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Property in the Vogtland: Economy meets the environment - The Interview

Hello Mr. Hörning, it is a pleasure to have you answer a few questions about your company and your plans today. You are active and successful in construction of private housing and in the implementation of innovative senior citizen concepts. Please say a few words about yourself as a project owner:

My name is Markus Hörning, I am 36 years old, married and father of 2 children, 2 and 6 years old. I have headed the Hörning Group since 2011 and have been Managing Director of Markus Hörning GmbH, a property company for property management, energy-related renovation, residential construction and project development, since 2016. My profession is my passion. Economy and environment always belong together for us.

Can you tell us something about the history of your training, qualifications? How long have you been active in the industry? What professional experience and experiences have you had and what positions have you held so far?

Since 1999 I have held managerial positions as a graduate in Real Estate and Housing Management and gained valuable experience in all areas in large companies, from 2011 in my own group of companies. After further training, including at the European Real Estate Academy and the Chamber of Industry and Commerce, I was accredited as a certified property valuer in 2015. Around our company exists a stable network of specialists in the fields of architecture, IT, marketing and sales, business administration and law. We have established reliable partnerships with all building trades.

Please introduce us briefly to your company Markus Hörning GmbH and give details about its share capital, organisational structure, your objectives, control bodies, scalability, etc..:

Hörning GmbH has a share capital of currently € 250,000. In addition, the company holds current capital reserves of at least the same amount and mezzanine capital of over € 1.5 million. Taking into account the low level of borrowed capital, this results in an equity ratio of at least 82%. Markus Hörning GmbH is an essential part of the family-run group of companies and thus “a child of the family”. Precisely in this way, every single property project is seen as a “part and child of the family”. We manage all areas relating to property projects ourselves, our partners participate in the success and are highly motivated. This enables us to act flexibly and leanly. Lean management as part of strategic business management is key to ensuring competitiveness and growth opportunities. It is also the basis for attractive, sustainable and stable returns for potential investors.

We want to implement innovative, environmental and affordable living space concepts. Tenants and buyers are involved in the construction process, which increases the acceptance and loyalty of future buyers or tenants. One example of this is our senior citizen concept.

How does the company finance itself? You had mentioned a high equity ratio…

In addition to proceeds from trading in property and income from letting, the company finances itself from equity and mezzanine capital as well as supplementary bank financing.

The mezzanine financings have a qualified subordination agreement, which gives the equity capital the character of balance sheet equity capital.

Credit institutions may be consulted from time to time for specific projects or as part of mixed financing.

What future plans do you have for your company and what are the prospects for investors?

We concentrate on creating living space with an environmental focus. Sustainability and profitability should fit together, quality comes before quantity. We want to create annually:

  • 3-4 projects of medium size or a volume of approx.
  • 30 – 50 residential units or an average of approx.
  • 2,500 – 4,200 m² of living and useful area

Preparations for our senior citizen concept have been underway since the end of 2017.

The market research, the business plan and the information brochure have been completed. We are already noticing a great deal of interest. The demand for high-quality living space suitable for senior citizens is huge, especially in our region. You will find initial information on our homepage: www.sunlife.world

What exactly is done in your projects? What is the objective, the basic concept and what are your unique selling points?

We acquire historically valuable property in predominantly central locations. We renovate them to the highest energy standards with optimal living space layouts. These properties are then let and sold at a profit to interested investors.

What priorities do you set?

In the first step every property undergoes a basic assessment of its current condition and an energy assessment. This includes the inspection of roofs, attics and facades, window reveals and glazing, the type of heating, air conditioning and hot water heating, the condition and insulation of cellars and other ancillary areas. We want to protect the environment and the purse of all those involved.

What technologies are used?

We follow the expert’s recommendations, adjusted to the respective property. As a result, a perfect indoor climate should be created efficiently. The product provider with the most comprehensive service wins. Quality pays off in the end and comes before price.

Does the Vogtland region have any location advantages as a location for investment?

  • Saxony is today the most densely populated state of all the former East German states
  • Here is the highest self-employment rate of all the former East German states
  • The highest foreign trade ratio of all the former East German states
  • The second-lowest per capita debt after Bavaria at € 2,847 per inhabitant
  • The highest investment rate for years of all the former East German states
  • The second highest industrial density of all the former East German states, Thuringia 3rd place in the whole of Germany
  • The highest density of craftsmen in Germany
  • Since 2000: 13.9% economic growth – first place for the whole of Germany
  • Low labour and living costs (tariffs for craftsmen well below national average)
  • Highly qualified and motivated workforce
  • We have a long tradition as a location for business, and today we are an internationally competitive high-tech location
  • Industry characterised by advanced small and medium-sized companies is not only located in conurbations, but throughout the region
  • Excellent connections to national rail and motorway networks
  • 45% of all R&D personnel and 46% of all patent applications in the former East German states come from Saxony

But there are also other regional peculiarities:

  • The situation in the quadrangle – keyword: influence: “opening of the east
  • The “late development”, late promotion of the medium-sized towns in the Vogtland. Since the end of the 1990s therehas been massive development of infrastructure and business locations due to the extraordinary conditions, such as space availability, low tax rates, good transport connections and highly qualified personnel

And, there are also the particularities of the regional property and tenant market in the medium-sized towns:

  • High funding potential for urban development through EU, federal and state programmes
  • Sustained positive development in micro-locations with stable and rising rents
  • Massive demolition of old buildings -> shortage of living space
  • “Rediscovery” of the region as a location for education and tourism
  • High supply of historically valuable buildings in inner-city locations
  • Cost prices for valuable residential property still low

Are there already references and similar projects?

Of course, here are few examples:

  • 12 residential units in residential complex in Greiz, € 1.2 million
  • 5 residential units and 5 commercial units in exclusive villa in Greiz, € 1.8 million
  • 40 residential units in residential complex – sale of freehold apartments in Netzschkau, € 1.0 million
  • 2 residential units in residential complex in Oelsnitz, € 320,000
  • 15 commercial units in property in Reichenbach, € 310,000
  • 6 residential units in apartment building in Lengenfeld, € 630,000
  • 3 residential units in apartment building in Greiz, € 168,000
  • 10 residential and office building units in Lengenfeld, € 600,000
  • 4 residential and office building units in Reichenbach, € 430,000
  • 2 residential units in residential complex in Reichenbach OT Mylau, € 650,000
  • 11 properties in portfolio / on the market with 45 residential units renovated and fully let, € 3.2 million
  • 27 other smaller properties brokered, € 4.3 million

Let us once again summarise the most important unique selling points of the Markus Hörning Group:

  • Exceptional, alternative and creative niche concepts
  • Pioneer for private, affordable housing in the region involving citizens
  • Environmental focus
  • Future-oriented senior citizen concept with high user involvement
  • Best locations with sustainable, environmental and functional design
  • Mainly equity financing and thus maximum independence from banks
  • Fusion of family, company and projects with a long-term mindset
  • Maximum flexibility, creativity, enthusiasm