It now seems, that despite pressure from the U.S. and the IMF, Germany’s decision to hoard cash reserves and maintain low debt, to enable them to deal with a “worst-case scenario” has proven almost prophetic. This situation has now materialised, and the government has been well placed to aid Germany’s recovery with a substantial financial rescue package. The German government has been typically efficient and resilient, in its management of the virus and its financial support given to its workforce. They have confounded many countries with their low death rates and stable unemployment figures. The property development market has continued to function and looking to use German Bridging Loans, albeit in a reduced capacity with external, or “dangerous” work being partially suspended during the lockdown to ensure that valuable ICU beds are kept for Covid19 patients. The lighter refurbishment end of the market, where the fund focuses its lending, has continued work, but within the strict safety guidelines issued by the government. At time of writing, we are already starting to see some European countries entering the next phase with Austria, Denmark and Czechia already easing restrictions, with a slow and structured return to work planned over the next few months. The German National Academy of Sciences Leopoldina recommended this week that the country could begin reducing the restrictions imposed by the government. Chancellor Angela Merkel announced that a gradual return to work would commence on the 20th April 2020. In terms of recovery, economists are split on this, although if we refer back to 2003/04 and 2008, we can see that consumer confidence is still much higher now despite this pandemic, and coupled with the strong unemployment figures, these are 2 of the key drivers in property growth. Liquidity Management Although there is definitely “light at the end of
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