Unearthing Investment Value: Introducing Berlin
We take a look at why forward-thinking property investors should give serious consideration to the value and potential on offer in the cosmopolitan German capital
We believe now is the time for investors into Europe to cast their attention across the Channel for new opportunities, and a host of established factors make Berlin a definite stand out when it comes to investment value and potential on the continent.
By far Germany’s largest metropolitan area, with a population of 3.76 million, Berlin is attracting new residents every month with its cosmopolitan cultural reputation and a robust, growing economy. After Paris and London, Berlin is the most visited destination in Europe. When the much awaited Brandenburg airport opens in 2016, it is expected to create 75,000 new jobs and see at least 27 million visitors pass through its doors.
Germany sits alongside the UK when it comes to economic robustness in Europe, and this is nowhere more evident than in Berlin. The city draws great benefit from the diverse nature of its business and industrial make up, with the technology, pharmaceutical, biotech, renewable energy, engineering and tourism sectors all prominent. Due to the low cost of office space compared to its continental neighbours, Berlin has also gained a reputation as the epicentre of the European Internet start-up scene. This diversity has been vital in lessening the impact of economic slowdowns, while the city’s well-established manufacturing industry has provided a reliable basis for long-term stability.
This economic strength is driving strong employment growth in Berlin, with more jobs created than in any other German state over the past two years. More than 176,000 new jobs were created in Berlin between 2005 and 2012, expanding the city’s workforce by 17.4%. Berlin also has the lowest unemployment rate in the country and the youngest working population in all of Germany.
On the Berlin residential real estate market, investors will find a situation primed for excellent investment returns. Like many capital cities across the world, Berlin is lacking in residential housing stock. In 2013, there were 20,000 to 40,000 more people than units available. Household growth is four times higher than housing supply, and while there has been a significant increase in building permits issued, developers still can’t keep up with demand. As a result, rental rates are being driven up. In 2013, average rents across the city increased by 7.7%, offering fantastic yields for investors.
Berlin also offers very low entry costs compared to other world capitals. The median sale price across Berlin is just EUR177 per square foot, with the highest pricing in the middle market segment still only EUR344 per square foot. The potential for return this value can deliver is well demonstrated by growth seen across 2013 – prices rose 9.1% citywide, with some neighbourhoods seeing increases of over 20%.
As Berlin becomes increasingly prosperous and attitudes towards home ownership continue to change, such developments are positive for buyers when they look to the resale market upon exiting their investment.
Next week, we’ll be looking at Berlin on a deeper level, exploring the city’s economic strength and investment potential as well as some of its most promising districts. We’ll also be launching our first Berlin development soon. If you’re interested in unlocking the potential of this exciting new market, please register your details with us and we will be in touch soon.
For more information, please contact [email protected] or visit us at www.ipglobal-ltd.com
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