Why Invest In Berlin Properties?

Unbelievably attractive purchase prices
For the 10 years, 1994 - 2004 property prices fell in Berlin and only in the last years has this position stabilised. Investors have realised that Berlin real estates is now one of the least expensive in Europe. Prices in Berlin are below those of Budapest, Prague and Warsaw and when compared with other Western capital cities Berlin appears remarkably inexpensive. Property is available in the German capital at less than 1,000 euros/m² (around £800/m²) which compares with London typically in excess of 6,000 euros/m² (around £5000/m²) or Paris at 6,000 euros/m² (£4,800/m²).
Add to the mix the recent development in tourism (up 16% in 2007), the availability of cut price flights and the sheer fun of a city which has thrown off the past shackles of the Wall and is rapidly becoming the liveliest and most interesting city in Europe. Oh and the beer’s good too...!!

Capital growth potential
With only 14% of Berliners owning Property historically there has never been a strong domestic market for the purchase of Property. This probably reflects the unique status of the previously divided city and its island-like position in a communist sea. Of course now this has changed...
Overall 40% of Germans own Property and therefore the opportunity to invest in Berlin becomes more obvious. The property market in Berlin is not wholly influenced by the influx of comparatively wealthy Brits throwing their equity at cheap and cheerful holiday apartments - Bulgaria, Spain and Cyprus come to mind. What we have here is a long-standing market correction fuelled by a surging German economy, falling unemployment and a desire to invest.

Higher investment returns than the UK
A typical return from a fully tenanted block of apartments (or a single unit) is between 4% and 10% with mortgage rates of as little as 4-5%.

Euro mortgage rates are lower than the UK
There is a healthy and competitive mortgage market available in Germany with English banks taking an increasing interest. Mortgages are fairly easy to obtain, with banks typically lending 50-60% of the valuation. Rates can be as low as 4% and can normally be fixed over several years.
With rental income typically at 4-10 % (or more) it’s not difficult to see the attraction of buying in Berlin! Perhaps this explains why in recent years a number of major players have made significant investments. For example, Terra Firma, a British private-equity firm, in 2006 reportedly bought a package of 150,000 flats, many of them in Berlin.

Stable, long term residential tenants
Historically the market is very different from that in the UK. Renting has always been the long term option for the majority of city dwellers in Berlin. Rental contracts are typically for an unlimited period and families often reside in the same apartment all their lives, with their children following on! It can be difficult (but not impossible) to remove a long term tenant but this does deliver a very reliable rental return to the investor.

Strong and improving economy
The unified Germany has had a tough time incorporating the old, East German economy requiring significant restructuring which has been necessary to meet the challenges of European economic integration. Germany now has the fifth largest economy in the world with falling unemployment and a 2.2% growth rate recorded in 2006. Germany has the highest gross domestic output within the European Union as well as the largest population which now exceeds 82 million. In terms of the global trading of goods and services Germany is second only to the USA and is the World’s largest exporter.
Germany stands out as a centre for business through innovative and internationally active companies, qualified and motivated employees, an internationally recognised education system, an excellently developed infrastructure, as well as top achievements in research and development. Germany is back as the power house of Europe and Property prices in Berlin are moving to reflect this!!

Regulated legal system and EEC protection
Germany is a modern constitutional state, a democracy at the heart of Europe. Germany also has a legal system that protects the rights of individuals and supports them to enforce these rights. The systematically structured and balanced legislation creates security, because it uses transparent decision criteria that can be understood by all. Operating within the EEC the investor has all the protection that has been enjoyed within the UK and Ireland. Can this be said for investors in Morocco and Dubai for example?

So if you believe an investment in Berlin property may be for you, then give us a call.......