The German city of Berlin has come up in several conversations recently. Many investors here in Thailand have recognised how it has become a ‘hotspot’ for the world this year. Let’s look at the reasons why?
Rewind some 25 years. The whole world watched in wonder as the first pieces of the Berlin wall came down and the broken city began a long healing process to make it whole once more.
Now, no longer content to view this vibrant city from afar it seems the world has decided to move to Berlin.
The Berlin senate revealed during the summer that the city’s growth is double the rate that city planners had expected, and more importantly for property investors, and prepared for.
Berlin’s population was expected to swell by 250,000 people between 2011 and 2030. Now city planners believe that number will be added by 2019. In 2014 alone the population grew by 44,700.
City Development Senator Andreas Geisel has described the growth as “a great blessing”, but it has also put pressure on infrastructure, with the need for housing increasingly sharply as a result.
For owners of residential property in Berlin, the city’s newfound popularity has led to some interesting developments. CBRE’s Global living: A city by city guide reported that average values for apartment buildings rose by 21 percent in a single year. Rents have also shot up by 5.7 percent over the past year (compared with 3.6 percent nationally).
Ray Withers, the Chief Executive Officer of specialist property investment company Property Frontiers, which is offering high specification buy-to-let apartments in the city at Stadtpark Steglitz from €153,670, commented: “We’re seeing some rapid shifts in Berlin’s property market after almost two decades of very little activity.
“It’s an exciting time to be part of the market there and property investors around the world are looking to Berlin as one of Europe’s top residential real estate investment destinations. Berlin looks set to be one of Europe’s most dominant cities during 2016 so far as residential investment is concerned.”
As well as a vibrant arts scene and rapidly growing reputation as Europe’s hottest start-up hub, Berlin offers a low cost of living compared to many European cities.
Rents are less than a quarter of the price they are in London: around £405 in Berlin compared to £2,080 in the English capital, according to CBRE. At the same time, the city’s economy is growing (CBRE cites projected growth of 2.6 percent this year) at a strong and sustainable pace.
With 81.2 percent of the city’s population opting to rent their property (compared with 51.3 percent nationally), Berlin arguably still represents a huge opportunity for buy-to-let investors looking to pick up a residential investment in a European hotspot.
