Country Guides > Germany > Berlin

Berlin - a vibrant city with huge investment potential

BERLIN IS BACK.

Back after a sixty years lull as the capital of a rejuvenated and reunified GERMANY and back as one of Europe’s if not the world’s greatest cities.

Berlin was the centre of critical historic events and became a sad curiosity after the Second World War, with a wall dividing the town in two halves and visitors mainly coming to see the attraction of a portioned Germany.

Today Berlin is an international metropolis equal to New York, Paris or London.
Tourism is on the rise and guests from around the world are being drawn to this glamorous city to savour the intoxicating mixture of the old and new.

Fashionable boutiques along the world famous Kurfürstendamm (Ku-Damm) in the Charlottenburg district, with the Kreuzberg and Prenzlauer Berg areas are amongst the hotbeds of creativity, likened to New York’s Soho or Paris’ Latin Quarter.

Berlin is addictive, open 24 hours, offering residents and visitors alike an almost inexhaustible variety of possible activities.

With a city that does not sleep transportation is important. The three major airports (Tegel, Schönefeld and Tempelhof) are best served by the excellent underground, bus and train systems that operate 24 hours a day.

Lets not forget the café’s, restaurants and of course the nightlife. The area around Hackescher Markt is very popular with its local and international speciality restaurants and cafes.

The city’s nightlife tempts people young and old to the countless bars, discos and clubs that stay open all night, and with exhibitions, open-air festivals and international sports events (who could forget last years fabulous football world cup).

BERLIN is back on the world map.

Why Invest In Germany?

· Unbelievably attractive purchase prices
· Capital growth potential
· Higher investment returns than the UK
· Euro mortgage rates are lower than the UK
· Stable, long term residential tenants
· Strong and improving economy
· Regulated legal system and EEC protection

Unbelievably attractive purchase prices
For the 10 years, 1994 - 2004 Property prices fell in Berlin and only in the last three years has this position stabilised. Investors have realised that Berlin Property 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 £650/m²) which compares with London typically in excess of 7,500 euros/m² (around £5000/m²) or Paris at 6,000 euros/m² (£3,500/m²).
Add to the mix the recent development in tourism (up 16% last year), 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 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 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 3-4%.

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 60-80% of the valuation. Rates can be as low as 3.5% 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 very difficult 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.
 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 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.