GERMANY LAW AND PRACTICE Contributed by: Wolfram H Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
1. General 1.1 Main Sources of Law The main source of real estate law is the Civil Code ( Bürgerliches Gesetzbuch ). Of further relevance are: • the Land Registration Act ( Grundbuchord- nung ); • the General Terms and Conditions for Build - ing Contracts (VOB/B); • the Mandatory Fee Structure Regulation for Architects and Engineers (HOAI); • the Federal Building Code ( Baugesetzbuch ); • the Federal Land Use Ordinance ( Baunut- zungsverordnung ); • the 16 states’ individual building regulations ( Landesbauordnungen ); • the Notarisation Act ( Beurkundungsgesetz ); • the Heritable Building Right Act ( Erbbaure- chtsgesetz ); and • the Condominium Act ( Wohnungseigen- tumsgesetz ). 1.2 Main Market Trends and Deals Although sustainability has become more and more important and also impacted real estate financing, it has been overshadowed by the interest rate turnaround ( Zinswende ) in 2023. According to surveys, mainly (commercial) resi - dential and logistic properties are in demand, data centres and care homes are also trending upwards. Transaction volume increased only very slightly compared to previous years. The most popular investment cities remain the top seven centres: Berlin, Hamburg, Munich, Frank - furt, Düsseldorf, Cologne and Stuttgart. Some of the most significant deals in Germany in 2023 were the takeover of X+Bricks super - markets by Slate and the sale of two residential
portfolios by Vonovia to CBRE Investment Man - agement. Neither blockchain concerning real estate transactions, nor creation of new opportuni - ties regarding capital investments in the form of tokenisation of real estate assets have gained broad acceptance so far. Use of artificial intel - ligence becomes more important in the areas of accounting, property administration, valuation, due diligence and ESG monitoring. A federal government funding programme for 2024 and 2025 with a volume of EUR480 million aims at the conversion of commercial real estate into climate-friendly residential properties. Own - ers and investors should benefit from advanta - geous loans. In light of the increased interest rates and infla - tion, more and more restructurings can be seen, including some insolvencies, while foreclosures do not (yet) take place in large scale. Loan on loan lending (net asset values lent against loan portfolios) is an increasing form of financing. 1.3 Proposals for Reform Federal Building Code (Baugesetzbuch) The German Federal Building Code dating back to the year 1986 shall receive an overall recon - sideration in the year 2024. While several smaller changes concerning single issues were made in the last couple of years, those amendment shall now be incorporated into an overall con - cept. The code’s instruments shall become more effective and less complicated. In particular in relation to climate protection, strengthening the focus on public welfare, further inner-city devel - opment and mobilising additional building land, the planning and approval procedure phase shall be accelerated.
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