What a new-build investment can mean in practice

Average figures over a 10-year period. This illustration is non-binding and does not constitute tax, legal or investment advice. It is based on the stated assumptions, including a personal marginal tax rate of 42%; declining-balance depreciation of 5% per annum plus an additional 5% special depreciation allowance pursuant to Section 7b of the German Income Tax Act (EStG); an average nominal interest rate of 3.74% per annum, including a KfW subsidised loan; an average initial repayment rate of 1.5%; continuous full occupancy; and an assumed annual property-value appreciation of 2.5%.

The financing example assumes an equity contribution of EUR 49,570, which essentially covers the ancillary acquisition costs, including construction-period interest and the fitted kitchen. In this example, the financing amounts to 93% of the purchase price.

A low equity ratio increases both interest-rate risk and realisation risk, particularly if the property is sold before the loan has been substantially repaid. The KfW subsidised loan included in this illustration is subject to fulfilment of the applicable eligibility requirements; there is no entitlement to funding.