Assiduous business professionals will agree to the fact that a multiplicity of factors needs to be considered before any decision to invest at an international level is made. Business entities do not exist in a vacuum; they affect and in turn are affected by various cultural, geographic, physical, legal, political and socio-economic aspects existing within any given country (McGowan & Moeller, n.d. p. 5). It is imperative to take a critical evaluation on each of the above mentioned factors while engaging in international business as this will assist the management to gain an in-depth understanding and competitive advantage in the area of investment. This paper concerns itself with evaluating some cultural, physical, economic, and socio-economic aspects that needs to be considered before investing in real estate in Germany.
Industry analysts are in agreement that German’s real estate market could offer meaningful opportunities for international investors as it has sufficiently recovered from a low growth witnessed during the first half of this decade (Zimmerman, 2008 para. 1).
Various aspects come into play when considering Germany as an opportune destination for investing in real estate. On the cultural front, it is fundamental for any investor to recognize the fact that Germany is a modern, liberal, and cosmopolitan society with an outstanding standard of living. The Germans are known for their deep-seated love for beauty and orderliness. With available data pointing to the fact that only 45% of homes in Germany are owner-occupied, it would be prudential to suggest that Germany is a favorable renter’s market (Zimmerman, 2008 para. 5).
In business etiquette, it is important to note that Germans do not require a personal relationship to engage in business with anyone. They often display enormous indifference to individuals in authority. Most business professionals do not practice an open-door policy, and appointments must be booked in advance if business is to be conducted. Business meetings are mostly done in a formal manner in addition to the fact that punctuality must be observed at all costs (Kwintessential, 2007 para. 3).
Germans value education, and will be interested in knowing your academic qualifications and the duration of time that you have been in business. The comprehensive German education system ensures that adequate and qualified human resources are available in the market, especially in the technical fields (Germany Trade & Invest, 2009 para. 8). In Germany, religion does not in anyway interfere with the business or corporate world as majority of the people profess the Christian faith. Investors must also be technologically savvy while making decisions to invest in Germany since the rate of technological uptake in the country is one of the highest in the world.
In evaluating the physical aspects, it is worthwhile to note that Germany offers one of the most comprehensive and efficient infrastructural systems around the world. Indeed, Germany is Europe’s topmost logistics market by virtue of being geographically located at the center of Europe. This offers an unrivaled advantage for real estate business in supply chain as the sector relies on a variety of sources for its materials. A sophisticated and intensive communications infrastructure coupled with supreme transportation systems ensures effective communication with clients and on-time delivery of the required materials (“Germany Infrastructure,” 2008 para. 1).
German’s temperate and cool weather patterns are friendly for any investment activity. The topography and terrain mainly consisting of lowlands in the north, high areas towards the center, and the Bavarian Alps in the south offers excellent investment opportunities especially in real estate (“Country Guide,” 2009). Germany is also endowed with a variety of natural resources and construction materials mostly used in real estate (“Germany Natural Resources,” 2009). Indeed, Germany is one of the major producers of iron and steel (Zimmerman, 2009 para. 3). These materials are important in the real estate sector. What’s more, the German government has enforced a policy culture that actively facilitates and protects sustainable environmental conventions and high safety standards.
Lastly, all economic indicators points to the fact that German’s real estate sector is ripe for investment. It is imperative to mention that Germany is the third largest economy in the world, and the largest in Europe. Many international blue chip corporations such as BMW, Siemens, Rohde & Schwartz and GE Healthcare are headquartered in Germany (“Investing in Germany,” 2009 para. 2). These and many other companies of similar caliber are the highest consumers of real estate products. In the same vein, some states in Germany offers financial and non-financial incentives to investors such as cash incentives, loans, labor-related incentives and R&D incentives (“Incentives Programs,” 2009 para 2-8).
This is good for any startup business as it stimulates growth. The tax regimes found in Germany favors international investment. In the social economic sphere, Germany has a population of around 82 million people, effectively making it the second most populous nation in Europe. Real estate investment in Germany is a sure bet as only 45% of the population occupies their own homes. In Berlin, only 13% of the residents have their own homes (Zimmerman, 2008 para. 2 &5).
Reference List
Country Guide: Germany. (2009). Web.
Germany Trade & Invest. (2009). German Education system. Web.
Germany Infrastructure, Power, & Communications. (2008). Web.
Germany natural resources. (2009). Web.
Incentives Programs. (2009). Web.
Investing in Germany. (2009). Web.
Kwintessential. (2007). Germany – Language, culture, customs, and business etiquette. Web.
McGowan, C.B., & Moeller, S.E. (n.d.). A Model for making foreign direct investment decisions incorporating real variables for political and economical risk analysis. Web.
Zimmerman, C. (2008). Investing in German real estate. Web.