Abstract
We evaluate the profitability of investments in residential property in Germany after unification with a focus on the comparison of East and West Germany. Calculations are carried out for (1) the after-tax return an investor might have expected at the beginning of the 1990s, and (2) the after-tax return that has been realized ten years after. We compare a set of statistical data for investments in fifty major cities by using complete financial budgeting. The results show that tax subsidies could not always protect investors from losing money, but they have boosted realized returns after tax considerably. Therefore, it was indeed the taxpayers, not the investors, who have borne the cost of reconstructing East Germany.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Baldwin, Robert H. (1959): How to assess investment proposals, Harvard Business Review, 37 (3): 98–104.
Burda, Michael (2006): What kind of shock was it? Regional Integration and Structural Change in Germany after Unification, SFB 649 Discussion Paper 2006–087.
Case, Karl E. and Robert J. Shiller (1989): The efficiency of market for single-family homes, American Economic Review, 79 (1): 125–137.
Copeland, Thomas E., Fred J. Weston, and Kuldeep Shastri (2005): Financial theory and corporate policy, 3rd ed., Addison-Wesley Longman: Amsterdam.
Darius, Annette and Roman Schins (2006): Fonds-Renditen? Vergleich mit anderen Anlageformen, Datenverarbeitung-Steuer-Wirtschaft-Recht: 111–114.
Darrat, Ali F. and John L. Glascock (1993): On the real estate market efficiency, The Journal of Real Estate Finance and Economics, 7 (1): 55–72.
Deutsche Bundesbank (2003a): Price indicators for the housing market, Monthly Report September 2003: 45–58, http://www.bundesbank.de/download/volkswirtschaft/monats-berichte/2003/200309mb_e.pdf (Access Date: 2005-10-25).
Deutsche Bundesbank (2003b): Capital market statistics 2003, http://www.bundesbank.de/download/volkswirtschaft/kapi-talmarktstatistik/2003/capitalmarketstatistics012003.pdf (Access Date: 2007-11-29).
Deutsche Bundesbank (2003c): Capital market statistics December 2003, http://www.bundesbank.de/download/volkswirt-schaft/kapitalmarktstatistik/2003/kapitalmarktstatistik122003.pdf (Access Date: 2008-11-12).
Donner, Christian (2001): Housing policies in the European Union, Journal of Housing and the Built Environment, 17 (4): 427–429.
European Commission (2005): Inventory of Taxes in the EU, http://europa.eu.int/comm/taxation_customs/resources/documents/tax_inventory_18_sw.pdf (Access Date: 2005-11-5).
Guntermann, Karl and Stefan C. Norrbin (1991): Empirical Tests of Real Estate Market Efficiency, Journal of Real Estate Finance and Economics, 4 (3): 297–313.
Hax, Herbert (1993): Investitionstheorie, 5th ed., Würzburg et al.
Hundsdoerfer, Jochen (2002): Die einkommensteuerliche Ab-grenzung von Einkommenserzielung und Konsum, 1st ed., Deut-scher Universitäts-Verlag: Wiesbaden.
IPD Deutscher Immobilien Index (2008): Ergebnisse für das Jahr 2007, http://www.ipd.com/LinkClick.aspx?fileticket=BBGsrdw-%2bRtY%3d&tabid=433&mid=4770, (Access Date: 2008-10-13).
Kachel, Petra, Alexander Kuhn, and Damir Prugovecki (2004): Aktie versus Rente? Aktuelle Renditevergleiche zwischen Aktien und festverzinslichen Wertpapieren, in: Rüdiger von Rosen (ed.): Studie des Deutschen Aktieninstituts, 26, Deutsches Aktieninstitut, Frankfurt: 1–109.
Kruschwitz, Lutz (2009): Investitionsrechnung, 12th ed., Deutscher Universitäts-Verlag: München.
Laux, Hans (1993): Modellberechnungen zur Rendite von Neu-bau-Investitionen in selbstgenutztes und in vermietetes Wohnei-gentum, Der langfristige Kredit, 12: 380–384.
Leifer, Albert (2004): Preisindikatoren für Wohnimmobilien in Deutschland, Allgemeines Statistisches Archiv, 88 (4): 435–450.
Maier, Jürgen and Richard Stehle (1999): Berechnung von Nach-steuerrenditen für den deutschen Rentenmarkt auf Basis des REX und des REXP , Kredit und Kapital, 1: 125–145.
Maurer, Raimond, Frank Reiner, and Ralph Rogalla (2004): Return and risk of German open-end real estate funds, Journal of Property Research, 21 (3): 209–233.
Maurer, Raimond, Frank Reiner, and Steffen Sebastian (2004): Characteristics of German Real Estate Return Distributions: Evidence from Germany and Comparison to the U.S. and U.K., Journal of Real Estate Portfolio Management, 10: 59–76.
Maurer, Raimond, Steffen Sebastian, and Thomas G. Stephan (2000): Immobilienindizes im Portfolio-Management, Working Paper Series No. 52, Finance Accounting, Johann Wolfgang Goethe Universität Frankfurt am Main.
Maurer, Raimond and Thomas G. Stephan (1995): Immobilien-Rendite-Benchmark für offene Fonds, Die Bank, 8: 491–495.
Maurer, Raimond and Thomas G. Stephan (1996): Konstruktion einer Immobilien-Benchmark und deren Anwendungen im Investment-Management, Zeitschrift für Betriebswirtschaft, 12: 1527–1546.
Müller, Heiko (2004): Das Aufkommen der Steuern vom Ein-kommen in Deutschland, Deutscher Universitäts-Verlag: Wiesbaden.
Pegels, Carl C. (1968): A Comparison of Decision Criteria for Capital Investment Decisions, The Engineering Economist, 13 (4): 211–220.
Plewka, Torsten (2003): Immobilienindizes als Basisinstrument von Immobilienderivaten, Grundstücksmarkt und Grundstücks-wert, 4: 198–204.
Rohmert, Werner (2008): Bankhaus Ellwanger & Geiger? Deutsche Immobilienaktien fallen auf historische Werte zurück, Der Immobilienbrief, Nr. 159, 12–13.
Rose, Gerd (1993): Die Substanzsteuern, 9th ed., Deutscher Universitäts-Verlag: Wiesbaden.
Ross, Stephan A., Randolph W. Westerfield, and Jeffrey F. Jaffe (1999): Corporate Finance, 5th ed., McGraw-Hill Companies: Boston.
Scholes, Myron S., Mark A. Wolfson, Merle Erichson, Edward Maydew, and Terry Shevelin (2008): Taxes and business Strategy. A Planning Approach, Prentice Hall: New Jersey.
Stark, Gunnar (2006): Zur Rentabilität des deutschen Invest-mentsparens, Finanz Betrieb, 9, 589–602.
Statistisches Bundesamt (ed.) (1995): Statistical Yearbook 1995 for the Federal Republic of Germany, Wiesbaden.
Statistisches Bundesamt (ed.) (2003): Statistical Yearbook 2003 for the Federal Republic of Germany, Wiesbaden.
Statistisches Bundesamt (ed.) (2005): Statistical Yearbook 2005 for the Federal Republic of Germany, Wiesbaden.
Stehle, Richard (1999): Renditevergleich von Aktien und festver-zinslichen Wertpapieren auf Basis des DAX und des REXP, unpublished manuscript, Humboldt-Universität Berlin, http://-lehre.wiwi.hu-berlin.de/Professuren/bwl/bb/Institut/stehle (Access Date: 2009-03-01).
Stehle, Richard (2004): Die Festlegung der Risikoprämie von Aktien im Rahmen der Schätzung des Wertes von börsennotierten Kapitalgesellschaften, Die Wirtschaftsprüfung, 17/2004, 906–927.
Thwaites, Gregory and Robert Wood (2003): The measurement of house prices, Bank of England Quarterly Bulletin, 2, Volume 43: 38–46.
Vornholz, Günther (2001): Wohnungswirtschaft Ostdeutschland, Der langfristige Kredit, 20-2001: 712–718.
Watts, Michael M. and Stephanie Farewell (2008): Measuring the Incentive in 50 Percent Bonus Depreciation, Tax Notes August, 677–682.
Wissel, Harald (1999), in Lutz Haegert, Ulrich Schreiber, and Theodor Siegel (ed.): Einkünfteerzielungsabsicht und Einkom-mensbegriff, Schmidt Erich Verlag: Hamburg.
Zeller, Florian (2005): Investmentfonds, Portfoliomanagement und Besteuerung, Eul: Köln.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (https://creativecommons.org/licenses/by/4.0), which permits use, duplication, adaptation, distribution, and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
About this article
Cite this article
Kiesewetter, D., Bensemann, T. & Schönemann, K. Who has really paid for the Reconstruction of East Germany? Expected and Realized Returns on Real Estate Investments in East and West Germany in the 1990s. Bus Res 2, 11–37 (2009). https://doi.org/10.1007/BF03343527
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/BF03343527