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Archive for the ‘German Property’ Category
“Too much” is a very vague term. It would be more accurate to say “What happens when people don´t want to lend to governments anymore”. Nonetheless, if a debt or a deficit is perceived to be too high, a country needs to borrow less, spend less and/or grow more. These are very difficult options.
For Ireland this meant higher income taxes, higher VAT, lower public salaries, higher retirement ages, lower capital spending and less state support for the elderly and children. Tough medicine to be sure, but I´m proud to say we had the stomach for it, unlike lots of other (mostly Mediterranean) countries that should be taking similar measures.
France is a good example. There was a massive public uproar recently when the retirement age was increased … to 63 years ….in small increments between now and 2018. They´re getting no sympathy from me!
Germany, on the other hand didn´t need to do anything nearly as extreme as the Irish because they are a conservative and prudent economy with low wages and high productivity. Between 2001-2006 they were drinking diet cokes while the Irish, French, British and Spanish were downing straight whiskies and margaritas. Their finances were fine and thanks to their awesome economy they can grow their way out of a recession a lot quicker than everybody else.
These are among the reasons we´ve started promoting multi tenanted German properties in key locations.
Feel free to call or email me (investments@torcana.com) if you´d like to learn more.
Kind Regards
Colin Murphy
Over the past 3 years a wide range of governments, regulators, banks and buyers have collectively been suffering from what might be described as Icarus Syndrome.
Laws and tax breaks were installed to encourage rampant construction of apartments, offices and hotels in dubious locations. “Soft touch” regulation was all the rage and banks were competing with each other to see who could rubber stamp the most loan and mortgage application forms in the shortest possible time. Buyers were borrowing beyond their means to purchase overpriced property developments around the world.
Too many thought they could keep on flying forever until finally, in early 2007, Icarus like, they soared too close to the sun and fell back to the ground with an almighty thud.
While all that craziness was happening, there was one country that paid no attention to the excesses of its neighbours during the boom.
Their banks didn´t get carried away with huge loan to value mortgages and their citizens generally saved more than they spent. Economic growth, rental rates and property price inflation were all stable and steady. It was and still is by far the most important economy in Europe and has been a profitable and safe haven for investors for decades.
