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Investors spy big bucks in day-care crunch

As German authorities scramble to create thousands of day care places by a 2013 deadline, many investment firms are sensing opportunity and setting up "day care-facility funds" that promise solid returns over several years.

Investors spy big bucks in day-care crunch
Photo: DPA

Demand for places in day care facilities in Germany is rocketing, and local authorities must make room for another 220,000 children between the ages of one and three by August 2013, when it becomes law that all children of that age have access to a spot.

“Day care funds are the logical continuation in the chain of real estate products that tie into people’s life cycle,” said Wolfgang Kubatzki, an executive board member with the rating agency Feri EuroRating Services.

Much like dormitories and other care facilities, day care centres can offer investors long-term security – not least due to the length of rental contracts, which often run for two decades or more.

Despite some warning signs of a property bubble in Germany, many investors feel that real estate is still a good choice, in light of inflation fears and low interest rates. And the operators of day care facilities, which include local authorities, churches and private groups, are thought to be much better positioned to weather annual rent increases.

Aviarent Capital Management, a Luxembourg-based asset management company, was the first to hop on board – with a fund worth a total of more than €50 million. In October of last year, the firm bought a former school in the western German city of Essen and converted it into a kindergarten.

Unlike Aviarent’s day care fund, which is targeted toward institutional investors like insurers and pension funds, the Habona Invest company in Frankfurt is looking to offer individuals the chance to get in on the trend – and analysts are convinced that other asset management companies will start offering similar funds in future.

Yet despite solid demand for day care, pouring money in the facilities is not necessarily a risk-free investment. Closed-end funds, like the one offered by Habona Invest – generally come with a lock-in period – and there is always the chance that a seller may be unable to get a suitable price for his property.

DPA/The Local/arp

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BANKING

Card over cash? Why Germany is seeing a new payment preference

Cash has long been king in Germany, with many smaller retailers refusing to join the rest of the world in adopting contactless payment systems. But card-based payments are on the rise, as recent stats about Girocard use reveal.

Card over cash? Why Germany is seeing a new payment preference

Germany has long been a very cash-based country, occasionally to the dismay of frustrated tourists at the Döner shop.

A few German phrases express the people’s love of physical money. There’s ‘only cash is true’ – Nur Bares ist Wahres. Or Bargeld lacht, literally meaning cash laughs, but used to imply that cash is what’s wanted, similar to ‘cash is king’ in English.

But the classic German preference for cash appears to be evolving, as the use of girocards is growing, even for small transactions.

How are girocards being used?

Girocard, an ATM and debit card service offered by German Banks, was designed to allow customers to use virtually all German ATMs and, increasingly, to make purchases at businesses.

READ ALSO: Ask an expert – Why is cash still so popular in Germany, and is it changing?

Last year, consumers in Germany used their Girocard more often than ever before for cashless payments. A total of €7.48 billion payment transactions with the plastic card were counted – 11.5 percent more than in the previous record year 2022, according to figures published by the Frankfurt-based institution Euro Card Systems.

Whether at the bakery, petrol station or supermarket, customers are increasingly pulling out their cards at the checkout, even for smaller amounts. As a result, the average amount paid with the Girocard fell from €42.34 to €40.69 within a year. 

The rise of card payments in Germany

Contactless payment, which is possible with girocards and credit cards that have an NFC chip, got a boost during the Covid pandemic, as retailers promoted it for hygiene reasons. 

But the use of card payments has continued to grow in Germany since then, boosted partly by the increasing use of girocards.

Promoting the use of girocards, some German banks have expanded their cards’ functions: Sparkassen, Volksbanken, or Raiffeisenbanken offer girocards for the digital wallet, for example.

Banks want to continue upgrading the payment card with further applications. For example, a project is being tested which would add an age verification function to girocards that would be useful when a customer is buying cigarettes.

On the retail side, it’s clear why the Girocard is preferred to other debit options.

“We see that debit cards from international providers cost up to four times more,” Ulrich Binnebößel, Head of the Payment Systems & Logistics Department at the German Retail Association (HDE) told DPA.

What’s the difference between the Girocard and other debit?

The Girocard is a strictly German phenomenon. It can be seen as the latest iteration of the EC card, which was created to consolidate payment systems following the unification of former East and West Germany.

In 1991 different debit card systems, including Eurocheque guarantee cards from former West Germany and Geldkarte ATMs from former East Germany, were unified into Eurocheque cards.

Then in 2001, the Eurocheque system was disbanded, but German banks continued to use the EC logo for “electronic cash’” cards, or EC cards. In 2007, the German Banking Industry Committee introduced Girocard as a common name for electronic cash and the German ATM network.

Girocards are only issued and accepted in Germany, so if you want to get one of your own, you’ll have to join a German bank, and shell out those notorious German banking fees.

READ ALSO: Why it’s almost impossible to find a free bank account in Germany

Alternatively, you can get by with internationally accepted debit cards provided by a bank in your home country, or otherwise by joining an app-based European banking service like N26. 

But be warned, without the Girocard in hand, at some smaller retailers you may be told, “Leider nur Bargeld oder EC-Karte.

With reporting by DPA

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