Why Berlin?

Why is Berlin & Germany such a hot property market?

Hot property

 

You only need to cast a casual eye on the property press these days to see the numerous glowing mentions of Berlin as one of Europe’s constant performing property investment markets, the question is why is that the case?

Back in 2005 Berlin was a very undiscovered city to the world unlike places like London and New York, the FIFA 2006 world cup pretty much changed that with the worlds press descending on the city for a month, apart from attending regional games most had an eye on the final to be held in Berlin on the 9th July 2006 at the Olympiastadion, Italy beat France on penalties after a 1 – 1 draw after the end of the match, famously the sending off of Zinedine Zidane’s sending off for headbutting Italy’s Marco Materazzi grabbing all the headlines.

Berlin lofts

Thousands of journalists all heading for Berlin with nothing more to do than the odd interview and attend a football match every few days, many had to stay in the capital as the hotels and flights were all pre booked well before the start of the tournament just in case the team they were covering made it to the coveted final, so with lots of time on their hands what better to do than discover Europe’s second largest capital, you could read stories of how amazing the bars and clubs were, the Berlin wall of course featured heavily in many articles, but as journalists got closer to residents another story started to emerged of how cheap it was to live in Berlin, at the time it was possible to rent an unfurnished, wooden floored period 2 bedroom apartment in a very good area of  Central or East Berlin for about £200 a month, with the equivalent London apartment costing up to 10 times that to rent, purchase prices showed a similar differential with many Berlin properties costing less than £100 per square foot to buy, the London equivalent being at least 10 time that price to purchase and in areas such as Mayfair over 30 times that for some properties.

Berlin apartment

With stories of Swiss timing public transport that was clean, efficient, cheap and a tube system that in some cases is open 24/7 (along with many bars) highlighted the difference with London’s overcrowded and very expensive public transport system, Berlin a city of some 3.5m people had a underground system built for 6m people was being compared to London’s Victorian system built for 3m people tying to cope with a city population of over 9m…Berlin’s packed restaurants and bars where you could purchase a meal for around €5 and have a beer costing way less than half of London prices and without any chemical in the brew process… Berlin’s charm and Bohemian atmosphere intoxicated many journalists during their stay it was clear to see the attraction of Berlin to many people, including expats who could work on the internet but live an amazing lifestyle in this once hidden capital.

Berlin Kitchen

Traditionally German tenants preferred to have a low rent with no or little facilities, many older Germans would have their own kitchen which they would take from apartment to apartment as they moved, but the trend following the world cup of 06 is for younger professional Germans to demand much higher standards, with large disposable incomes tenants requirements started to change with a large percentage now willing to pay a premium to live in a trendy area with high quality fitted kitchens and bathrooms, this opened up an incredible opportunity when older tenants vacated old style apartments for these apartments in many cases that were rented for between €2 – €4 m2 per month to a refurbished then rented at open market rents of between €8 – €12 m2 per month, and a further marked emerged for all in fully furnished ‘all inclusive’ rentals at between €12 – €16+m2 per month, the average London tenancy is 17 months the average Berlin tenancy is 92.5 months

It has resulted in many investors seeing very large increases in rent and yield as tenants move out and new tenants move in willing to pay open market rents for refurbished apartments, in many cases our own clients (mainly UK based investors) who we have helped source, finance, purchase and manage up to around 1,000 investment apartments in Berlin, mainly in blocks of between 20 – 40 apartments have seen yields rise in most cases to a net yield of between 10% – 12% pa with capital values rising as many newspapers report have risen by up to 50% in the last 3+ years.

Berlin a summary:

  • 88% of tenants rent in Berlin
  • Lowest rents of any European Capital
  • Second largest capital in Europe with a population of 3.5m (including 500,000 ex pats)
  • New Large capacity International airport
  • Very low cost of living
  • World class public transportation system, 1.3 billion journey undertaken in 2011
  • Frequently listed in the top 10 worldwide locations for quality of living
  • Berlin is a world city of culture, politics, media, and science (from wiki)
  • Siemens is just one of 30 DAX listed companies that headquarters in Berlin
  • Overnight stays (2011) 22,359,000
  • Berlin has 800+ hotels
  • Museums (2009)  157
  • Allotments (2009)  74,094
  • Schools offering general education (2011/12)  777 (both public & private)
  • Colleges and universities (2010)  39
  • Cinemas  (2010)  247

Berlin city facts & figures sourced from Berlin.de

If you need help sourcing an investment property or finance in Berlin, looking to re mortgage a property or need property management for your investment in Berlin then contact me and I  will be happy to discuss how we may be able to help you.

****** none of the content of this site constitutes a loan, mortgage or any other financial offer in any way, professional advice should be sought prior to any application, all loans or offers from banks are subject to status and the terms and conditions of the lender.

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