BERLIN RIVER Building Photos 016

2016 – An Opportune time to invest in Berlin Property!

Many headlines this year 2015 have read like…….. „Berlin ‚No-Brainer‘ for International Property buyers.“  Indeed we wrote a blog on this very topic –https://www.next-estate.de/blog/2015/10/19/uk-telegraph-calls-berlin-no-brainer-for-british-property-buyers/

So while we can be satisfied with what 2015 brought, we at Next-Estate Berlin ask and our blog readers also will wonder…. ‚What will the year 2016 bring for Berlin Property investors?‘

Berlin real-estate is part of the European Real Estate Market and is thus closely bound in with the vagaries of macro-economics, European Central Bank blasts of QE  ‚quantitative easing‘ or the lack of them.

The FT reports there are new European Real Estate funds – targeting yields of 5.5 % – investing in cities with the biggest potential for growth in high-quality properties in Paris, Lyon, Berlin, Frankfurt, Munich, Hamburg, Brussels and Amsterdam.http://www.ft.com/intl/cms/s/0/dc0bdccc-a28a-11e5-8d70-42b68cfae6e4.html#axzz3vo1zp9Mf

So while we have no direct influence on those larger issues, what we can do is look at those local fundamentals which have made investing and buying a Berlin Property in the past profitable  and extrapolate them to this coming year 2016.

What are those positive ‚givens‘ which make buying a property in Berlin in 2016 such a ’no-brainer‘? We will go over some of the most important.

Firstly the popularity of everything that is Berlin! The ‘creative classes’, international painters, writers, film-makers, musicians, and internet-startups make Berlin their home base and have done so for more than a decade. The percentage of Berlin’s 3.5 million residents who are younger than 35 years old is 40% and they provide the core of the city’s creative energy.

These important players are essential to create a lively world city, and they have indeed pushed Berlin into the Paris, London and New York league of sought after international capital cities.

There remains lots of unused space in Berlin. As luxurious apartment buildings are being built, even directly on top of the demolished Berlin Wall, small parcels of land in the central Berlin areas of Mitte, Prenzlaurer Berg and Friedrichshain-Kreuzberg still remain vacant.

There are presently more than 250 new apartment building projects in progress that will provide circa 18,000 new apartments within the next year, of which 4,600 will be in Berlin Mitte alone. And then there is the former Tempelhof Airport with 3.5 square kilometers of prime real estate in the middle of Berlin! 

But while there are strict rules, very teutonic rules, designed to prevent any signs of hedonistic or usurious or ‘out-of-control’ property speculation which Berliners of all politcal hews hate, there is a very progressive renewal taking place in the Berlin area’s of Mitte, Prenzlaurer Berg and Friedrichshain-Kreuzberg. Germany has a safe and secure legal system and while never risk-free, international clients of Next-Estate find buying property in Berlin is comparatively speaking, low risk.

The average price for property in Berlin remains low at between 2500 in the medium range to  3500 Euro per square metre in the up-scale market. This is circa 1/3 of Paris or London prices, which maintains Berlin as an attractive investment option of stable rental income for international investors. All indications are that the Berlin rental market in 2016 will thrive as it did in 2015 – Berliners do rent rather than buy, so long-term rental contracts are popular.

We cannot look back at 2015 without discussing the large refugee migration into Germany which has affected all aspects of life, both social and economic. Germany’s federal states, of which Berlin is one, will spend circa 17 billion Euro on dealing with the refugee crisis in 2016.

The money will mostly be used for a large-scale home building programmes to house refugees – many of whom have been living in local school gymnasiums, empty office blocks and even tents.

The effect of this for Berlin Real Estate supply and demand will largely remain uneffected because most of the space and properties in question will be provided from those owned and controlled by the German or Berlin local government which are not commercially available. It will however provide a boost for local Berlin builiding contractors.

In closing we at Next-Estate would like to thank all of clients – both German & International – for their patronage in 2015 and wish them and our blog readers a very healthy, happy and prosperous 2016!