Profitable commercial real estate in Germany: apartment buildings, bringing a stable income
Real estate is the most reliable and promising subject for investments, saving and increasing the capital. Leased real estate objects bring a stable income, especially in countries that have a strong economy, for example, in Germany. And because of the rising prices for real estate, including residential one, in course of time the object can be profitably sold.
Buying an apartment building in Germany, or, in German, Mehrfamilienhaus'a, is one of the most popular and safe ways of investing money in real estate for the purpose of saving and multiplying. There was such type of houses in Germany at the end of the XVIII century, when some private entrepreneurs began to buy or build apartment buildings specifically for their subsequent leasing and accumulating funds. Formerly, such houses were called: "revenue houses."
To date, the essence of "revenue" house has remained the same, and it still represents a residential building, consisting of three or more apartments, intended for long-term lease. The prices for such objects depend, first of all, on their location, profitability and technical state.
Certainly, objects in such cities as Berlin, Hamburg, Cologne, Dusseldorf, Munich, etc. are of great interest. However, prices for real estate in such megalopolises meet demand for them and are quite high, which negatively affects the level of return. That is why our company concentrated its work mostly in the densely populated industrial regions of North Rhine-Westphalia, which have the most developed infrastructure in Germany and a reasonable ratio of the price and quality of real estate, providing an attractive level of its profitability.
Many years of experience of our employees, along with their education in Germany in the real estate sector, are undeniable advantages for our customers, ensuring the proper professional manner, in which we conduct our work.
A further advantage for BMG Invest customers is the management of real estate offered by our partner company, which relieves its new owners from possible numerous difficulties in communicating with German-speaking service companies, government services, technical firms, etc.
So, investing financial resources in income-generating apartment buildings in Germany has, in particular in cooperation with our company, a number of advantages:
- thanks to our longstanding activity, we have established relationships with banks, brokers and other suppliers of high quality, profitable real estate objects;
- German economy is one of the strongest and most stable in Europe and in the world as a whole;
- the Law of Germany clearly regulates relations between owners and tenants;
- a wide range of such real estate allows choosing the best option, that meets the investor's requirements;
- high level of demand for leased housing: the majority of Germans, as well as foreigners with a residence permit in Germany, prefer leased apartments (about 60% of the population of Germany);
- a high percentage of housing occupancy factor and income consistency: the tenant in most cases lives in the same apartment for more than 10 years;
- growth in lease rates outpaces the growth of inflation;
- lease of housing is a type of obtaining the best of possible types of income - passive income.
By investing in apartment buildings in Germany with our help, you make the right decision to save and multiply your capital!
Profitable investments in real estate in North Rhine-Westphalia
Our company sells real estate in Germany in one of the richest and most successful federal land of this country – North Rhine-Westphalia.
According to opinion polls, many wealthy foreign residents view certain European countries as a potential place of residence, seek to buy an apartment in Germany and other economically developed states of the European Union. For this purpose, all conditions have been created in this country: a high standard of living, high-quality medical care and education, a stable economic situation, and an excellent infrastructure.
Why real estate in North Rhine-Westphalia is worth choosing?
Attractiveness of this region creates a unique geographical and profitable economic situation. This is the westernmost territory of Germany. On the territory of this federal land there are almost 25% of the total population of Germany, there are 29 large industrial centers with a population of more than 100 000 people. The official statistics data show that more than 27.1% of foreign investment remains in the state of North Rhine-Westphalia. In total, this amounts to 200.6 billion Euros.
Developed economy and industry
Rich mineral reserves, developed metallurgical, heavy, textile and coal industries create a lot of jobs here. Local enterprises generate 25% of Germany's GDP. North Rhine-Westphalia is considered the world's leading exporter in several sectors of the economy. In search of well-paid job, residents from other, less successful territories and other European countries are eager to move here. This creates a high demand for real estate in Germany and determines the high investment attractiveness of the region.
The most prestigious educational institutions
The most successful educational institutions of Germany are concentrated here: students from different countries can be met in Düsseldorf, Dortmund, Bonn, Essen, Cologne, Münster and other cities. A total of 69 institutes and universities have been opened in North Rhine-Westphalia, where more than 600,000 students study annually. This also forms a high demand for housing in Germany.
Opportunities for tourism and recreation
Foreigners are attracted by the rich cultural heritage of this region and excellent opportunities for living in nature, recreation and tourism. There are many historical sites in big cities, unique industrial monuments of the Ruhr Valley and evidence of the Romanesque era, for which many tourists come here every year.
The rivers Ruhr and the Rhine have excellent conditions for fishing and water sports, and there are excellent ski runs in the mountains; in the picturesque forests tourist biking and hiking routes are laid. This contributes to a stable demand for the lease of real estate in the territories, remote from major cities.
Real estate to buy in Germany
The cost of real estate here still lags behind the capital region; therefore buying can be a very profitable investment. This will allow securing your savings from inflation, bring a constant good income from leasing it and provide a comfortable future for children and grandchildren.
In our catalog there are offers for every taste: for living in a large industrial center or in a quiet calm town, for a successful business or leasing of real estate. Well-established infrastructure, high standard of living of local residents is the best proof of the correctness of the decision to buy an apartment in Germany.
Safe investment of money
What associations does the word "safety" evoke? Surely one’s mind is crossed with something solid, determined, strong, powerful. Can capital investments yield the same solid and large income? Can investments be protected - as the people say, be "as safe as the Bank of England"? They can, if this Bank of England is a wall of the house. This means investments in real estate.
Of course, there are also risks when investing money in real estate. For example, changes in prices, taxes, payments, unstable political situation. In the end, there may be a fire or a natural disaster. Insurance. Can you foresee and avoid these troubles? If you competently come down to the point of choosing a real estate object, any risks can be minimized, and making really safe investments becomes possible.
Investments in real estate in developed countries are considered a safe investment of money; they are becoming increasingly popular in Europe. "Concrete gold," as they say in Germany, is really strong and powerful, when it comes to the guarantee and stability of income provision.
What determines the safety of investing money in German real estate?
Each investor, even if he is from another country, can be sure that his property, assets in Germany will be secured. Regardless of the political will of the leadership, which at any time is at the helm of the country, the Law of Germany strictly protects the interests of private owners.
The country's economy is considered the strongest among European countries. The world crisis, which unbalanced the economic situation of more than one country, was relieved by Germany relatively easy. The real estate market was almost not affected, housing and infrastructure objects demonstrate positive dynamics, adding to the cost each year. A stable economic situation allows us to talk about the safety of investments in German real estate.
Speaking about safe investing of money, it is necessary to take into account not only the assessment of the overall political and economic situation, but also the risks of accidents - fires, natural disasters. In Germany, an insurance system is smoothly running, each real estate object is insured for a large sum, which not only local citizens, but also foreign investors have the right to receive.
Safe investments are the investments, made after careful analysis of all data that affect the profitability of an investment project. Investors in Germany receive a maximum of information about the investment object, which makes it possible to accurately predict the return of real estate.
Safe investments of money are investments that can be returned at any time. This opportunity is difficult to access for owners of deposits, members of open-end funds. Owners of real estate in Germany due to favorable market conditions can at any time sell their real estate objects, returning you the invested funds as a hundredfold.
The guarantee of safe investments of money is the thoroughness and pedantry, inherent in the Germans when checking documents. Preparation of all certificates, verification of data on the real estate object takes at least 1.5 months. This approach allows you to completely exclude discreditable practices, fraud in deals with real estate.
The way to calculate the profitability of lease
One of the factors influencing the decision to purchase real estate in Germany is the volume of profitability, which is calculated as the ratio of the annual rental income to the value of real estate object. How to calculate the annual rental income from the lease?
The German specificity of the lease relationships between the tenant and the owner of the apartment is that there are two definitions of lease:
1. Basic rent (Kaltmiete) - this is the basic amount of lease or apartment rent (fee for using the premises).
2. Rent including heating (Warmmiete) - is the full amount of lease payments, which includes basic rent and utility payments (Nebenkosten).
The scheme for calculating lease payments is as follows:
1. The tenant is interested in the amount of rent including heating, since he must pay the apartment owner this amount. Utility payments for the current year are paid in Germany not upon use, but according to the economic plan (Wirtschaftsplan) for the previous year, approved by the annual meeting of the owners of apartments and house management. In other words, utility payments are paid as an arithmetic mean. Once a year there is a recalculation of payments, i.e. actual costs are compared with the planed ones according to the meter readings, and the tenant either pays the difference, or receives a surplus back. Based on actual payments, a new economic plan is drawn up. Therefore, the size of the profitability of the real estate object, indicated in our catalog, is the current indicator, which may slightly fluctuate during the recalculations, but remains unchanged in the long-term period.
2. The owner of the apartment receives from the tenant a rent including heating, from which the sum of utility payments is transferred to the accounts of the house management. Thus, the owner of the apartment reserves a basic rent. Utility payments (Nebenkosten), paid by the tenant, are also called utility-maintenance payments (umlagefähige Kosten), passed on to the tenant.
3. The owner of the apartment pays for the house management services (Hausverwaltung) and makes contributions to the communal fund (Instandhaltungsrucklage) to the house management account from the amount of basic rent. That is to say, the costs of house management services and contributions to the household fund (reserve fund) are not utility-maintenance payments (nicht umlagefähige Kosten), passed on to the tenant.
4. So, we get, that utility payments + (house management services + household fund) = utility-maintenance costs, passed on to the tenant, + utility-maintenance costs, not passed on to the tenant = housing payment (Hausgeld or Wohngeld). Housing payment is transferred to the account of the house management, which distributes it further. According to the German Tenants Association (Deutscher Mieterbund), a housing payment in Germany is 2 to 3 Euros per square meter per month.
And the annual rental income will be:
Annual income =
utility-maintenance costs, that are borne by the owner of the real estate object (not passed on to the tenant)
Now we explain the components of the housing payment in more detail.
- Public utilities (Nebenkosten) include consumption of cold and hot water, heating, gas, garbage collection, sewerage, television cable, lighting in the entrance, etc., telephone, Internet.
- House management services (Hausverwaltung) Each house in Germany has its own house management. This is a private organization that monitors the maintenance of cleanliness and order in the house, provides public utilities, small and large repairs of the building. The cost of house management services depends on the house in which the apartment is located, and on the volume of services provided.
- Household fund (Instandhaltungsrucklage) is a so-called reserve fund for accumulating funds for carrying out current or major repairs. Decisions on activities to be carried out in the building (for example, repairs, painting of the facade, replacement of the elevator, repair of the playground, etc.) are taken by a majority vote at the general annual meeting of owners and house management. At the same meeting, the amount of contributions to the household fund is also determined. Thus, if the size of the household fund is high enough, it can be assumed that the building expects major repairs, which will lead to an increase in the value of the real estate object. And if the amount of funds in the household fund is small, then, perhaps, major repairs have been done recently. When buying an apartment the amount of contributions, already paid by a previous owner, passes to the new owner automatically.
Where to invest money? How to earn?
Opportunities for investments in real estate will always attract the investors. It should always be remembered that the return directly depends on the magnitude of the risk: the more safe the investment is, the less risk it has - the lower the return is, and vice versa. In modern economic realities, it is real estate that is the instrument that will simultaneously allow the investor to save his capital, diversify investments and reduce risks. In addition, real estate must work, that is, generate income; otherwise investor's investments will begin to bring negative returns related to the content and management of real estate. In other words, real estate should be leased, and permanent lease payments will bring a stable profit.
It’s up to you to decide whether it is worth to invest in real estate or not. Real estate as an investment tool has undeniable advantages: safety, demand and return. Unlike investments in financial instruments, real estate cannot disappear in a second, like investment funds, or depreciate to zero as shares of the companies. Real estate cannot be stolen - this is its great advantage as a way to save the investments. In addition, real estate can be reliably attributed to essential goods, since whatever economic turbulence come, people will always and under all conditions buy and lease housing. And real estate, bought wisely, will bring triple income, namely:
- lease payments from leasing
- capital gains as a result of growth in the value of real estate due to an increase in market prices and improvement in the condition of the object
- profit from the sale of the object at the end of the tenure period
Of course, when investing in real estate there are also risks, that can be minimized if you know how to do this. So, real estate is characterized by low liquidity, i.e it takes some time to turn it into money. In this case it is important to initially buy a liquid object.
The second point is a relatively low return when compared with other investments. It is important to remember that such a level of return is the guarantor of the presence of minimum risks, that is, the equivalent of stability, safety and protection of investor's investments. In addition, the return can always be increased: to buy real estate with loan proceeds, optimize taxation, increase the cost of the object through necessary repairs, etc.
Speaking about real estate abroad, the group of risks may include the distant location of the object and the need for management and maintenance of the object in another country. Choosing a country, in which an investor buys real estate, it is necessary to take into account both its economic and political situation, as well as prospects for development. Germany, in this case, is one of the few islands of stability and predictability in this regard. And the risks of management and maintenance of real estate can be practically leveled, if you transfer these functions to the trust management of a professional management company.
Stages of investment
One of the most important and often asked by investors is the question of how the real estate is being purchased in Germany. The detailed answer to this question for each specific case will be individual, since it depends on many factors. The general procedure for investing is presented in the table below.
Stage of investment
up to 2 weeks
Investor determines the investment objectives and according to them selects an object from the catalog
up to 5 days
Investor reserves the real estate object, makes an advance payment and concludes a service agreement indicating the amount of the advance payment. From this moment the pre-sale inspection of the real estate by the notary begins.
up to 1.5 months
General inspection and preparation of the object for sale, as well as preparation and execution of the investor's visit to Germany (agreement on all meetings, execution of necessary sets of documents, receipt of loan financing by the German bank, etc.).
Visit of the investor to Germany, which includes:
- inspection of the object;
- opening of a bank account in Germany;
- payment of one-time purchase costs;
- signing of the contract of sale at the notary’s office;
- at the request of the investor, signing of a contract for the services of management company, the services of a tax consultant, the registration of insurance
According to the terms specified in the contract of sale
The notary reserves a real estate object in the Land Register (a unified state register of property rights in Germany) and fulfills all the prerequisites, specified in the contract of sale
According to the terms specified in the contract
The investor fully pays the value of the object after the notary confirms the fulfillment of all the prerequisites, specified in the contract
According to the terms specified in the contract of sale
The moment of economic transfer of ownership is the date specified in the notarial contract, from the moment of occurrence of which all rights and obligations, related to the subject of the contract, are transferred to the investor (incomes, costs, risks, responsibility for ensuring the security of the object, as well as all rights and obligations under contracts, concluded by the seller with third parties (for example, under a lease agreement). The most often the date of economic transfer of ownership is the date of full payment of the value of the real estate to the seller, unless otherwise provided for in the contract.
1 day of the next month after the payment
Receipt of rental payments to the investor's account
up to 3 months
The investor receives an extract from the Land Register, which states that the new owner of the acquired real estate is the investor
Where to invest?
Typically, the investor has a choice where to invest money. However, how to make the right choice which will really preserve and multiply the invested funds? This question is more complicated, especially for a beginner investor. Please contact us. Perhaps our proposals are exactly what you are looking for.
How to earn money?
Modern people in addition to the age-old questions "What to do?" And "Who is to blame?" are concerned about one more – "How to make money?". Considerable efforts are undertaken on finding reliable earnings, decent incomes. Someone is investing in their own education, hoping to find a high-paying position, someone considers it safe to keep deposits in banks, and someone just buys a foreign currency waiting for rate changes. It is worth thinking about those options that really bring real living income at a level sufficient for the issue to disappear forever from the agenda.
One of the most reliable sources of earning money is real estate investment. It is believed that there are certain risks when working with real estate. It is difficult to argue with this, but there are risks and there is an unprofessional approach that can lead to financial failure. These are different things. In other cases, investment in real estate is always a guaranteed receipt of reliable earnings.
Moving to Germany: conditions of temporary and permanent residence permit
Germany is a strong and successful European state that provides a high standard of living for people. Many people are striving to get a high-quality and valuable higher education here, a highly paid prestigious job or even immigrate to this country forever. However, citizens of other states (including Ukraine and Russia) can move to permanent residence in Germany if they have German or Jewish roots or confirmed refugee status. If you do not belong to any of the above categories of persons, your variant may be a temporary or a permanent residence permit in this country. There can be the following grounds for its obtaining:
• Training at German universities (obtaining of higher education and further employment). This option is popular among young people who want to get European education of high quality based on a combination of traditional scientific base and the latest techniques and technologies. The basic requirements for students entering German universities are a basic 12-year education corresponding to the end of the second year in homeland universities, and knowledge of the German language (although the training process can also be conducted in English). Each foreign student after graduation from the university is compulsorily able to find a job in the specialty, and therefore he is allowed to stay in Germany for another year.
• Work and business at the territory of Germany (if there is an invitation from the employer in the first case, and starting capital and a convincing business plan in the second one). Obtaining a residence permit is possible for private entrepreneurs registering a legal entity in Germany.
The German labor market, unlike many other European countries, is rather limited. Unskilled labor of foreigners is not in demand in Germany. Employees with a low level of qualification can expect only for temporary work (up to 6 months), and on the basis of such employment it is impossible to obtain a residence permit. Since August 1, 2012, foreigners who have obtained a higher education outside of Germany can stay in its territory for 6 months in order to find work. In order to apply for a half-year stay in Germany, it is necessary to confirm the obtained higher education and the ability to financially secure oneself during the period of stay in the country, because such visa does not entitle to simultaneously reside and work in Germany.
In addition, doctors and well-known, unique, popular specialists and scientists, representing economic and social interest for Germany, can use the simplified procedure for obtaining a residence permit. Such immigration by the so-called Blue Card of the EU, functioning in Germany since the summer of 2012, is based on the employer's initiative, that is, on a specific proposal for work with an annual gross salary in the amount of 44 800 euros (for specialists in mathematics, new technologies and doctors – not less than 34 944 euros).
- Family reunification (provided that a close relative or husband/wife is a German citizen or has a residence permit). This argument is also spreading for the reunification of the parent with a minor child living in the FRG territory and vice versa.
It is important to note that the acquisition or possession of real estate in Germany is not the reason for obtaining a residence permit, but it can greatly simplify and speed up this process if one of the above reasons exists.
Business immigration to Germany
According to the current immigration laws of Germany, the main conditions for the granting a residence permit through the registration of a legal entity are:
- the feasibility of a business idea set forth in a business plan;
- entrepreneurial experience of the applicant;
- entrepreneurial activity is of economic interest or regional need and has a positive impact on the economy of the region;
- scientific and innovative value of a business project;
- financing from own funds or represented loan capital
In other words, instead of infusion of large sums of investments into its economy, Germany considers granting a competent business plan of the enterprise that will be useful and economically efficient either for the country as a whole or on a regional scale, as the main condition for the applicant to obtain a residence permit through a legal entity.
There are, of course, many more nuances. However, it will be easier to deal with them if in order to obtain a residence permit you will request the assistance of professionals who will help to make not only a plan for obtaining residence permit and collect the necessary documents, but also help to write the very same precious business plan, which will convincingly present the economic effect which will be brought by the enterprise activity. As experience shows, all legal issues of obtaining residence permit through business emigration are better to be entrusted to lawyers from Germany specializing in such matters.
We already gave the detailed information on the peculiarities of opening of a legal entity in the article "The opening of a legal entity in Germany". In this article, we will consider in details the proven ideas for a business plan related to the purchase of real estate in Germany. Among other things, it is possible to open a legal entity and purchase a multi-apartment revenue house on it. You can also buy a property that requires significant reconstruction or major repairs, which implies the creation of jobs for builders. It should be understood that the acquisition of real estate in Germany does not automatically give you the right to obtain residence permit, as it does not guarantee the visa issuance. Buying income-producing propertysignificantly increases the chances and is a significant advantage for making a positive decision on the issuance of residence permit.
Initially, the residence permit (Aufenthaltserlaubnis) is issued to a foreign businessman for 1 year, and then it is extended for another 2 years. However, residence permit can be issued also straight for 3 years. It depends on the fulfillment of the main conditions for obtaining a residence permit and on the decision of a specific official. After three years of residence in Germany and provided that the enterprise is successful, you can apply for an indefinite residence permit (Niederlassungserlaubnis). Together with the businessman, his family members receive a residence permit.
Real estate in North Rhine-Westphalia: investments which you do not have to regret about
There are the three most attractive regions for life and investment in Germany: North Rhine-Westphalia, Bavaria and Baden-Württemberg. Our company specializes in selling different types of real estate in Germany exactly in North Rhine-Westphalia. The central office is located in Krefeld.
You will find many interesting facilities located in North Rhine-Westphalia in our catalog of German real estate: houses, apartments, commercial real estate. Why is it worth to invest in real estate of Germany located in this region?
The most densely populated land: North Rhine-Westphalia is home to one-fourth of Germany's population. There are many large cities in its territory. Just consider this: 29 settlements have a population of more than 100,000. There are a lot of young people in the region who need housing. Let us recall that Germany is the country of tenants. There is always demand for rental of residential real estate in Germany, and North Rhine-Westphalia is not an exception.
The region has an excellent well-functioning infrastructure. There are 6 airports in its territory, 2 of them have the status of international, 4 carry passengers across Europe. The flight to Düsseldorftakes on average 3 hours 20 minutes from Moscow, and 3 hours from St. Petersburg.
North Rhine-Westphalia has a wide network of modern highways, and a railway service is well developed. The largest in the world river port is located in Duisburg, its cargo turnover is 125 million tons per year.
The largest exhibition area in Europe: more than 60 different specialized exhibitions are held in the cities of North Rhine-Westphalia over a year. Not only Germans take part in them, people come for exhibition events from all over Europe and the countries of Asia and America. In total, attendance reaches 16 million of people per year.
A large business and industrial center: two dozen well-known industrial German concerns have placed their head offices in the North Rhine-Westphalia. These are such companies as Metro, ThyssenKrupp, RWE and others. The headquarters of Ford, Toyota, 3M, BP are located in this region too.
27.1% of foreign investments (and this is a very impressive amount – 200.6 billion euros) remain in North Rhine-Westphalia. 22.3% of German exported goods are produced in this region of Germany.
It is major educational center in Germany. There are the six largest universities in Germany here. In total there are 69 universities and institutions of higher education in the territory of this land. 600,000 students from all over Germany are studying in these institutions.
The least number of crimes. In comparison with other lands the lowest number of crimes is committed in North Rhine-Westphalia.
Tolerance and benevolence. If you want to buy a property in Germany for yourself, you will not find a better place than North Rhine-Westphalia. No one will let you feel a foreigner here. Both neighbors and civil servants happily help to adapt to those who have chosen a life in the calm and beautiful North Rhine-Westphalia for themselves.
German hospitality breaks records
North Rhine-Westphalia: welcome to the heart of Europe!
North Rhine-Westphalia is Germany's most western federal land. 18 million people or 1/4 of the population of the country reside here. The population in 29 cities is more than 100,000 people. The largest cities (more than 200,000 inhabitants) are Cologne, Dortmund, Düsseldorf, Essen, Duisburg, Bochum, Wuppertal, Bonn, Münster and Bielefeld.
North Rhine-Westphalia is economically the most developed metropolis in Europe. The leading sectors of the economy are energy engineering, chemical industry, the sphere of mass information and communications. The central exhibition area of Europe is located here. If the land is considered as an independent state, it could safely be ranked among the world's leading exporters. North Rhine-Westphalia is the industrial heart of Germany, where 1/4 of the country's GDP is created thanks to 1.3 million work positions. The core of the economy is the middle class.
The largest number of higher education institutions and scientific research centers is concentrated in this land. About 600,000 students (10% of whom are foreigners) study at 69 universities and higher vocational schools.
The cultural and creative life in the region is so diverse, rich and eventful that it is just as good as such cultural centers of Europe as London and Paris. In addition to the historical heritage, a huge number of museums, galleries, theaters, cultural centers and concert halls can satisfy the most demanding admirers of culture and art. A large number of exhibitions and festivals for every taste are held here every year.
The investment attractiveness of North Rhine-Westphalia is confirmed by a recent study of Ernst & Young, international consulting company, according to which foreign investors prefer this particular land to others. Foreign capital choses German engineering industry, automobile manufacturing and information technologies. And the most attractive city for international business in Germany is the capital of the NRW – Düsseldorf. The reason is simple: NRW is a powerful economic region with developed infrastructure and great labor potential.
Region with high purchasing power
The investment attractiveness of the federal state of North Rhine-Westphalia cannot be overstated. This is the most densely populated territory of Germany, one of the most economically developed regions among all 16 federal states. North Rhine-Westphalia is a major industrial center of Germany. More than 16.5% of all export goods are produced here, 22.5% of all German import goods go there. This is due to the high purchasing power of the population of this territory. Thanks to such indicators, private investment in Germany as a whole and in North Rhine-Westphalia in particular is increasing.
In a highly competitive environment, North Rhine-Westphalia successfully maintains its leading position in the field of research and innovation. This allows preserving and increasing the competitiveness and investment attractiveness of local enterprises. On the territory of this federal land there are about 70 universities and more than 40 research institutes that are actively working to improve production efficiency. Thanks to their efforts there is an increase in the number of industries, new work positions are being created; with an increasing number of inhabitants there is a growth of consumption and consumer activity in the region.
This territory is increasingly being explored by investors from Asia, in particular, the leading manufacturer of construction equipment from China Xuzhou Construction Machinery Group (XCMG) increased investment in Germany. In 2013, it opened the first European sales office in Krefeld and a modern research center to create new efficient technologies in the production of hydraulic systems and drive technology. This project has given the region more than 50 million euros of investments, thanks to it, up to 2016 it is planned to create about 100 high-tech work positions.
Investors from Japan are also actively developing this region. In 2011, the largest Japanese car manufacturer DENSO conducted a massive expansion of its investments in Germany, investing in the expansion of its production almost 19.3 million euros. Until the end of 2015, DENSO plans to invest in production more than 21 million euros, create more than 100 new engineering working positions in North Rhine-Westphalia. The company specializes in the production of components for the automotive industry.
All this is reflected in the prospects for the real estate market in North Rhine-Westphalia. This segment of the market shows average development rates among all federal lands. The capital of land Düsseldorf is at a worthy place among the most economically developed cities in Germany, including Berlin, Munich, Hamburg and Frankfurt am Main regarding the level of profitability and the value of rental rates for real estate.
The number of new homeowners in this territory increases by 3.8% annually, with an average of 4% in Germany. According to the forecasts of Cliff consulting company, we should expect gradual increase in house prices in North Rhine-Westphalia by 3.5-4% per year in the future.
This same agency has repeatedly indicated that the real estate market in Germany is booming. Investments in commercial and residential facilities in a country with a stable economic and political system make it possible to reliably protect savings from inflation and ensure a stable income.
North Rhine-Westphalia is a place for your business in Europe
Foreign investors are considering various opportunities for doing business in Germany, including investing in the real estate market.
The federal state of North Rhine-Westphalia is the westernmost territory of Germany which borders with neighboring Belgium and Holland. This region has the highest population density among all other federal states: this figure is 514 people per square kilometer, there are more than 17.5 million people permanently living there, which exceeds the population of certain European countries, in particular, the Czech Republic, Hungary, Belgium and some others states.
North Rhine-Westphalia is considered the most urbanized territory of Germany. This territory is more known among the inhabitants of the country, as "Land of coal and steel". The territory is rich in minerals and raw materials, there is a wide network of coal mines, a huge number of enterprises of heavy equipment, metallurgical, chemical, consumer goods, food industry, machine building. The most advanced business enterprises in Germany prefer to open their branches here.
The center of industry of the territory is the Rhine-Ruhr region. It includes such major industrial centers as Düsseldorf, Cologne, Essen, Dortmund, Hagen. There are 29 large cities in total in the state of North Rhine-Westphalia, each of which has at least 100 thousand inhabitants.
The economic structure of the state of North Rhine-Westphalia covers all sectors: from household waste recycling to high-tech energy production. The abundance and diversity of raw materials increases the productivity and efficiency of local enterprises which has a positive impact on business development in Germany in general and in this region in particular. At the same time, the territorial government very carefully monitors compliance with all environmental standards; therefore, agriculture and tourism are also actively developing here.
In recent years, this territory has been successfully explored by foreign investors for business in Germany, covering all major sectors of the economy. This is not surprising considering the region's leading economic positions. The advanced development zone Prime Site Rhine Regio has been created in one of the most developed areas of this land, including the cities of Bonn, Cologne and Aachen, a total area of which is 205 hectares. It is planned to intensively develop the areas with a significant prospect for the future.
An additional impetus to the development of the territory is given by the powerful infrastructure of the region, the availability of all necessary communications and an advanced logistics network. An increasing number of work positions, a high level of welfare and consumer demand of the population provokes a growing demand for housing.
It is believed traditionally that the real estate market like business in Germany is one of the most reliable and sustainable in Europe. Since 2010, there has been steady moderate growth in the cost of housing every year. This is also applied to the land of North Rhine-Westphalia.
When deciding to open a business in Germany or invest your savings in the economy of this country, it is worth considering that more than half of all residents of the country prefer to rent real estate rather than buy it. Therefore, one of the most profitable and most common ways of investing is to acquire revenue houses and apartments with its subsequent leasing. The level of rental rates directly depends on the number of working positions and the economic level of the territory.
Many foreign investors, both private individuals and large companies, are striving to acquire residential and commercial real estate here for subsequent leasing. According to the published statistics, the value of rental profitability in Germany is from 5 to 7%, which is an excellent indicator for a stable European economy.
The property market in the federal state of North Rhine-Westphalia confidently holds average positions across the country. Cologne and Düsseldorf are among the most attractive cities for doing business in Germany in terms of profitability and rental rates. Berlin, Hamburg, Munich and some other megacities are in the same list.
Take a closer look at North Rhine-Westphalia state. This German federal state has great opportunities for conducting private business in Germany, opening a successful branch of a large company or profitable investment location.
The most developed infrastructure in Europe
The successful geographic position, well-developed infrastructure of the federal state of North Rhine-Westphalia give this territory a special investment appeal among all EU member countries, it occupies one of the leading places among the total number of investments in Germany.
The following objects are located in the territory of the state of North Rhine-Westphalia:
- International airports in Düsseldorf, Münster, Dortmund, Cologne, Weeze, from which more than 400 passenger and commercial flights leave to all countries of the world. This allows to successfully conduct business in Germany for entrepreneurs from different countries;
- several regional airports: in Aachen, Bielefeld, Essen, Geilenkirchen and several other large cities in the region, which carrying out a lot of passenger and cargo air transportations within the European continent;
- more than 17,500 highways of excellent quality;
- nearly 2,200 kilometers of urban freeways;
- the most dense and multiple circuit of railways is laid through the territory of the region;
- more than 120 river ports are functioning successfully here;
- 720 kilometers of waterways connecting Germany with the North, Baltic, Black and Mediterranean Seas, the Atlantic Ocean have been developed.
One of the largest inland ports in the world is the German Duisburg located in this federal land.
North Rhine-Westphalia is an important transport and logistics region, where there are the most demanded and equipped with the latest technology transport junctions on the way of moving goods from all regions of Europe. This allows developing business in Germany successfully.
Without a highly developed logistics system, it would be impossible to manage powerful international and national transport flows, so an increased attention is paid to the development of this sector. Almost 28 thousand enterprises, which employ more than 284 thousand employees, are engaged in the field of transport logistics. Taking into account the employees of industrial and trade enterprises engaged in logistics tasks, this figure is more than 610 thousand people.
New companies are actively developing and successful trade and warehouse enterprises from other regions of Germany are expanding their presence in the territory of the state of North Rhine-Westphalia. This region is also chosen by many foreign enterprises for their investments. The most successful business enterprises in Germany are Fiege, Deutsche Post DHL, Kühne + Nagel, FedEx, Imperial, Raben, Rhenus, Schenker, Yusen Logistics and UPS and some others.
One of the most prestigious research institutions in the world in the field of logistics is also located in this region. This is the famous Fraunhofer Institute of Materials and Logistics in Dortmund (IML). Within its walls, the advanced transport and warehouse logistics schemes are being developed that allows local enterprises to optimize their expenses and remain highly profitable in the conditions of high competition.
The well-developed infrastructure and the optimal balance of production, warehousing and transport-logistics enterprises determine the stable economic development of all sectors of the region's economy, including the residential and commercial real estate market in Germany.
Thanks to this, the number of working positions increases, the purchasing power of the population grows, the economic attractiveness of North Rhine-Westphalia increases and investment in Germany as a whole grows.
A highly developed industry is the key to success in the service sector
The economic structure of the state of North Rhine-Westphalia is characterized by an optimal combination of industries that are traditional for this region: coal, chemical, heavy metallurgy, machine building and modern, highly prospective sectors of the economy: banking, insurance, advertising and PR, trade, construction and many others.
The enterprises of dozens of leading industrial corporations, many small business enterprises in Germany, have already reached a high level of technological development in this federal state. Almost 18.5% of the working-age population of the state are engaged in the industrial sector, the total turnover of industrial enterprises of the region in 2013 reached 340 billion euros. The range of products is impressive: the region produces everything from confectionery products to technical chemical compounds for individual production sectors, which increases the attractiveness of investments in Germany.
Almost 71% of the total economic turnover of the state of North Rhine-Westphalia is in the service sector. More than 6.5 million people are involved in this most important branch of the economy. At the same time, most of these business enterprises in Germany are aimed at servicing the current needs of the final producer of goods: the production of components for the automobile manufacturing, digital equipment, logistics, banking services, construction field.
The successful consulting companies, banking institutions, enterprises which are focused on advertising goods and services of local enterprises of industry and production, function in the region. Considering the prospect of the territory development, the leading companies in the sphere of mass communications and information prefer to open their branches here and invest in Germany. From 40 most promising German trading companies, 16 enterprises have their head offices in the cities of this region. These include Aldi, Tengelmann C & A, Metro, Deichmann, Rewe and some other corporations whose names are widely heard outside the country.
For the share of business servicing enterprises in Germany 27.5% of the total turnover of enterprises of economic tertiary sector of this country relates to North Rhine-Westphalia. 16.4% of all goods produced in Germany for export account for the enterprises of the state of North Rhine-Westphalia. According to Eurostat European statistical agency, this German region accounts for almost 23% of all goods imported into the country from abroad.
It can be said that the economic basis of the territory is made up of small and medium-sized businesses in Germany, the total number of which is 765 thousand. Almost 180,000 of them are engaged in handicraft production, provide jobs for almost 1 million inhabitants of this territory. This is the most impressive indicator for the country, which allows us to say that the largest number of employers in Germany belong to small or medium-sized businesses.
According to statistics, the share of small and medium-sized businesses in the state of North Rhine-Westphalia accounts for 79% of payments to the social insurance system, more than 82% of students after studying in higher and special educational institutions find work in small and medium businesses or open their own business. Such data was published by the Federal Statistics Office.
A special place in this list is occupied by small real estate companies offering services for renting residential and commercial buildings and premises. The long-term lease of commercial and warehouse real estate is in high demand. They are distinguished by a high level of rental profitability of 7-8%, and the profitability of investment inclusions reaches 11-15%. This is possible due to the availability of long-term loans for such transactions.
Revenue houses and hotel real estate as investments, gives profitability of 9-12% in Germany with the participation of bank lending. The highest profitability from the rental of real estate in North Rhine-Westphalia is recorded in Duisburg and Wuppertal, where real estate rent can bring up to 9.25% of the income from the value of the property.
The functioning of all enterprises in the services sector of this federal land is coordinated by the Chamber of Commerce and Industry of North Rhine-Westphalia in Düsseldorf, where the center for promoting economic cooperation with Russia (Russland Kompetenzzentrum Düsseldorf) is open. Another agency regulating the activities of service companies is the Investment Agency under the Government of North Rhine-Westphalia.
World renowned research center
North Rhine-Westphalia is one of the leading places in the German economy in terms of investment. This is facilitated by a high level of security of economic activity, a completely competitive, carefully thought-out tax system and a high level of technical equipment of local enterprises. A significant role is played by considerable state support for the centers of scientific and technological research and the most saturated network of research organizations in the European Union working at the institutions of higher education in North Rhine-Westphalia.
A total of 69 universities and institutes and about 50 separate research centers are successfully functioning in the region. This concentration of scientific institutions is unique for the European Union, it positively affects the technical progress of the territory and the conduct of business in Germany as a whole.
Special attention should be paid to such major world renowned research centers as the German Center for Air and Space Flight Research, the Research Center for Information and computing machinery in St. Augustine, the Research Center in Jülich, and other autonomous research institutions and technology centers.
A great role in choosing a place for organizing business in Germany is played by the correct approach of government structures to the problem of introducing innovative technologies and popularizing them in the business environment. To this end, special sectoral clusters and business incubators are created, which are constantly working among entrepreneurs. This allows the state of North Rhine-Westphalia to successfully compete with other regions of Germany and attract new investments.
The list of services, provided by business incubators to technologically oriented companies, includes:
- assistance in leasing specialized premises and equipped laboratories;
- business support;
- provision of consulting and expert services;
- assistance in finding partners among companies of one focus;
- cooperation at all levels: from local and regional to international;
- assistance in setting up pilot production and developing prototypes.
On the territory of this federal land, ideal prerequisites for the successful transfer of technology to industrial business in Germany have been created. There are 30 specialized centers, 48 science parks. These structures help entrepreneurs in the development of innovative start-ups, attraction of companies, operating in the field of high technology, establishment of subsidiaries. Science parks will unite several innovative specialized centers to work on a common task, which at times increases the efficiency of their work and accelerates the introduction of modern developments in industrial production.
In total, there are almost 1,900 companies that carry out successful transfers of innovative technologies of different directions (by sector of the economy). In their work, 12.5 thousand employees are employed. These firms own the entire complex of professional infrastructure, have stable ties with partners from the scientific sphere, leading industrial enterprises from related business areas in Germany. This allows quick assessing of the current economic situation and prospects, finding entry for own products in the market outlet.
The largest contribution to the implementation of successful business projects in Germany is made by the State Agency for Economic Development, represented by the Ministry of Economy, Industry and Energy of Germany.
Sectoral clusters mean an information and communication platform for successful cooperation between regions. It allows more effective coordination of the work of scientific communities, industrial enterprises and legislative initiatives. All this stimulates the sustainable industrial development of the region and the attraction of new investors for doing business in Germany.
Among the successful clusters are:
- automotive industry;
- medicine and health care;
- mechanical engineering;
- ecological technologies;
- nano- and micro-materials;
- construction and other clusters, covering all significant sectors of the economy of the state of North Rhine-Westphalia.
The most profitable in the region is the residential real estate market. Investing in this sector of the economy, you can get an annual 5% rise in the value of real estate. The average return on the real estate market is up to 15% per annum with lending, depreciation of residential real estate does not exceed 1% per year.
Our agency has detailed information about investing in this region, provides advisory services on the implementation of investments with high financial return in residential real estate in North Rhine-Westphalia, existing support programs, and helps in finding the right place for the project.
Specially trained, competent employees inform the beginning and already established entrepreneurs about legal and tax aspects, support in finding sources of financing for the implementation of projects. The quality and list of services is the same for both local and foreign investors.
A comprehensive approach to solving important problems allows the state of North Rhine-Westphalia to successfully retain its leadership in the face of stiff competition, because in such conditions, virtually any business in Germany is run. This, in turn, positively affects the reputation of the territory, stimulates the growth of investments in the economy of the region.
It’s a real estate market that is notable for the greatest level of return in the region. Investing in this sector of the economy, you can get a 5% increase in the value of real estate per year. The average return on investments can reach 15% per annum with loans, while the depreciation of residential real estate objects does not exceed 1% per year.
The agency BMG Invest has detailed information about investing in the region, provides consulting services on the implementation of investments with high financial returns in residential real estate in North Rhine-Westphalia, special support programs, and helps in finding the right place for the project.
Foreign firms in North Rhine-Westphalia
In no other German lands, the number of foreign firms and their role in the economy are as important as in North Rhine-Westphalia. According to the Amadeus company's data in North Rhine-Westphalia, there are about 15,000 foreign enterprises - this corresponds to about one quarter of foreign enterprises in Germany.
Number of foreign enterprises in North Rhine-Westphalia
- Netherlands – 3.374 companies
Examples: "Akzo Nobe"l, "Albert Heijn (Ahold)", "HEMA", "Philips", "Seacon Logistics", "TNT"
- the USA - 1.385 companies
Examples: "3M", "Amazon", "FedEx", "Ford", "Johnson Controls", "Medline", "QVC", "UPS"
- Switzerland - 1.208 companies
Examples: "Ineos Phenol", "Lindt & Sprüngli", "Rolex", "Zimbo"
- Great Britain - 1,179 companies
Examples: "AB Elektronik", "BP Europa SE", "Colt Group", "Dyson", "GKN", "Rexam", "Vodafone"
- China* - 800 companies
Examples: "Huawei", "Minmetals", "Sany", "WISCO", "XCMG", "ZTE"
- France - 781 companies
Examples: "AIR LIQUIDE", "Bonduelle", "Decathlon", "L'Oréal", "Renault", "Saint Gobain", "Schneider Electric", "Total"
- Austria - 620 companies
Examples: "Benteler", "Chemson", "Eickhoff Maschinenfabrik u. Eisengießerei "," Strabag "
- Japan * - 500 companies
Examples: "Alps Electric", "Canon", "Fujifilm", "Mitsubhishi Int.", "Mitsui" "Toshiba", "Toyota", "Yakult"
- Italy - 462 companies
Examples: "Barilla", "Generali", "TX Logistik"
- Turkey * - 300 companies
Examples: "ALFA Möbel", "ATV Avrupa", "Fluid Service Plus", "Gökbora", "Sarar", "Turkcell"
- Sweden - 268 companies
Examples: "Atlas Copco", "Ericsson", "Ikea", "SANDVIK", "Securitas"
- Poland * - 200 companies
Examples: "Amica", "FLT-Metall", "Hoesch Design/Sanplast Grup", "Raben Group", "Tele-Fonika Kable"
- Denmark - 177 companies
Examples: "Arla Foods", "Dänisches Bettenlager", "Grundfos", "ISS Facility Services"
- Taiwan * - 144 companies
Examples: "Asus", "Chieftec", "Chi Mei Optoelectronics", "Nanya Technology", "Quanta"
- Finland - 118 companies
Examples: "Kemira", "Metso Automation", "UPM Kymmene (Rhein Papier) "
- India * - 100 companies
Examples: "Ashok Leyland", "Bharat Forge"; Mahindra & Mahindra; "Suzlon Energy", "Tata Group", "Wipro"
- Norway - 90 companies
Examples: "EZ Systems", "Norske Skog Walsum", "Statkraft Markets", "SuperOffice"
- Korea * - 70 companies
Examples: "Clark Europe", "Doosan Infracore", "SK C&C", "Hwacheon", "LG Electronics", "Posco"
* own investigation
Sources: agency "Amadeus-Unternehmensdatenbank 04/2014", "NRW.INVEST GmbH"
The largest exhibition area in the world
North Rhine-Westphalia takes the leading place in the import of foreign goods among all 16 federal states of Germany. This figure reaches 22.3% of all German imports, which in total amounts to almost 204 billion Euros.
The bulk of imports account for crude oil and gas is 68.5%; the share of non-ferrous and ferrous metallurgy accounts for 15.5%. Refined petroleum products, coke products are 6.3%. A slightly smaller volume to 4.2% accounts for imports of peat and coal. A little more than 1% accounts for the production of the chemical industry.
The region is also intensively increasing its presence in the international stage, exporting goods, produced on its territory, to all countries of the world, including European countries. Among the main export goods, 27.1% is the share of high-tech machinery and modern equipment. About 15.5% account for the share of trucks and their components. 13.9% account for chemical products, a little more than 5.5% account for the share of metallurgical enterprises and enterprises, producing food and animal feed.
The region actively attracts foreign partners and expands marketing outlets for its goods. More than 60 international specialized exhibitions are held here annually. The most popular exhibitions in Germany are held in Dusseldorf, Cologne, Dortmund, Essen. This gives grounds to call North Rhine-Westphalia the largest exhibition area in the world. Among the most famous exhibition area are "Anuga", "Photokina", "MEDICA", "E-world of energy & water", "Drupa", and "Boot", and many other exhibitions in Germany that attract up to 6 million visitors a year.
Anuga exhibition is rightfully considered to be the largest and most advanced trade exhibition in the world. It is held every two years and is dedicated to new technologies that allow achieving high quality and safety of food. It is attended by leading manufacturers of products, catering and retail enterprises. Presentations of new directions, dishes and thematic forums and conferences are held. During exhibitions in Germany, the concepts of trade, safety of production, reduction of production costs and harmless production are discussed.
The world exhibition Drupa is held in Düsseldorf every 4 years. For investors, it provides a unique opportunity to get acquainted with all the scientific and technological achievements in the field of printing industry and typography. This exhibition is always relevant, it allows the specialists to learn about new products in this area. Such exhibitions in Germany set a new stage in the development of the industry, plays a significant role in modernizing the technical equipment of work processes.
Exhibition Photokina combines innovative technologies for creating photographs, processing and output of digital images. E-world of energy & water - an exhibition in Germany, dedicated to the problems of energetics and water supply. In its course, scientific congresses are held on the current problems of water purification.
In addition to openness and wide opportunities, the federal state attracts foreign investments in Germany with a very competitive taxation system. The average total volume of taxation for industrial enterprises and large corporations is at the level of 29.8%, which is quite consistent with this indicator in other industrialized countries.
In particular, the high level of professional training of local personnel, the world level of research activity, which is conducted in 54 non-university scientific research organizations and centers of technological research, are very attractive for business in Germany in general and in the lands of North Rhine-Westphalia.
The training of qualified personnel for local enterprises is carried out by 69 universities, 6 of which are in the 12 most prestigious universities in Germany. In the federal state of North Rhine-Westphalia almost ideal conditions have been created for the successful and rapid transfer of modern technologies into production.
Among all segments of the economy, the most attractive for foreign investors in Germany is the residential and commercial real estate market. The growing demand for real estate in close proximity to major economic centers, moderate prices, low interest rates on mortgage lending and the stable state of the German economy as a whole determines the high return of this sector of the economy.
Investments in real estate in Germany – is a profitable investment of funds, because according to experts, the return can reach 15%, taking into account bank loans. Most foreign investors appreciate the prospects for the residential and commercial real estate market in Germany, in North Rhine-Westphalia, and prefer to invest their own money here.