Can the Germans compete at sea with the United Kingdom? I personally doubt it.
They did build the second largest navy in the world with a budget half the size of the British, this time they're not making that mistake, not after the blockade.
Most British industrial centres are within a reasonable range of the coast, for obvious reasons. To my knowledge, the Rhine would not be able to accommodate a naval industry in the Ruhr - especially if Belgium was left free in exchange for the return of German colonies. That's not to say you cannot build ships inland, but it does make the logistics of the industry rather more complex.
Ship components get transported over land all the time, the Austrian navy guns were made near Prag, it doesnt get any more inland than that.
In a similar vein, Britain's island status means that there was (and is) a disproportionately high percentage of the population engaged in maritime activities and employment. This can easily be translated into a military sailor base. Germany, while it has a larger population, has a much shorter coastline and depends far less on maritime industries to survive.
The same can be said about Germany - it was what, the second largest merchant marine before the war? Plenty of sailors there, and as before, the blockade changes priorities.
And a German naval buildup after the war assumes they have no desire for detente with the British, which will simply drive London towards supporting a new anti-German coalition.
There's no anti German coalition.
-AH is on the German side
-The Balkans is on the German side because they hate each other more
-Finland/Baltics/Poland/Ukraine are on the German side because they just received fresh German Kings and absolutely fear Russia
-Scandinavia does not care
-Iberia does not care
-Italy changes to the winning camp, they always do that
-Turkey/Ottomans is on the German side because they fear the Greeks/Russians/UK/Persians
-Russia is a mess, it lots its agriculture and industry and is in a brutal civil war and all of its neighbors hate it, in fact there's a good chance that the Germans and Allies will collaborate to strangle the Soviet Union in its crib in which case Russia ends up with a German monarch
-France is fucked, utterly fucked, unlike Russia they dont have distance between them and Germany, with the second invasion of Germany in living memory they will not go easy on it, it will be JC 1067 all the way, deconstruction of heavy industry, rationing of food, mandatory labor for civilians in the damaged regions, abolishing of the old money, seizing of all intellectual property etc
-USA does not hold grudges on anything which happened on the continent, in fact you might get worse relations with the UK for getting them into the war and then defaulting on all the loans they gave them
-China has bigger fish to fry (Japan)
-Japan has bigger fish to fry (China)
The anti German coalition will be more or less just the British Empire... which will be very unruly once the English start to loot it for money to pay off the Americans for a war the English got them into.
That said, should Germany choose that path, Britain will have to pull out all the stops to keep ahead. A continuation of the Anglo-Japanese alliance, to maintain a global lead, could occur, especially if Russia comes totally under the dominance of Germany.
IMO Britain has two choices during the peace negotiontions:
-Pay some reparations and give back the colonies to keep the Germans from establishing bases at the English Channel
-Keep the colonies and end up with the German fleet in shooting distance of the English coast
No matter what choice they're in big trouble because they owe the Americans a whole lot of money, money they used to keep the Russians and French in the war, those two are now obviously not going to pay up, they needed the German reparations but they too are not coming. They'll try to get that money somehow and they'd turn to the Empire, which really will not like that, you'd have uprisings and secessionism everywhere.
And on top of that without a Washington naval treaty, which will not happen here as it was a mutual agreement between the winning powers, you're going to see Yamato style battleships by 1930 or so which makes all the pre war and during the war build battleships obsolete, now with the UK in monetary trouble and with Germany receiving extra money from reparations and with no restrictions on it... it's not looking good for the Royal Navy. It needs more than just parity with Germany, the Royal Navy also has to be present in the Indian Ocean and the Pacific should the Japanese get any funny ideas.