Business

AMMAN — Royal Jordanian (RJ) announced Sunday in a press statement that losses dropped by JD1 million to JD7.3 million in the first quarter (Q1) of 2016 from JD8.3 million in Q1 of 2015.  “The results improved by 13 per cent despite the unfair competition the company faces,” the company said in the statement.

“The drop in losses happened even though Q1 of 2016 revenues also went down 5 per cent to JD140.4 million from JD148.4 million in the first three months of 2015.”  The lower revenues were attributed to the reduced tickets prices resulting from lower oil prices. RJ reiterated that air traffic is seasonal in nature.

“Normally airlines, RJ included, see a remarkable regression in the number of travellers in the first and last quarters of the year [the winter season], whereas they witness active traffic in the second quarter and reaching the peak season in the third quarter, during the summer and holidays, which means improved seat factor,” it said. Improved seat factor enables airlines to achieve better financial results at the end of the year, as was the case with RJ last year.

AMMAN — Industry, Trade and Supply Minister Maha Ali on Tuesday inaugurated the Jordanian-Czech business forum, organised by the Jordan Chamber of Commerce (JCC) in cooperation with the Czech embassy in Amman. 

Ali indicated that the Kingdom's import from the Czech Republic in 2014 and 2015 reached $34 million, whereas Jordanian exports to the European country in the same period did not exceed $100,000.

Noting that commercial and investment exchange between the two countries does not reflect the good bilateral political relations, she highlighted Jordan as an investment and tourist destination and a business hub in the region, especially that it provides an advanced business environment, modern infrastructure, qualified human resources and efficient communication network, in addition to special economic zones that are equipped with infrastructure and logistics. 

The minister also said that Jordan has signed trade agreements with many countries, such as the US, Canada, Turkey, Singapore, the EU and Arab countries, that enable the Kingdom to penetrate markets with more than 1 billion consumers.

She added that Jordan's gross domestic product increased from $8.5 billion in 2000 to some $37 billion in 2015, while the national exports went up by fivefold between 2000 and 2015.

Czech Industry and Trade Minister Jan Mládek noted that political relations between Jordan and the Czech Republic date back to the mid-1960s, describing Jordan as among the most important partners in the region due to the security and stability it enjoys in a turbulent region.

He said his country is looking forward to reaching developed economic ties with the Kingdom and increasing the commercial exchange volume.

Mládek also referred to an agreement between both countries on generating nuclear energy, expressing his country's readiness to provide Jordan with all its technical expertise in this field.

JCC President Nael Kabariti called on Czech businesspeople to take advantage of Jordanian investment environment, which is based on modern laws.

On the sidelines of the forum, Ali and Mládek held a meeting and discussed necessary steps to enhance economic cooperation through signing bilateral agreements and stimulating both countries' private sectors, highlighting the need to intensify commercial visits and holding joint conferences. 

AMMAN — The Jordan Exporters Association (JEA) recently arranged the participation of local food companies in SIAL Canada food exhibition hosted in Montreal last week, JEA President Halim Abu Rahmeh said Tuesday.

Nine Jordanian food companies took part in the event which is expected to open new export markets for local products, Abu Rahmeh noted. Department of Statistics' figures show that Jordanian exports to Canada in 2015 reached JD38.3 million, compared to JD36.4 million worth of Canadian exports to the Kingdom in the same year.

The JEA president also highlighted the importance of the Canadian market for the Jordanian food sector, due to the big Arab community it houses and its being a gateway for local products to enter the US market. He also noted that the association is preparing for other participations in Russian, French and Emirati exhibitions.

ABU DHABI/HASAKA, Syria — Syria's war has destroyed agricultural infrastructure and fractured the state system that provides farmers with seeds and buys their crops, deepening a humanitarian crisis in a country struggling to produce enough grain to feed its people.

The country's shortage of its main staple wheat is worsening. The area of land sown with the cereal, used to make bread, and with barley has fallen again this year, the UN Food and Agriculture Organisation (FAO) told Reuters.

The northeast province of Hasaka, which accounts for almost half the country's wheat production has seen heavy fighting between the Kurdish YPG militia, backed by the US-led air strikes, and Daesh militants.

Farming infrastructure, including irrigation canals and grain depots, has been destroyed, according to the FAO. It said the storage facilities of the state seeds body across the country had also been damaged, so it had distributed just a 10th of the 450,000 tonnes of seeds that farmers needed to cultivate their land this season.

Farmers are also struggling to get their produce to market so it can be sold and distributed to the population.

The conflict has led to the number of state collection centres falling to 22 in 2015, from 31 the year before and about 140 before civil war broke out between government forces and rebels five years ago, according to the General Organisation for Cereal Processing and Trade (Hoboob), the state agency that runs them. Many of those lost have been damaged or destroyed.

The breakdown of the agricultural system means Syria could struggle to feed itself for many years after any end to the fighting, and need a significant level of international aid, FAO said.

It has had a major impact on plantings; the area of land sown with wheat and barley for the 2015-2016 season stood at 2.16 million hectares, down from 2.38 million hectares the previous season and 3.125 million in 2010 before the war, and only around two-thirds of the area targeted by the government, it indicated.

The UN organisation added that its planting information came from the Syrian government. The government itself has not made public the figures for 2015/16 plantings.

The agriculture ministry could not be reached for comment. A government source told Reuters that information on the 2015/16 crop area was still not ready for publication.

"What concerns us is not the fluctuations from one year to the other, it is the worrying overall downward trend," said Eriko Hibi, the FAO's main representative for Syria.

Depending on rain

The worsening wheat shortage is another hammer blow to a country where the population numbered around 22 million before the civil war but more than 250,000 have been killed in the fighting and millions have become refugees.

Last year, farmers sold just over 450,000 tonnes of wheat, a fraction of the 1-1.5 million tonnes that is needed to provide enough bread to government-held areas of the country alone, government sources and traders said.

Before the conflict, by contrast, Syria could produce 4 million tonnes of wheat in a good year, with around 2.5 million tonnes going to the state and the surplus exported.

The United Nations said in January that some Syrians were starving in besieged areas under the control of rebel forces or Daesh, which it said were home to at least 400,000 people.

Faisal Hejji, a farmer in Ras Al Ain in Hasaka, said he had devoted 200 dunums of land to wheat this season, down from 300 dunums before the conflict.

"War has made us lose a lot of the necessary inputs we need and when we do find them they are pricey," Hejji added. "We used to support one dunum of wheat with 50 kilogrammes of fertiliser but now this is missing."

"Also, we are now depending more on rain rather than other irrigation methods," he continued.

No security

His plight is typical of farmers across the country, according to the FAO, which estimated last year that Syria's wheat deficit for 2015 stood at around 800,000 tonnes. That deficit could widen every year should farmers continue to lack access to agricultural inputs and markets, it said.

"Many farmers don't want to be displaced or give up their land, they want to stay as long as they can and in order to do that they have to be able to produce their food and make ends meet," Hibi said.

She added that it was still too early to tell what this year's wheat crop would be, as it depended on the weather. "So far it has been a bit drier but that may change," she said.

Syrian farmers benefited from the best rainfall in a decade last year and harvested around 2.4 million tonnes of wheat, significantly better than the drought-stricken year before but still around 40 per cent lower than the pre-war average.

Hejji's land is located in a part of Syria where Kurdish groups declared their own government two years ago known as the self-administration. Yet he still sells his wheat to the state-run Hoboob, which he says is the only group capable of buying it at suitable prices.

"I go to the Hoboob agency in Hasaka or Qamishli to sell my wheat and I store small quantities for me and my family. Some farmers sell their wheat to middlemen but these traders also sell them ultimately to Hoboob," he said.

It is difficult to transfer wheat and other food from one province to another because of lack of security, Hibi added. "I've seen a lot of fresh fruit wasted in some areas where just nearby people haven't seen fresh fruit for years."

SEOUL — South Korea vowed Tuesday to restructure the country's once formidable shipbuilding and shipping sectors, now crippled by mismanagement, slowing global demand and competition from Chinese rivals. 

Shipbuilders, including Hyundai Heavy Industries and Daewoo Shipbuilding and Marine, have racked up massive losses after slumping oil prices sapped demand for tankers and offshore drillers.

The "Big Three" firms dominated the world's shipbuilding market during the 1990s and 2000s and although they had combined sales of more than 68 trillion won ($59 billion) last year, an extended export slump, regional rivalry and overcapacity have taken their toll.

Daewoo, the world's second-largest shipbuilder, posted a record net loss of 5.5 trillion won last year.

Hanjin Shipping, the South's top container carrier, applied for a creditor-debt restructuring plan on Monday to avoid bankruptcy after reporting mounting losses stemming from slowing demand in China. 

Its smaller industry peer, Hyundai Merchant Marine, has also been bleeding cash for years, with both firms criticised for paying inflated charter fees to shipowners.  

As shipbuilding and shipping firms seek government aid or extensions on their debts, Seoul's regulatory body said it would press them to sell more assets, shed jobs, slash worker pay and streamline their business plans.  

"The focus of the restructuring is to deal with overcapacity and loss of competitiveness for companies involved," said Yim Jong-yong, the chairman of the Financial Services Commission (FSC).

"Companies and creditor banks can't do this alone. We all need to work together and fast to make this happen," Yim added.

While the FSC also named the steel, petrochemical and construction sectors as being in need of intensive restructuring, it focused on shipping and shipbuilding because of their "continually worsening situation". 

Daewoo, partially owned by state-run Korea Development Bank, will be required to shed thousands of jobs, cut costs and have its progress reviewed by creditors, according to the FSC statement. 

Hyundai Heavy and Samsung will also be required to submit their own restructuring proposals, which will be closely monitored by their creditor banks.

Shippers like Hanjin and Hyundai will be required to renegotiate and slash charter rates for vessels they have leased and reach an agreement with bondholders to restructure the debts before creditors start to provide support. 

Creditor banks, mostly state-run, will help boost capital of the ailing companies that push through "speedy and pre-emptive" restructuring measures, the FSC said. 

"The government and creditors need to make full efforts for speedy restructuring to... revitalise the economy as soon as possible," it added. 

An extended slump in exports and weakening domestic consumption has taken an increasingly large toll on Asia's fourth largest economy, which expanded just 0.4 per cent in the first quarter of this year. 

Exports, which account for nearly half of the country's economy, have been in decline for 15 straight months. The International Monetary Fund this month cut the country's growth outlook for 2016 to 2.7 per cent from 2.9 per cent.

AMMAN — The first credit information bureau will play a key role in increasing financial inclusion and eventually triggering economic growth, Central Bank of Jordan (CBJ) Governor Ziad Fariz said Monday.

Speaking at the opening of the Euromoney Jordan Conference, Fariz said the bureau will help make available credit for those who were never able to get credit from banks.

“The bureau is important for enhancing financial inclusion, especially for startups and women and increasing their participation in the economy,” said Fariz, adding that only 25 per cent of Jordanians have bank accounts.

“We have to exert efforts to increase this percentage to 50 per cent, which is internationally acceptable,” added the governor at the event, which brought together around 400 high-level government officials, investors, financiers, business leaders and entrepreneurs from Jordan and across the Middle East region to address the development of Jordan’s innovation economy. 

During the event, Planning and International Cooperation Minister Imad Fakhoury reviewed Jordan’s National Vision and Strategy 2025 which charts the path for the future and determines the integrated economic and social framework that will govern the economic and social policies based on providing opportunities for all. 

“This national strategy is foreseen to enable Jordan to move rapidly to the diversification of resources, development of infrastructure, and capitalise on existing strengths. Its basic principles include promoting the rule of law and equal opportunities, increasing participatory policy making, achieving fiscal sustainability and strengthening institutions,” said Fakhoury.

The strategy is being implemented through three phases. The Kingdom’s 2016-2018 Executive Development Programme (EDP) forms the first implementation phase. 

This programme has been prepared with full coordination for the first time with the General Budget Department so that the outputs of the development programme are the reference in the preparation of the budget which ensures the direction of financial allocations in the areas of development, that have been planned for. 

The EDP also takes into consideration the Governorates Development Programmes for 2016-2018, he added.

The government has also identified 15 priority initiatives that were included both the long term strategy and medium term plan. These priority initiatives are in the sectors of water, healthcare, tourism, energy, vocational training, investment, transport, ICT, education and local development, Fakhoury continued.

Regional circumstances and disruption associated with them have impacted Jordan for very long... However, Jordan has always been able to accommodate its strategies and plans accordingly.

“We always seek to find opportunities in challenges, thus though we have long-term strategy “Jordan 2025”, but its implementation is through flexible medium term developments programmes that are revised annually. This enables us to take all new developments into account within our plans. For instance, currently the (2016-2018) EDP  is being revised to integrate the outcomes of the 2015 Population Census and the Sustainable Development Goals of the 2030 Agenda  into the programme,” Fakhoury elaborated.

Organised by Euromoney Conferences, the event also attracted a significant number of international delegates from further afield, including attendees from Australia, Canada, France, the United Kingdom and the United States of America.

Sharing their views during the opening session, panellists including Ahmad Abu Eideh, chief executive officer, Middle East at Standard Chartered, and Trevor Cullinan, director of sovereign ratings at Standard & Poor’s, debated the outlook for Jordan’s economy, discussing the effect of low energy prices, the future of the International Monetary Fund programme and public debt management, as well as addressing the expected impact of the first phase of the Jordan’s 10-year economic development programme, ‘Jordan 2025’.

The event also explored the important role that Jordan’s small and medium-sized enterprises sector plays in the country’s wider economic development. 

Panellists such as Fawaz Zu’bi, founder and chief executive officer of Accelerator Technology Holdings, Rasha Manna,  managing director of Endeavour Jordan, and Marion Hoenicke, head of the lending operations division at European Investment Bank, discussed the challenges and opportunities faced by entrepreneurs and start-ups. 

They also examined the role that supporting organisations, such as donors and credit agencies, play in helping these companies to grow and thrive, as well as how Jordan can further cement its status as a hub for entrepreneurship in the region.

Another key theme of the conference was that of innovation and the development of a digital ecosystem in Jordan. 

Panellists explored how digital technology and information communication technology contribute to the advancement of the innovation economy, looking at its potential benefits to the Kingdom’s economy as a whole. 

RIYADH — The powerful young prince overseeing Saudi Arabia's economy unveiled ambitious plans on Monday aimed at ending the kingdom's "addiction" to oil and transforming it into a global investment power.

Deputy Crown Prince Mohammed Bin Salman said the world's top oil exporter would raise the capital of its public investment fund to 7 trillion riyals ($2 trillion) from 600 billion riyals ($160 billion) and would sell up to 5 per cent of shares in state oil giant Aramco.

The plans also included changes that would alter the social structure of the ultra-conservative Muslim kingdom by pushing for women to have a bigger economic role and by offering improved status to resident expatriates.

"We will not allow our country ever to be at the mercy of  commodity price volatility or external markets," Prince Mohammed said at his first news conference with international journalists.

"We have developed a case of oil addiction in Saudi Arabia," he had earlier told Al Arabiya television news channel.

His "Vision 2030" envisaged raising non-oil revenue to 600 billion riyals  ($160 billion) by 2020 and 1 trillion riyals  ($267 billion) by 2030 from 163.5 billion riyals ($43.6 billion) last year. But the plan gave few details on how this would be implemented, something that has bedevilled previous reforms.

The 31-year-old prince gave assured answers to questions on the plan, and appeared to pitch his comments to appeal across the Saudi social spectrum, and in particular to young people, who face unemployment and an economic downturn despite their country's oil wealth.

Even before oil prices started to plunge in 2014, economists  had regarded Riyadh's fiscal policy and economic structure as being unsustainable, but reduced income from energy sales has made reform more urgent.

At the centre of the plan is the restructuring of its Public Investment Fund, which Prince Mohammed said would become a hub for Saudi investment abroad, partly by raising money through selling shares in Aramco.

The partial privatisation of Aramco was also central to the plans, and Prince Mohammed said it would be transformed into an energy company that he expected to be valued at $2 trillion to $3 trillion, and that less than 5 per cent of it would be listed on the stock market.

So big is the state oil company because of its rights to the kingdom's crude reserves, that selling even 1 per cent of its value would create the biggest initial public offering (IPO) on earth, he said.

He added that other Aramco subsidiary companies would also be listed along with other publicly held companies, and noted that one major benefit of privatisation was that it would increase transparency and help limit corruption.

"People used to be unhappy that files and data of Aramco are undeclared, unclear and not transparent. Today they will be transparent. If Aramco gets IPO-ed that means it has to announce its statements of accounts," he continued.

Since the prince was appointed to oversee Saudi long-term planning through the Council of Economic and Development Affairs, Riyadh's focus on reform has grown far more urgent and far more acute.

Prince Mohammed has enjoyed a dizzyingly rapid rise since his father became king 15 months ago, from being little known outside the ruling Al Saud family to become the driving force of Saudi plans to prepare for a future after oil.

In his rare press conference, he presented himself as a modernising leader who seeks to shake Saudi Arabia out of its economic slumber and its reputation for opacity and rigid bureaucracy, showing an interest in topics including education, the public role of women, and football.

The government ran a deficit of 367 billion riyals ($98 billion) or 15 per cent of gross domestic product in 2015, officials said, and this year's budget plan aimed to cut that to 326 billion riyals ($87 billion).

His economic team has already announced efforts to curb wasteful government spending, to diversify revenue streams by introducing sales tax and privatising state assets, and to make reforms in the education sector.

Such was the speculation among Saudis over the details of the plan that hashtags associated with it were the top two trending on Twitter on Monday in the country with the highest rate of social media use in the Middle East.

But ambitious targets, such as raising the private sector share in the economy to 60 per cent from 40 per cent, reducing unemployment to 7.6 per cent from 11 per cent and growing non-oil income to 1 trillion riyals ($267 billion) from 163 billion riyals ($44 billion) were not explained further.

Some Saudis said they had hoped for more detail on crucial issues such as education reform. There were no further details of plans to increase revenue from tax or of any changes to the political structure of the absolute monarchy.

"For me as a Saudi, I am concerned by the education transformation plan," said a Saudi entrepreneur. "If it is not at the top of the list, why not?"

However, the plan also envisaged increasing women's participation in the workforce, something that has already grown quickly over the past five years, to 30 per cent from 22 per cent.

But he also said he did not believe Saudi society was ready to end its ban on women driving.

A green card system would also be launched within five years to enable expatriate Arabs and Muslims to live and work long-term in the country, Prince Mohammed said, in a major shift for the insular kingdom.

But the focus was on economic restructuring to help reduce oil dependence.

"I think by 2020, if oil stops we can survive," Prince Mohammed said. "We need it, we need it, but I think in 2020 we can live without oil."

Appealing to Saudi youth, he ended his news conference by promising them a new Saudi Arabia.

"The vision is not a dream, it's a reality that will come true," he said.

AMMAN — Economic growth rates in Djibouti constitute a good opportunity for Jordanian businesspeople to invest in the industrial, agricultural, housing and service sectors, Industry, Trade and Supply Minister Maha Ali said on Monday. 

At a meeting the Jordan Chamber of Industry organised between the industrial sectors in Jordan and Djibouti, Ali added the Kingdom is "very keen" to enhance economic relations with Djibouti.

She also referred to a previous meeting with Ilyas Dawaleh, Djibouti's minister of economy and finance in charge of industry and head of the delegation, when it was agreed to increase Jordanian exports to the African country, especially  pharmaceuticals, phosphate, potash, electric devices and Dead Sea products.

Djibouti agreed to provide necessary facilities to establish a Jordanian logistic village in its free zone to store Jordanian goods and re-export them to African markets, Ali continued.

Both countries also decided to embark on talks to sign bilateral agreements on commercial preferences, investment encouragement and protection, agriculture, exchanging expertise on standards and metrology, and industrial property protection, the minister elaborated. 

Transport Minister Ayman Hatahit said Aqaba Port is connected with Djibouti through four maritime routes, noting that shipping between Aqaba and Djibouti is the cheapest, where the cost of one 20-cubic feet container costs between $500 and $600.

Dawaleh said the visit to the Kingdom is aimed at developing commercial ties, and facilitating the Jordanian trade movement into Africa.

At another meeting, Dawaleh met Sunday night with local private sector industrialists.

Jordanian Businessmen Association (JBA) President Hamdi Tabbaa said Jordan is about to establish a maritime transport route between Aqaba and Turkey's Iskenderun Port, with a possibility to extend the route to Jeddah and Djibouti. 

Tabbaa encouraged Djibouti's businesspeople to invest in the Kingdom which offers good opportunities to reach US, European, Canadian, Turkish markets thanks to bilateral free trade agreements, according to a JBA statement. 

Tabbaa, who is also the honorary consul of Djibouti, highlighted the importance of cooperation in the service sector, mainly because Jordan enjoys "good reputation" in the health, pharmaceutical, and higher education fields. 

Dawaleh praised JBA's mission and invited a JBA delegation to Djibouti to check on cooperation means and investments in the country, which can serve as a hub to reach eastern African countries, added the statement.

BERLIN — Unlike his parents who rented their whole life, Berlin resident Sebastian lives in his own apartment and is considering buying a second property in the German capital as an investment to top up his pension one day.

For decades a nation largely of tenants and prudent savers, growing numbers of Germans are buying property, not just to own their homes but also in search of investment returns they can no longer earn on their bank savings.

This shift to a more US or British approach to property is being encouraged by the European Central Bank's (ECB) cheap money policies and rising rents, especially in German cities.

A growing urban population and unexpectedly high immigration are pushing up a housing market where construction rates had been low for years.

"I've a private pension scheme, but despite diligent saving, it hardly yields anything due to the ultra-low interest rates," said Sebastian, a 38-year old management consultant, who asked not to be named in full because he does not want clients to know about his personal financial affairs.

While Sebastian bought his first apartment six years ago to escape rising rents, he now wants to buy a second property as a private retirement fund.

In the years that followed the fall of the Berlin Wall, property prices in the city were significantly lower than in the likes of London or Paris. But the German capital is no longer a cheap place to live.

"The problem now is: it's really difficult to find an apartment in Berlin which is not totally overpriced," added Sebastian.

Figures from the European Union's (EU) statistics agency show 52.5 per cent of Germans lived in their own home in 2014, well below the EU average of around 70 per cent. But this is sharply up from 2006 when, according to separate data from the German Federal Statistics Office, the level was about 42 per cent.

Strong demand for homes is fuelling a construction boom that is helping to support the German economy while exporters, who traditionally drive growth, struggle due to a slowdown in some of their major markets such as China.

In the last three months of 2015, construction was one of the biggest growth contributors while net trade was a drag. In the first two months of 2016, building investment further increased, raising hopes of a strong first quarter.

However, concerns are growing that a property bubble may be inflating at least in some cities. If it bursts one day, a scenario that could be created by rising interest rates, higher unemployment and changing demographics, owners and lenders alike could be hurt, posing a risk to medium-term growth.

A shortage of affordable housing is also forcing poorer families out of cities, widening the social gap in one of Europe's richest societies and raising tensions after a record 1 million migrants arrived last year alone.

Benefitting from the boom

So far, Sebastian has benefited from the boom. After studying in London and Boston where rent ate up a large part of his scholarships, he returned to buy a 100-square-metre apartment in Berlin's then up-and-coming Wedding district. For the 120,000-euro ($135,000) purchase, he borrowed  100,000 euros in 2010 on an interest rate of 3.8 per cent.

"From today's point of view, this was a bargain," Sebastian said, adding that he could now probably sell the flat for twice the price, if not even more.

Many others have followed suit. Comparing prices on property websites has become a hobby for many Germans and real estate is a frequent topic of conversation at parties.

"The demand for owner-occupied flats in Berlin has been booming since 2010 and it has increased in the last two years," indicated Christian von Gottberg, a real estate agent at the Engel and Voelkers.

First-time buyers tell Gottberg how landlords are raising rents for a third time within a couple of years. "So whoever can afford it, and has the financial means to meet the bank requirements for the deposit, opts for their own apartment."

Rates of owner occupancy remain modest by EU standards. "But for Germany, it's a radical change. And it's the ECB's record-low interest rates that are driving this," indicated Steffen Sebastian, head of real estate finance department at the University of Regensburg.

Strict standards

Construction firms and real estate groups are naturally benefitting from the boom.

For instance, shares in Patrizia Immobilien, which is building 4,000 new flats on top of the 80,000 homes it already owns, rose about 35 per cent in the past 12 months.

Hochtief, which focuses on public construction projects but also builds homes, has risen nearly 60 per cent over the same period.

Perhaps the biggest beneficiaries are thousands of small- and medium-sized firms that dominate residential building, and the banks which hand out ever more loans.

According to the Bundesbank, the overall volume of real estate loans rose by 3.5 per cent, the strongest annual rate in more than a decade, to a record 1.23 trillion euros in 2015.

This has led Bundesbank board member Andreas Dombret to warn of an overheating property market, at least in some cities, and urge banks to stick to their credit criteria which have so far been strict.

While some blame speculation for part of the price rises, others point out that housing remains in short supply due to a lack of construction in 2001-2009 when borrowing costs were much higher and tax incentives were scaled back.

Also, German home buyers still finance nearly a third of their property purchases with cash. The average debt ratio has risen only slightly from 70.3 per cent in 2010 to 71.7 per cent in 2015, according to Interhyp, Germany's biggest mortgage distributor.

"Talk about a nationwide housing bubble is surely exaggerated," Interhyp Chief Executive Officer Michiel Goris said.

The structure of loans has even become more conservative as clients are locking in record-low borrowing costs of below 2 per cent for a period of up to 15 years, he added.

For Sebastian, German banks are still too strict. Since he opened his own consultancy firm with no steady income on paper, lenders have hesitated to give him a second property loan. 

"That's absurd. But due to standardised processes, the banks are not flexible, no matter how cheap the ECB is making money," he said.