Germany Monitor

In the "Germany Monitor" series we address political and structural issues which have great significance for Germany. These include commentaries on elections and political decisions, as well as technology and industry issues, and macro-economic topics which go beyond the business cycle matters addressed in "Focus Germany".

February 27, 2020

Berlin housing market: Rent cap may decouple real estate cycle from economic supercycle for a number of years

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Topic:

Analyst:

The key message: If the Berlin rent cap is constitutional, the situation for investors will change dramatically. The realignment of housing policy in Berlin and the rent cap represent a radical attempt to sideline market-based mechanisms. We believe the economic supercycle in Berlin will continue undiminished and Berlin remains an attractive market for long-term oriented investors. The negative effects of the rent cap on the housing market are likely to emerge clearly in the long run. [more]

January 9, 2020

E-mobility: Remaining a niche phenomenon for now – at least without subsidies

Region:

Germany

Germany Monitor

Topic:

Sectors and resources

Analyst:

Eric Heymann

The shift towards alternative propulsion technologies, such as e-mobility, is currently the biggest challenge for the global auto industry. So far, this structural change is driven mainly by government regulation and not so much by market forces. At the moment, electric vehicles only have significant market shares if they are heavily subsidised. While e-cars can help to reduce carbon emissions in the EU, the favourable climate effect will be smaller than many supporters of electric mobility expect. A higher market share of e-cars will lead to manageable job losses in the German auto industry; however, local factors are key for value added. [more]

November 21, 2019

Natural gas as a transitional source of energy: How can Germany ensure a sufficient supply?

Region:

Germany

Germany Monitor

Topic:

Sectors and resources

Analyst:

Josef Auer

As German policymakers plan to do without nuclear power, coal and lignite in the future, natural gas remains the last traditional source for power generation. And since Germany targets complete climate neutrality by 2050, natural gas will also be a transitional source of energy – nothing more and nothing less. The completion and operation of Nord Stream II is clearly in line with the declared goals of German energy policy. Nord Stream II will improve supply security and pipeline gas, such as that delivered by Nord Stream II, is more environmentally friendly than LNG. [more]

March 14, 2019

German property and metropolis market outlook 2019

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The house price cycle in Germany should remain in place in 2019. But we expect much more divergence across regions and a heavily increasing complexity of causal impact channels. Led by immigration and the continuous labour market uptrend, house prices and rents will likely continue to rise. The risk of overvaluations and a full-blown price bubble in the German housing market is rising. However, the price uptrend is likely to continue for years to come, in Germany as a whole and in most major cities. In this report we look at the housing markets in Munich, Berlin, Frankfurt, Hamburg, Düsseldorf, Stuttgart and Leipzig and we comment on the German office market. [more]

February 12, 2019

German robo-advisors: Rapid growth, robust performance, high cost

Region:

Germany

Germany Monitor

Topic:

Banking and financial markets

Analyst:

Orçun Kaya

Robo-advice is a new breed in asset management. Robos’ assets under management have been growing quickly in Germany. However, the market is increasingly becoming concentrated and competitive. Robo portfolios have shown relatively robust performance recently. Yet the high costs of robo-advice in Germany are a drag on returns and may alienate potential customers. Current clients, meanwhile, are mostly middle-age, higher-income men rather than millennials. [more]

January 30, 2019

German industry: Growth in investment spending driven by only a few factors

Region:

Germany

Germany Monitor

Topic:

Sectors and resources

Analyst:

Eric Heymann

During the current cyclical upswing, which started in 2010, German manufacturing companies have increased their real gross capital expenditure by just above 3% p.a. In 2017, the industry accounted for 51% of total other capital spending (intellectual property) in Germany. This shows that manufacturing is the most important driver of research and development and thus of technical progress. The automotive and the pharmaceutical industries stand out from other sectors. The capital stock in energy-intensive industries has been shrinking for years now – a trend that gives cause for concern. While the German manufacturing industry is faced with long-term challenges, we believe that it is nevertheless sufficiently adaptable to remain competitive on a global scale. [more]

November 8, 2018

Industry 4.0 – digitalisation to mitigate demographic pressure

Region:

Germany

Germany Monitor

Topic:

Digital, Sectors and resources

Analyst:

Josef Auer

With digitalisation becoming an ever more common feature along the value chain, the German industry looks set to enjoy higher potential growth in the coming years. The additional gross value added in German manufacturing might total EUR 70–140 bn for the years between 2018 and 2025. As a rule, the industrial sector is in a better position than numerous (personal) services sectors to benefit from the favourable impact of digitalisation. Traditional capital goods producers, such as the auto industry or mechanical and electrical engineering, are likely to see their gross value creation benefit more strongly from digitalisation than the metals or chemicals sector. [more]

September 14, 2018

German corporate taxes: Growing need for action

Region:

Germany

Germany Monitor

Topic:

Economic and european policy

Analyst:

Dieter Bräuninger

Since the last corporate tax overhaul in 2008, the need for reform has been continuously building in Germany. Given the ongoing criticism of Germany's current account surpluses, a reduction in corporate taxes would be a strong signal to provide new impulses to the sluggish domestic investment activity, thereby addressing a key issue of the current account discussion. The international trend towards lower tax rates also needs to be addressed, if Germany is to retain its competitiveness as a site for investment, innovation and jobs. [more]

July 25, 2018

German FinTechs on the rise: A mixed blessing for banks, beneficial for clients

Region:

Germany

Germany Monitor

Topic:

Banking and financial markets, Digital

Analyst:

Heike Mai, Orçun Kaya

The number of FinTech start-ups in Germany has surged in recent years. They are mostly active in crowd funding and payments. Online payment schemes offered by FinTechs or BigTechs have already become the most popular way to pay for internet purchases. Meanwhile, the biggest focus of blockchain start-ups in Germany is on financial services. Many FinTechs cooperate with banks which like them for their innovative solutions. [more]

January 26, 2018

The German housing market in 2018

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Topic:

Analyst:

Metropolitan areas in Germany are booming. The current real-estate cycle started in 2009 and has led to significant price increases for residential property in many cities. Prices for apartments have as much as doubled in some cities. Strong population and employment growth and declining unemployment rates are driving demand, and supply elasticity is low. Overvaluations are rising, and the risk of a price bubble in the German housing market is increasing. The price uptrend is likely to continue for several years, at least in most major cities in Germany. [more]

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