_International Property Digest: Investing in Berlin
Investors interest in the Berlin property market shows no sign of abating thanks to a range of positive indicators demonstrating the city’s growth potential. Berlin, the capital of Europe’s strongest and most stable national economy, has the lowest house prices of any German city with a population over 1 million.
A shortage of new homes and a rapidly expanding and well-educated population who have seen their mean monthly income rise 25 per cent over the past decade coupled with a low percentage of owner occupiers – 15 per cent at the last count – help investors view Berlin as a buoyant and safe haven.
International professional services company PwC support this view, rating the city in the top two across Europe for overall investment and development prospects for five consecutive years now.
A rising population
Meanwhile research from Deutsche Bank forecasts that Berlin will attract a further 250,000 residents by 2030, an 8 per cent population growth. And while 20,000 new apartments are currently required each year by 2021 to keep pace with demand, less than 16,000 are currently being completed.
"This all cements Berlin’s reputation as one of Europe’s best value cities and comes right on cue for the thirtieth anniversary of the fall of the Berlin Wall this winter. After three decades of reunification and rebuilding, Berlin has emerged as a culturally vibrant and economically strong city, a place with exceptional arts and culture where big business and start-ups happily co-exist."
The tech scene is of special interest. Berlin is one of the world’s top five locations for the number of start-ups it hosts and second only to London for investment volumes within Europe. And it isn’t only start-ups who see an opportunity: Siemens are aiming to develop an innovation campus for €600 million, the largest ever investment in Berlin.
Quality of life
From arts to architecture, music to technology, Berlin has embraced change and the city’s successful transformation can be shown in numerous quality of life polls where it scores highly, significantly outperforming Paris or London.
Berlin is a large city linked by a strong local transport system and also a green one, with one third given over to lakes, parks and forests. Winters can be harsh and the much-delayed new airport – now scheduled to open at the end of 2020 – is an unusual aside to normal Teutonic efficiency yet Berlin is clearly somewhere people want to live.
The city’s modern face is instantly apparent around Mediaspree in former East Berlin where a new district has been created. This part of on-trend Friedrichshain bordering Mitte and beside the river has changed beyond recognition in just five years to become a creative entertainment district centred on the impressive Mercedes-Benz Arena and Verti Music Hall.
It includes a long section of the former Berlin Wall that has been reimagined as East Side Gallery, the world’s longest open-air mural. International companies and e-commerce businesses are relocating there, Coca-Cola and Universal among them, creating around 30,000 new jobs and making it an appealing residential area for young professionals and therefore also for investors looking for solid rental returns.
Investors in Berlin who hold their property for ten or more years do not incur Capital Gains Tax. Knight Frank suggests these longer-term investors should concentrate their search within S-Bahn belt, the city rapid railway route, and in particular central areas including Mitte, Kreuzberg and Charlottenburg.
To enquire about Knight Frank’s Berlin portfolio contact Oliver Banks from Knight Frank's International Residential Development Desk.