Christopher Oertel studies the impact of public policy measures on the German real estate
market and confirms the assumptions which imply that a city can influence its economic
position in relation to nearby cities in the short run by making use of this tax instrument.
His analyses begin with an examination of the German residential real estate market from a
consumption good perspective. The findings indicate that the home-ownership allowance had a
distorting effect by capitalizing into residential real estate prices although at lower than
expected rates. Then the author studies the German residential real estate market from an
investment good perspective. Investigating an important amendment of the German tenancy
legislation there is a positive yet insignificant relationship between the tenancy law reform
act and the development of the cap rate. The analysis is completed by focussing on the German
office market and investigating how its rental levels and gross purchase prices are affected by
changes in the municipal trade tax multiplier.
