and business climbed 4,7% year on year, with a big increase in visitors from the USA and UK who were the biggest groups to visit the city. The Leipzig Council have many programmes to encourage tourism and business travel to this exhibition and trade centre of Germany, and these efforts are paying off. A number of new hotels in the centre of Leipzig have sprung up in the last 12 months to take up this extra demand.
Capital Magazine Ranks Leipzig 4th in Germany for Economic Output Growth
The East is catching up substantially, the most recent ranking of the cities business magazine "Capital" make it the first time three East German cities are in the top ten. Leipzig is the top East German city, ranking at 4th [Hamburg is No 1].
Leipzig, the biggest climber in the survey by 15 places, has focused on logistics and automotive industries and is predicted to increase its economic output by a fifth. While the population is expected to grow by 7.2 percent, according to the study new jobs will be created that will allow the purchasing power per person increased by a tenth.
Perhaps the most fiercely fought over title for any city in Germany is "Train Station of the Year". This coveted title has been awarded to Leipzig in 2011, the biggest train station in Germany. The judging panel had to trudge around 2000 train stations who entered the competition, marking the stations for pages and pages of criteria. Anyone who has been to Leipzig station will see why it is No 1, and a real confident welcome from the city to folk arriving by train.
Feature – Property Maintenance
To ensure your property enjoys the best rents in the market, and stays problem-free, careful property maintenance and developments are necessary throughout your period of ownership. For some buildings, this may simply mean that planned works such as boiler maintenance and simple fixes are carried out in a timely manner. Other properties may require more intensive works at the start of ownership, particularly if taken on from a less-than active investor. The link below takes you to a short article on this topic.
Property Maintenance (PDF Download)
Top Tip – Setting Rent Levels
No investor wants their property having empty units sitting for any extended period, and rents that are paid should match the market levels. As you know, rents for commercial and residential property are set per square metre and have levels for the so-called warm and cold rent. But how would you find out what the current market levels are? Perhaps if you have recently purchased your investments, the sales agent gave you some guidance to these levels. But perhaps it was a while ago now since you made your investment. The attached briefing notes gives some tips for you to use the internet to get a very good handle on what your property should be marketed at for rental, and will help you guide us to your ideas with marketing for new tenants and also reviewing existing tenant rent levels.
Guide to Setting Rent Levels - (PDF Download)
Letting Focus – The District of Schleussig
As a regular feature each month, we will select a district of Leipzig and discuss rental activity and levels in the area. This month we will look at the in-demand suburb of Schluessig, to the West of the city and nestled between the Clara-Zetkin Park and its bigger neighbour Plagwitz to the West.
Well, the story of growth in Schleussig has been quite remarkable over the last 5 years. The city has grown in population steadily during this period and this suburb has really benefitted from this increased demand. Initially, growth came as tenants were increasingly priced out of the district across the park, Sudvorstadt. Tenants came across, many young families and professionals, for the slightly lower rents but the same proximity to the leafy park area. Rents per sqm for a typical 60 sqm apartment around 5 years ago would have been 4.2-4.5 Eur per sqm, with a balcony slightly more. Rents have risen steadily for the past 5 years, and the suburb has matched the rent levels seen in the other prime areas of the city to a great extent. Following this trend of increased rents has been an improvement to the commercial offerings and general quality of life in the area. Small cafes and restaurants and boutique clothing shops have opened along the main streets of Konneritz Strasse, and also nearby the Canal off streets like Industrie Strasse. The only problem with the area, and it is an increasing one, is the lack of parking. There are very few dedicated parking zones so on-street parking is a nightly battle for returning commuters to the city.
As to the market now, new tenancies today are completed very quickly, often with competition from tenants to secure a property by either paying an increased rent or claiming an early move in date to motivate the landlord to accept the agreement. Rent levels for a typical 60 sqm apartment are at the lowest around 5 sqm for a property on the main road with no balcony, rising to 8 Eur per sqm for property with a balcony in close proximity to the parkland or canal. As an increasing number of apartments are being sold to owner-occupiers in this location, and the lack of space to build new units, the supply of rental stock can only be tightened. Investors in this area should therefore enjoy great demand for any apartment which becomes available for rental, and rental levels for existing tenants should be monitored regularly to ensure they keep pace with the market. Finally, for investors in this area looking to the future, single apartment prices are generally now above 1200 Eur per sqm, and up to 1700 Eur per sqm for quality property. This could give options when it is time to sell the property, whenever the time comes.
Next Month's Issue
Next month's issue will include updates to the local area and the economy plus an update on our new IT property management system we will be trialling soon,
Do get in touch with any topics that you would find of interest, and we will be sure to include them.