The current situation in the real estate market of Berlin
Berlin is a large European metropolis that can be reached from end to end in half an hour; the public transport system is well developed here and the healthcare sector is uniquely built, there is an opportunity to get a prestigious education for free and then start building your own business without any special obstacles. It is not surprising that with such indicators, the population of the German capital is increasing annually, and the local real estate market is increasing not only its liquidity, but also its investment attractiveness.
Briefly about the main thing
In economic terms, Berlin has been actively gaining momentum in recent years: wages over the past year have increased significantly, and unemployment is at a record low. In addition, an important role is played by population growth (and not only due to migrants) – a scenario that, according to forecasts, was to be achieved only by 2025, has already come to life.
The city, once gloomy and destroyed by war, abandoned in the oceans of communist Germany, over the years has turned into a thriving metropolis, attracting investors, international companies and talented workforce from around the world. But perhaps one of Berlin’s most obvious benefits lies in its ever-living atmosphere and “pulsating” rhythm of life.
International research companies confer the capital of Germany the title of one of the world’s best technology centers for ample opportunities to start their own business and favorable living conditions, and this includes everything from intense nightlife and entertainment to low levels of air pollution, the quality of local parks and a variety of leisure activities. The dynamic, entrepreneurial culture of the city, a dozen universities, technological, musical and artistic development, as well as the prevailing cosmopolitan outlook are so attractive that the population of Berlin annually grows by 40,000-50,000 new residents.
The key factor that is causing the German capital to boom, experts at Forbes cite enormous business opportunities. Yes, this is the initial starting point, but in addition to it there are a number of “bonuses” that make the purchase of real estate in Berlin attractive, including from an investment point of view.
The profitability of renting real estate in Berlin is slightly lower than in other European capitals (3% compared with 3.2% in London and 3.48% in Paris), but considering the cost of a “square” in the main cities of Britain and France (€ 17,000 and € 12,000, respectively), an “entrance ticket” to the Berlin market at a price of about 4,000 euros per square meter. m seems much more democratic and acceptable to investors.
The German legal system – transparently structured and stably maintained – has a reputation as one of the strongest in Europe, so investment in real estate in the country as a whole and the capital in particular will always be safe.
More and more Berliners intend to buy their own property. Germany is traditionally considered a land of tenants – only 18% of metropolitan residents live in their homes as owners. However, the increase in rental rates prompts many residents to buy their apartment, which means that investors who had time to pre-attend to the purchase of real estate made a very competent move by investing their capital in a liquid asset. In addition, the lion’s share of purchase transactions falls on foreign investment companies, and demand, as you know, is a good incentive for further price increases.
The current situation in the real estate market
Berlin real estate continues to grow in price, and this trend can be seen both in the sales segment and in the rental market. The average cost per square meter in the first half of 2018 was approximately € 3,700, taking into account secondary and primary real estate in various areas of the city. The average rental rate was about € 12 / sq. m. According to experts, the growth in the value of real estate in Berlin is currently about 7-8% per annum. Demand remains at a high level and exceeds supply, which means that the real estate market in Berlin remains the seller’s market. At the moment, it is much easier to sell real estate profitably than to acquire it.
To this we can add that market experts observe increased activity of foreign real estate sellers who profitably purchased the property 10 years ago at the time of the financial crisis and are now selling it profitably and without speculative tax (after 10 years of ownership, there is no profit tax on real estate resale) . The buyers, for the most part, are Germans, who receive profitable loans at 1.5-2.5% per annum in German banks.
Berlin and foreign demand
For a competent entry into the market, it is important to decide on the purpose of acquiring real estate: renting out, reselling in the foreseeable future or possible own residence.