Berlin Property Investment

Why has Berlin property become such an attractive investment opportunity?

For the answer we have to step back and take a brief look at the unique history of Berlin. Between 1961 and 1989 Berlin was a divided city, with West Berlin an isolated island in the midst of the Soviet dominated Eastern Block. However, in 1989 the Berlin wall came down and in the euphoria of re-unification in 1990 the then view was that the pent-up demand from East Berliners would create a property style, ‘gold rush’ with a construction boom and significant investment in real estate.

Oh how wrong they were! The economics of the situation just did not add up - the optimism was fatally flawed. The shear cost of absorbing the East Berliners, most of whose jobs in subsidized businesses disappeared over night, was colossal. The shattered economy of the East offered no support to these fledgling westerners and without the creation of new jobs they simply left Berlin to other cities in both Germany and Europe which offered employment. Thousands of properties were left empty, property prices crashed - between 1994 and 2004 property prices in Berlin fell by 30%!!

It has taken the Berlin economy (and Germany as a whole) the best part of fifteen years to readjust, create new jobs and stem the exodus of people from Berlin. During this time, of course, property prices in the rest of Europe have been forging ahead - and this is the opportunity - because the best time for a Berlin property investment is NOW at the end of this adjustment phase.

Currently Berlin property investments are typically 30% less than similar properties in Munich. However, when the comparison is made internationally then you will realize just what an opportunity Berlin property as an investment really is. An average price /m2 for Berlin investment property would be, say, 1000 euros/m2. Compare this with London, Dublin or Paris where the price/m2 exceeds 5000 euros/m2 and you can see the scale of the investment potential. Property investments in Berlin are significantly cheaper than Budapest, Warsaw or Prague also. With only 12% of Berliners owning their property there is a ready supply of paying tenants for your investment in Berlin property. Overall 43% of Germans own property which is another example of a market requiring correction.

Berlin is showing further signs of a sleeping giant coming back to prominence. Tourism increased by 16% in 2004, with air traffic into Berlin up 8% in 2006.In excess of 2,000 luxury hotel rooms have been added in Berlin in the last three years. British tourism alone increased by 22% in 2006.A new Berlin international airport is currently under construction with its associated levels of investment.

Berlin is back on the World stage - what a fantastic opportunity property investment in Berlin really represents!!