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News: Berlin a genuine BTL city

Mon, 03 Sep 07

Berlin is on the up, offering excellent opportunities for investment, reports Assetz...

It's now some 18 years since the euphoric events that saw the Berlin Wall breached and torn down, reuniting a city and leading to the reunification of a country.

Since that time, Berlin has suffered economically as Germany's national economic fortunes declined in the 1990s and the subsidies which poured into West Berlin during the cold war vanished.

East Berlin suffered as the rest of the former German Democratic Republic (GDR) did, with outdated industry, economic backwardness, pollution and bleak urban landscapes contributing to its problems.

Yet Berlin is now on the up, restored once more as a capital city, growing as a centre for culture and the arts, the scene of considerable economic development but above all, from the property investor's point of view, a place offering excellent opportunities for investment.

Germany ‘out of kilter’

Figures today showed that Germany is out of kilter with its neighbours when it comes to housing, with a Halifax survey on Eurozone property prices showing that Germany was the only country to see prices decline in the last five years, dropping five per cent in that time.

Home ownership is also low compared with many countries, being around 43 per cent compared with 70 per cent in Britain.

In Berlin this figure is even more notable, with just 13 per cent owning their own homes. This, stated Deborah Fox, managing director of property consultancy Emerging Real Estate, makes Berlin a genuine buy-to-let city.

Combine this with a gradual improvement in the economy and the opportunities are there for the investor who is prepared to go in for the long-term, added Ms Fox, saying: "The strong rental culture means that the investor has the stability of long-term tenants."

She added: "At present property prices are a tenth the price of London. Looking at capital cities and the way property prices are increasing, in our mind there is no question that Berlin is a good place to invest. But it's not going to happen overnight. We're talking to people about a five to ten-year investment," she advised.

East-West gap ‘closing’

This may come as a surprise to some, who may have read news such as the statement by the Berlin Senat that some apartments in the east of the city have risen in value by as much as ten per cent in the last two years.

But Ms Fox notes that the gap between the two parts of the city has closed as property opportunities in the east have been snapped up, with the profile of many districts in the old GDR sector being raised by the buying of apartments by celebrities like Brad Pitt, Angelina Jolie and Tom Cruise.

Stating that there are "fewer differences than there were before", Ms Fox added that the key now is to find the best areas on both sides of the city, saying: "It really depends, more now than ever, on the area of Berlin rather than east or west."

As examples of this city-wide trend, she listed Mitte and Friedrichshain in the east (the former, she noted has been compared with Chelsea) along with Charlottenberg and Tiergarten in the west as the best performing districts.

Very little remains of the Berlin Wall now, being a hated relic of a bygone age, rather than something felt worthy of preservation. If the invisible wall of economic and social difference is also crumbling, with the key attractions no longer gravitating to one side or another, it's a development investors looking for the best opportunities in a city with plenty of them would do well to note.

Source: http://www.assetz.co.uk (Press release)

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