To the cutting room

June 8, 2015 admin

Film directors famously take more cans of film, and actors speak more lines, than are wanted or needed. The rushes are whisked off to the cutting room and the editors get to work to trim down the raw footage and the wordage to a manageable, workable, budgeted length. The result is what you see when you go to the cinema.

It’s the same with articles. Our story creators often will write too much, and it will have to be edited down to fit the allocated space. That is particularly the case with Institutional Real Estate, Inc.’s print publications. Not for them the luxury of an endless computer screen, page down after page down, space no object — as with this blog. Print publications have real pages, an allocation of space for each article, and a style that means you cannot squeeze a quart into a pint pot. Get the scissors out.

Just as with films, the outtakes can be illuminating. Take the story I have just finished, on the prospects for real estate investors in eastern Germany, the territory of the former German Democratic Republic. July 1, 2015 marks the 25th anniversary of currency union between the two Germanies.

Here’s some jewels of insight that sadly got left on the cutting room floor:

Investment-grade properties had to be built in the towns and cities of eastern Germany, and that formed part of the massive expenditure from public and private sources that was put into improving the infrastructure and superstructure throughout eastern Germany. This was paid for partly by the much-resented income tax “solidarity” surcharge, one of those “sticky” taxes that is quick to be introduced and not so quick to be taken away again. The regeneration surcharge raises some €15 billion per year.

Reason for cut: All very true, but said in a similar way elsewhere in the story. It’s right about “sticky” taxes, though. What’s yours?

Television, whether the clock face on the evening news programme was black on white or white on black (one was West German TV, the other East German; GDR schoolteachers would ask children what kind of clock face was on their parents’ television the night before, and the wrong answers went into the Stasi files), was still television and the clock still told the time.

Reason for cut: Interesting enough, just didn’t work. Not about real estate. Kids, eh? I blame the parents. So did the Stasi, one of those fearsome security police structures that Eastern Europe was so good at — and maybe still is.

Don’t go thinking that Germany is a productive nirvana and that the workers are content with their lot. They’re not and increasingly they are making their views known. For a country governed supposedly by consensus politics, Germany is a surprisingly volatile place.

A recent visit to the country for the purposes of this article was blighted by industrial relations difficulties — Lufthansa pilots have been taking strike action against proposed pay and benefit changes for some time already, denting that airline’s reputation and persuading your writer to fly with other airlines, but on this occasion it was the decision of the German train drivers’ union to call a sudden five-day strike that halted rail services across the country and frustrated efforts at on-the-ground research. And the strike was stronger in the east, where union membership is higher and attitudes more entrenched, a throwback to socialist days and comradely solidarity.

Reason for cut: Topical, certainly, but ultimately not relevant to the story. Trade unions have been flexing their muscles throughout Europe — we nearly had a rail strike again last week in the United Kingdom, and this week sees threatened industrial action by air traffic controllers in Spain, a two-hour strike in the morning, another two hours in the afternoon and doubtless a siesta in between, every other day for a week.

How much longer will it be before eastern Germany can be said to be equal in all respects to western Germany, both from economic and real estate market points of view?

Reason for cut: Conjecture. Doesn’t help the story. How long is a piece of string? One person said, “another five to 10 years,” a second, “at least another 10 years,” a third, “never.” Well, he didn’t say, “never.” He said that eastern Germany “is destined to remain behind.” Same thing, really.

You want to know more about the real estate markets of eastern Germany? About the prospects there for global investors? Read the bits that weren’t cut? See the cover story in the forthcoming July/August 2015 issue of The Institutional Real Estate Letter – Europe, on the streets from around June 20.

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RichardFlemingRichard Fleming is editor of The Institutional Real Estate Letter – Europe.

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