Fast becoming Europe’s coolest metropolis, Germany’s vanguard capital has foreign property buyers piling in. Laura Henderson reports
They say time is a great healer and nowhere is this more true than in Germany’s scrubbed-up capital, Berlin. A city of paradoxes, from its Prussian opulence and underground techno music scene to its hardcore Stalinist suburbs, the city spent most of the 1950s in ‘No Man’s Land’ political limbo, torn between the conflicting interests of occupying Allied forces. The 1960s saw its population wrenched apart with the construction of the Berlin Wall, a symbol of infamy that apportioned East Berlin to communist Russia and West Berlin to capitalist America. It’s a potent landmark that when it came down thirty years later, left a unified yet deeply schizophrenic city.
Since then the city has been working hard to catch up, coaxing its Cold War order into the 21st century in a bid to absorb a rapidly growing upwardly mobile population. More than 1m residents have arrived in the past 20 years, many filling the gaps left by the suburban exodus of easterners. But it’s a population exchange that has opened doors of opportunity, with large swathes of land declared a development zone by the government.
“After the wall fell, East Berlin districts such as Prenzlauer Berg, Mitte and Friedrichshain became magnets for creative types and pioneering expats looking to put down roots,” explains Andreas Steinbauer of Peach Property Group. “Now developers have moulded the area’s residential and commercial potential. The rebuild has become a working template for other parts of the city, one of the finest representations of which is Potsdamer Platz, with its architecture-come-entertainment landmarks such as the DaimlerChrysler and Sony buildings.”
While the German housing market as a whole has been rapidly heating up in recent years, it is perhaps Berlin that has an investment benchmark for other cities to follow; apartment purchasing prices up 97.7% and rental prices by 51.1% since 2007. “Germany as a whole these past few years has seen its other cities fill up with outside investors keen to capitalise on attractive yields,” adds Steinbauer. “The restructuring process in Berlin has just been that bit quicker, although prices per square remain remarkably affordable.”
“Berlin real estate is one of the least expensive cities in Europe,” confirms Andreas Muller of Black Label Properties. “Prices are a fraction of those of Budapest, Prague and Warsaw and well below the threshold of Western capital cities. Property can be picked up an average of £2,500 per square metre, which compared with London typically in excess of £5000 per square metre or Paris at £6,000 per square metre, is a steal. It’s going to take time before the market reaches anything like the price margins commanded elsewhere – so a wise buy now bodes well for future dividends.”
But while investment returns of between 4% and 10% are giving a fillip to transaction volumes by wealthy foreigners, the city’s re-birth is also about correcting a long-standing market imbalance, one that will be aided by a diversifying German economy, falling unemployment and a new-found willingness to invest. “With only 14% of Berliners owning property historically (a reflection of a previously divided city) Berlin has never been a strong domestic market for the purchase of property,” explains Muller. “With overall 43% of Germans now owning property, the opportunity and desire to invest here is more obvious.”
Buyers in the market for a downtown bolthole will find the broadest choice in the sprawling central district of Berlin-Mitte. “Locations such as Potsdamer Platz, Gendarmenmarkt, Scheunenviertel and Unter den Linden, are prime investment spots,” confirms Trine Borre of agents Berlin Maegleren, “although fringe districts such as Schöneberg, Tiergarten and Pankow, are also benefitting from regeneration with prices for renovated apartments in central neighbourhoods now hitting the £1,250 to £2,750 per square metre mark.”
One prime location garnering its share of attention is the fashionable Friedrichshain-Kreuzberg area. Formed in 2001 through the combination of former East and West Berlin neighbourhoods; the area boasts a vibrant café-culture scene with a buzzing arts and music quarter. A prime location for vintage renovation stock, local agents Berlin Properties has a number of turnkey apartment projects on its books sporting open plan living spaces and original features including parquet flooring, ceiling cornices and traditional doorways – as well as state-of-the-art bathroom fixtures and fittings. Prices start from £160,000.
Local agent Rita Friedburg adds: “Berlin is tackling the 21st century on its own terms. First-time visitors get the measure of the place pretty quickly. No doubt its capacity for reinvention will keep them coming back for more.”
Fast Facts – Buying in Berlin
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