Challenge and Opportunity: Theses on Municipal Development after the Pandemic

Once a quarter, the members of Loanboox’s Market Industry Board exchange views on current topics related to municipal financing. In the virtual March meeting, Norbert Portz from the  German Association of Cities and Municipalities was a guest. He shared his knowledge and experience and presented inspiring trends on the possible development of cities and municipalities after Corona.

There are about 11,000 cities and municipalities in Germany, large and small, structurally weak and structurally strong. What unites them all – despite the differences – is the question of the “aftermath” and what effects the pandemic will have.

Thesis 1: Inner cities develop new structures

It is foreseeable that online retail, which has increased by 20% in 2020, will remain at a high level. This has an enormous impact on local retailers and on the structure of city centres.

Inner cities are the mirror of society and represent its change spatially. They are home, offer identification, are points of attraction for residents and tourists. Much of this is lost through the closure of department stores and retail outlets as a source of footfall. New concepts of use and adapted structures are needed.

The future lies in functional mixing

Some medium-sized cities are setting a good example – and did so even before Corona. In Chemnitz, for example, a former department stores’ was turned into a museum and in Neuss into a theatre. Others are opting for a mix of uses for the department stores’ property, including retail, gastronomy, education, housing and parking. Potential new tenants for retail shops in the shopping malls could be craft businesses, kindergartens and creative people, for whom the inner city location is becoming attractive due to falling rents. Falling prices also offer opportunities for affordable living in the city and new work concepts.

But a change of use entails other adjustments. Noise protection and making opening hours more flexible are just two examples. Other things also need to be considered: a good pedestrian and bicycle infrastructure, public transport connections and accessibility by low-emission private transport. Attractive, safe and clean public paths and squares with seating and sufficient play facilities for children are equally important.

The municipalities, with their economic promotion and city marketing, play a key role in shaping the inner city transformation and are faced with major tasks.

Rathaus Deutschland

Thesis 2: Working from home strengthens the metropolitan hinterland

Working from home will continue to be recognised by many companies as an equivalent form of work in the future. There will be no complete return to compulsory office presence, according to surveys and studies. The resulting effects will be enormous, especially in the conurbations: vacant office space and buildings in the city centres and their conversion are one thing, moving to the countryside is another.

The dream of a house in the countryside – and more seclusion

Whether Cologne, Frankfurt, Hamburg, Berlin, Munich, Stuttgart or Düsseldorf – the rural areas around the major German cities are booming. There, one can combine the advantages of rural life with those of proximity to the big city: larger flats or houses with gardens, better access to childcare places and nature right on the doorstep, coupled with urban cultural offerings and medical care. Working from a home office also means that it is no longer necessary to drive into the congested city centre every day. This creates freedom and leisure.

Rising property prices reflect this trend. With the exception of Düsseldorf and Frankfurt, the prices of condominiums in the surrounding areas have risen more strongly on average since 2017 than in the metropolises themselves, according to a study by the Sparda banks and the Institute of the German Economy (IW) in Cologne. Moreover, it comes as no surprise that demand for the purchase of single-family homes in particular has risen sharply since the beginning of the pandemic.

A good infrastructure without ifs and buts

The small and medium-sized towns and municipalities benefit from the love of the countryside. But here, too, concepts are needed for the further development of structures. The expansion of public transport and connections to the metropolis, broadband internet and fibre optic cables, ensuring medical care and the expansion of kindergartens and primary schools are important criteria when it comes to choosing the right place to live.

In general, the “after” becomes a social and cultural task for society as a whole that goes far beyond commercial points of view.

Talking about commercial viewpoints: If you are interested in open market operations and how municipalities can benefit from the ECB’s cash injection, then continue listening or reading here.

Interest rates and inflation – Daniel Stelter’s economic forecast

Interest rates and inflation – Daniel Stelter’s economic forecast

How do cities and municipalities get through the Corona crisis? What do capital providers and investors need to be successful? And what advantages does digitalisation bring? In the loanboox.asks. series, we talk to experts about topics like these. Daniel Stelter kicks off our audio talks.

The forecasts for 2021 are mixed. On the one hand, highs on the stock market – on the other hand, dampened economic expectations due to the ongoing Corona pandemic. And on top of that, central banks are pumping massive amounts of money into the markets and keeping interest rates low. We talked to the economic expert and author Daniel Stelter in loanboox.asks. about how all this is connected. He says:

The economic consequences of the Corona crisis will keep us busy for a very long time.

Listen to his assessments in the following audio:

Niedrigzins und Inflation - ein Ausblick auf 2021 mit Daniel Stelter

by Simone Franzke

About the person:

Daniel Stelter is a macroeconomist, strategy consultant and author. In his podcast “Think beyond the obvious” he looks behind the scenes of economic and financial policy and explains important connections.

No time to listen to the audio now? Then simply download the article.

The vaccine and the capital markets

Everything will be fine, one might say in view of the hopeful news about Covid19 vaccines that will soon be available. And at least the financial markets agree with this credo. But is this just a snapshot or already a signal for a synchronised global upswing?

The announcement that several vaccines against the virus could be approved before the end of this year has not only caused the prices of the respective pharmaceutical companies to soar, but also boosted the stock markets in general. Although many details – such as the distribution of the vaccines – have not yet been clarified, the upswing on the markets is virtually anticipated. This applies both to the development of the real economy and to the opportunities on the capital markets. Investors worldwide are optimistic. The question, however, is: What factors can influence this development? And at what starting point do we actually stand?

Corona is still omnipresent

The macroeconomic backdrop is certainly more constructive at present than it was in the summer or even in the spring. Although the second wave of infection has been rolling for weeks, it has not hit the economy that hard so far. This is partly because governments in Europe have so far tried to avoid a complete lock-down. The international movement of goods, for example, is largely unhindered – that was not the case during the first wave. On the other hand, people have learned from the experience of the crisis in the spring, which creates a better basis in many respects. That is the good news.

Uncertainty factor USA

But the Covid19 infection figures in most countries are still rising or at least stagnating at a high level. The US is fighting a third wave, and if there were to be new lockdowns, this would certainly result in weaker economic activity. In addition, an agreement in Congress on the support programme so urgently needed by the economy is not yet in sight – this also plays a major role in the development of the financial markets worldwide.

Power forecast with small blemishes

This rather ambivalent situation makes an exact prognosis difficult, but nevertheless: the announcement of the vaccines and the hope for an early return to normality is a euphoric signal. Even renewed economic setbacks caused by Corona – according to the calculations of many financial experts – could be quickly offset once widespread vaccination begins. They expect GDP in the Eurozone to return to pre-Corona levels by the end of 2022. The capacity for a rapid economic recovery has already been demonstrated this summer, they say.

Investors are keeping an eye on this development. It is wise to start thinking about the post-pandemic period now. 

You have the foresight and want to invest? Find out about safe investment opportunities on Loanboox.

Market-Update: To know where the wind blows

Market-Update: To know where the wind blows

It’s good to know what’s coming, even in turbulent times. The Loanboox Market Update gives you an overview of the most important developments on the financial markets and on our platform every month.

How are interest rates developing? Will it remain at the historically low level? And what influence will this have on current deals on the debt capital market? Every month we answer these and other important questions. In addition, we provide you with all the relevant news on economic developments in Germany and, of course, on the activities on our platform.

In the current issue, you will find out, among other things, what is currently causing German municipalities to worry and why Loanboox is becoming increasingly attractive for institutional lenders.


The Market Update is exclusively accessible to registered users. If you would also like to read it regularly and benefit from further Loanboox services, register here free of charge and without obligation.

Corona solutions: How to successfully organise digital financing

Aktuelle Neuigkeiten zu Loanboox

Spending just for the sake of negative interest rates, on the other hand, is a bad idea. “The interest rates sound very tempting. But taking out loans always involves the promise of repayment,” says Christian Keuschnigg, who holds the Chair of Public Finance at the University of St. Gallen. Besides, interest rates could also rise again soon.

The interest subsidies from this also serve to ease the burden on the budget

Says Stefan Mühlemann, founder and CEO of Loanboox.

But it’s not a good business model. Waldkirch has already profited from it: Last year, the municipality took out a loan and received an interest rate of 0.25 per cent, said Aurelio Zaccari, president of the municipality, at an information event on the sports field vote.


Connecting instead of disrupting: How FinTechs and banks work together

Connecting instead of disrupting: How FinTechs and banks work together

Aktuelle Neuigkeiten zu Loanboox Blog Bild Partnerarbeit

FinTechs versus banks – the public likes the image of the small, innovative David against the big, ponderous Goliath. What is often disregarded in the process: the customer benefit. We explain why cooperations with institutional partners like banks are important and useful. 

Many banks, insurance companies and businesses want to become more customer-oriented, efficient and agile. But structures that have evolved over decades and internal regulations do not exactly make this development process easy. It is important for clients, especially in difficult times like these, to find efficient financing options that can also be easily operated from the home office.

The market for such partnerships is there

For our COO Dominique Hügli, the advantages were therefore obvious when, for example, the opportunity arose to cooperate with Deutsche Kreditbank (DKB). Through the cooperation, both sides want to drive the digitalisation process in the financial sector and better exploit the existing market potential.

Digital transformations and joint projects like these are always a challenge as well. It is important that everyone is brought on board, believes in the joint product or service and consistently follows the underlying strategy.

But it worked well and at the end of the process, with the “Direktdarlehen”, we have a digital product that everyone is happy with – especially the customer. What’s more, the cooperation with DKB shows that it is worth expanding the portfolio for further strategic partnerships. With innovative partners who – like us – believe in the digitalisation of the debt capital markets. What’s important here: picking up on needs and developing new standard solutions from them.

Interesting topic? You can find information on further services with DKB here.