Berlin sounds interesting...what's your experience of purchasing in Germany? I hadn't even thought of it to be honest!
Yes Germany has shown a lot of promise over the last 15 years or so. I solely focus on developed markets with solid legal precedents for protection of buyers and sellers. My low risk strategy is for sustained pragmatic returns in medium to long-term investments.
Since I started in this game years ago, have transacted Millions of Dollars worth of business in numerous global cities.
Please allow me to tell you about Berlin...
I have been investing in Berlin for over 5 years; Charlottenburg, Mitte and Lichtenburg have been the main areas of interest. Berlin has definitely been the highest growth market in my portfolio for the past 5 years – this is partly due to the supply & demand dynamics of the city and also due to the incredibly lost cost of borrowing (fixed interest rates for 10-15 years from 1.6 - 2.9%).
investing in Berlin now makes so much sense now as:
- The value is still there for more growth
- Arguably the most stable economy in Europe
- If investors hold their property for 10 years they will pay 0% capital gains tax
- Cheap finance – 10 year fixed rate mortgages of 1.6% to 2.9%
- A cheap Euro compared to the USD on historical averages
Berlin Investment Case Berlin is not only Germany’s political centre, but also one of the most dynamic economic regions in Europe. With a strong and stable economy, Berlin’s GDP sits at EUR35,627 per capita and exports to the US market alone total over EUR1.7 billion per annum. Its economic structure is diverse and is shaped by long-established industrial firms, strong footed SMEs, a thriving services sector, as well as innovative high-tech businesses.
This economic strength has been drawing people to the city and in 2016 alone the population increased by over 60,000 inhabitants. Following this trend, the Berlin-Brandenburg statistics office expects a further increase of 7.5% between 2015 and 2030. This will put an upward pressure on property prices, which have been increasing by an average of 6.5% per annum (EUR2,130) since 2004. Furthermore, since 2009 housing demand has risen at increased levels and capital growth rates have averaged 10.9% per annum in response. WOW
Supply and demand Population growth and a booming economy remain the primary demand drivers in the Berlin residential real estate market, as building efforts have not been able to keep up with the demand for new units. Berlin’s housing market is structurally undersupplied with a supply shortfall of at least 80,000 units as of 2016. The Secretary of State for Construction and Housing outlines a requirement for at least an additional 20,000 units per year up until 2030. Only 15,000 units were completed in 2017, well below the annual 20,000-unit requirement.
The large gap between supply and demand will take a considerable amount of time to diminish and as population levels continue to grow, chronic undersupply will continue to shape the market. This imbalance presents investors with a unique opportunity, as quality units are in high demand for the city’s families and young professionals moving to work in the city.
Rental Market The Berlin rental market has also been profoundly shaped by the forces of supply and demand, evidenced by an extremely low vacancy rate of just 1.2%. This has resulted in consistent levels of rental growth of 6.1% per annum on average since 2006, with rents almost doubling in that time. Additionally, a record 10.7% rental growth was seen in Berlin’s top market segment over 2017, with capital growth rates rising by 11.4% over the same period.
Regeneration At the centre of Mitte, next to Central Station, government buildings and cultural sites, sits one of the city’s most important development areas -
Europacity. Made up of approximately 400,000 sqm of gross floor space, Europacity will be a significant mixed use area for all Mitte residents with office space for 10,000 jobs, apartments to house 2,000 people and many bars, restaurants and art galleries.
With a lack of office space available, it is projected that Berlin requires 1.5 million sqm of office space to meet current demand, yet there are few large-scale projects in production. This deficit bodes well for the projects in Europacity, which contains 232,000 sqm of planned office space and has meant the office blocks have been quickly snapped up by companies. Europacity is being built in stages, with many buildings already fully finished, and is due for completion in 2025. This project will create an entirely new commercial, residential and recreational area of the city.
WHAT ARE ALL YOU INVESTORS WAITING FOR