Best living qualities in Frankfurt

If you ever wondered what it takes to make a place the most wanted residential area, let me share with you from my current experience what such a place looks like and what it offers to its inhabitants.








1) Extensive transportation system - extended and quick multi-system public transport (bus, regional trains) and a good car connection to a high interest economic center (distance: 20-30 km).
2) Strict building regulation - to ensure that the houses being built follow a certain pattern and don't disturb one another.
3) Having woods and meadows in the area - to be used for practicing different sports: running, nordic walking, cycling. Apparently, having large green areas in the neighborhood is one of the main points of difference between equally attractive areas.
4) Comprehensive housing solutions - which makes the area not only dedicated to the high net worth individuals (personal income > 1 mio. EUR), but also to the middle class. This includes: different housing options (individual housing, houses in rows, houses with an inner yard, 3 story common housing), as well as affordable financing options.

Comparing these criteria to what we have in Romania, the logic leads to noticing that:

- the deficient transportation system makes the residential areas crowd in small spaces. Thus, even new, relative expensive residential areas offer: 14 story blocks, or in the best case unaffordable expensive individual houses with 3m concrete fences and with little or no green space for a yard. What is more, current residential areas around Bucharest (e.g. Pipera) have no or a very weak public transportation connection to downtown.

- no building regulations- make residential areas show striking unbalances: views of 3 story velvet colored houses next to a 1 story house, or individual houses next to industrial firms.

- limited woods, trees, or other public spaces where one can practice sports. Even if this exists in restricted areas, such a "feature" makes the price of the land unaffordable for the upper mid class. Thus, only the "newly enriched people" have access to these facilities and they use them not for enjoying themselves, but more for public promotion.

- housing solutions - Currently, the housing prices in Romania have no connection what so ever with the personal income that inhabitants possess. This makes housing highly unaffordable even to the middle class, who then has to live in the old communist apartments. Some of these people fall into the real estate firms' trap and engage in highly leveraged credits to pay the sky rocketing, low facility, questionable quality houses.







Just for comparison: a 58 square meter apartment in a newly built central area in Frankfurt am Main costs about EUR 170.000, whereas in Bucharest a similar size apartment, but localized in an area with limited access to public transport and far from the downtown costs more than EUR 200.000. To make this comparison even more striking, bear in mind that the annual gross salary of a graduate is in Romania at best EUR 12.000, whereas in Frankfurt it is about EUR 36.000. Make the calculations yourself how long it takes an university graduate to afford a decent house at a yearly salary increase of 10%.

The effects of PMI: a case where the theory is very close to reality

It is common understanding that what is learned in the business schools as "theory" represents an ideal, optimal state of affairs, compared to which the "reality check" reflects a more or less different story. In the case of Post merger integration (PMI), the reality seems to be very close to what the theory is preaching.

To review what I'm talking about, theory says that as after a merger or acquisition, both companies (the acquirer and the acquired) suffer from a discontinuous economic activity and go through a series of stages of disruptions. Some of the most commonly mentioned are:

- corporate culture clash
- psychological employee concerns about the future, which affects working productivity
- reduction in the number of redundant functions and employee release
- change in location for some employees, which also leads to them leaving the company

All of these translate into lower company results for the entire integration time. Consequently, it is highly recommended to begin with the integration even before the merger process is formally announced.

What I currently witness is a relevant example for an integration process that has started in 2001 and it is not yet ended. Naturally, I wouldn't be able to talk about it with objectivity if I were involved in it. However, as a "side watcher", I can distinguish all the issues mentioned in the theory as they happen in reality. Of all these, I will discuss about the mobility of people and change in location that a merger usually involves.













One of the merger's objectives is to achieve synergies and leverage shared knowledge between the two merged entities. That is why usually in the aftermath of a merger, employees on a mid to high management level or some company functions (e.g. R&D, marketing) usually have to relocate. This has happened in this case, as well: the commercial functions (marketing, supply, consumer research) need to relocate in another country in order to leverage knowledge and be close to the decision making place.

I won't concentrate on the upside of the story this time. My focus is on company's losses as a result of this decision. Imagine a 40 year old person in upper mid management level, who has to decide between the following:
- to move and likely progress in her/his career
- stay and move in another role, usually with a lower managerial importance, in order to maintain stability on the family and personal life side

It often happens that very valuable people who are made to make such a decision will eventually leave the company. From my current experience about 20-25% of people choose this way. Moreover, it often happens, as in the current case, that the company loses among the most valuable people. Thus, a move which is expected to bring higher economic returns by leveraging knowledge and best practices, leads at least on mid term, to negative economic returns and limited benefits.

Witnessing such a case is much more dramatic than it seems when reading about it in the case studies, as one sees: teams being left without a leader to guide them in the new environment, or being left without their informal leader, teams lose their overriding common goal and spread into adjunct, non-productive discussions.

Celebrating spring...among others

Today I celebrate two important events:

The first one is the beginning of spring, which is celebrated in my country, Romania, with flowers and certain pin-ons which are given as a gift from men to women, from children to moms and to the teachers, as well as among pupils. It's meaning is briefly explained below:




The second celebration is that today is one year since I started writing on this blog. Be it in times of economic growth, crisis and depression, I tried to capture and present what I passionately care about besides my daily professional life. Apart from being a "catching up" platforms with my friends from all over the world, it is meant to reflect the changes in my interests, a certain "how I was vs. now" kind of thing. As such, even if this blog is not as interactive as was initially aimed to be, I still find it very valuable as a storyboard of my globetrotting. I thank to my friends who take the time to read my pages from every now and then and I am happy that we can stay in touch through this, although I would prefer to meet you all in person again.

Enjoy reading and have a great spring!

Hafen City

Hafen - City (in English Harbour City) is one of the largest new urban areas in development, whose aim is to increase Hamburg's, the second biggest city in Germany, appeal to investors and to attract the creative class. The idea behind is to revitalize part of the the harbour which has stayed as as unused area for many years and thus to connect the city north of Elbe to the (poorer) southern part of Hamburg.

This is however not the single project of this kind. Other cities such as Amsterdam, Copenhagen or Vancouver have developed similar projects and are are thus in a "competition" for increasing their value as a location.

When it comes to the Hafen City project, it promises to be much more than a residential or office area. It aims to become the "hottest" metropolitan district which offers a mix of cultural and leisure infrastructure, retail and hospitality outlets, inner-city living quarters, service-sector office space as well as public parks, squares, and waterfront promenades.

According to official sources, at the beginning of 2009, roughly 1.500 people live in HafenCity and about 3,000 people work there. Every building in itself is interesting and is meant to connect to the water theme. However, my current impression, from walking though the finalized areas, is that the buildings don't connect to each other. Although this may change in time when they start beautifying the areas with trees and flowers, it currently looks as a Legoland. Or as somebody has brought modern buildings each made by star architects and put them one after another to build a city. Unfortunately, the place still looks pretty "sterile" and "artificial". If one judges after the people who stroll there, it can be said that it is a museum alive...but not a place to live.

The prices for the residential apartments are rated at aprox. EUR 8000/ sqm for luxury apartments for sale, and at about EUR 5000 / sqm for middle range apartments, whereas the rent starts at EUR 670 / month for one-room apartments. Although authorities aim to make the area affordable, when we look at prices it seems already a bit up-priced compared to other Hamburg districts (except for the old city centre).

Here are some pictures to have a look yourself at the current state of development: