In Berlin, Alexanderplatz is Hot Again — This Time for Architects

For nearly half a century the tallest building in Berlin has been a relic of its Soviet past. The Park Inn, a slender glass and concrete hotel in Alexanderplatz, was erected in the late 1960’s to mark East Germany’s 20th anniversary.

The 410-foot tall edifice, called Hotel Stadt Berlin at the time of its construction, can still be seen across much of the low-slung German capital today, standing in the shadow of the city’s television tower, the iconic sphere that stands just over 1,200 feet.

Yet as Berlin’s property values continue to soar – rising faster than any German city over the past five years – residential developers are set to challenge the Park Inn’s elevation supremacy. Two international builders have unveiled plans to erect skyscrapers at Alexanderplatz that will stand nearly 500-feet high and house some of the most expensive property in the city.

Russian developer MonArch AG, one of Moscow’s largest builders, plans to construct a sleek glass and steel tower that will measure at least 490 feet high and include 14,000 sq metres of residential apartments, the developer says.

A more ambitious project is being developed by the American firm Hines. The Houston based company is planning to build a boxy, twisting structure designed by Frank Gehry that will rise 490-feet and include three-hundred apartments and a hotel. Despite intense scrutiny from city officials, Berlin’s planning commission is set to approve the projects later this year, both developers say.

Though the new designs have triggered intense public reaction for their girth and ambition, they are being joined by more than 20 new residential properties in the planning or construction stages around Alexanderplatz, according to the Bauamt der Stadt Berlin, the city’s building authority.

The surge of new development around a decades-old Soviet-style transportation hub underscores not only developers increasing confidence in the Berlin property market, but also the race to find buildable space in Mitte, a district with some of the most expensive property values in the city.

“Alexanderplatz has a very rich history and tradition for Berlin,” says Christoph Reschke, co-managing director of Hines Germany. He says the new project will include small apartments and penthouses but that prices haven’t yet been set. “We see growth for this area just as we see growth for the entire Berlin market.”

Alexanderplatz is an unlikely target for upmarket housing. A broad and bleak concrete square in the heart of old East Berlin, it has long stood as one of Germany’s less-exalted instances of urban planning. Lined with aging, prefab high rises, it is the epitome of the former communist regime’s preference for function over form, says Laura Fogarasi-Ludloff, a principal architect at Ludloff + Ludloff Architekten, a firm that has designed a string of residential properties in Berlin. She says many long-time east Berliners, stubbornly wary of gentrification symbols, view the new designs as another attempt to erase any trace of the former East Berlin, turning the iconic square into just another oversize strip mall bearing little resemblance to its historical form.

“It’s not that the projects themselves are terrible in any way,” Fogarasi-Ludloff says. “It’s just that the designs don’t fit to it’s location and seem completely out of place for Alexanderplatz.” (read full article)

German property über alles

Is your home your castle or just the place where you live? The British are well known for being a nation of beloved homeowners, but that aspiration rarely comes without chalking up a spot of personal debt in the process.

Embarking on a hefty mortgage for the best part of a person’s working life is likely to cause most people a sleepless night or two. Germans tend to be significantly less focused on the home-ownership goal and are much happier to rent.

According to our research, Germany has an owner-occupation rate of just 44 per cent – the lowest ratio in Europe, after Switzerland. The German residential sector is heavily regulated, meaning that rents are more affordable in comparison to other European countries; in general, housing costs, including heating, represent only 20 per cent to 23 per cent of net household income. Demand is high for rental properties and this is providing good opportunities for investors. Here are a few reasons why we like this sector.

In comparison to other countries, German house prices have shown the lowest levels of growth and volatility over the last 20 years. Although there has been sharp growth in the past three years, this follows a long period where prices were extremely stable. German house prices are currently only 6 per cent higher than they were in 1994, in comparison to the UK where they are three times higher. As a result, good investment opportunities are still relatively easy to find.

Germany has a mature population and it continues to grow. Population growth has accelerated in recent years – with net migration of 400,000 people in 2013 alone – as strong economic growth has encouraged immigration from other parts of Europe. At the same time, the German population is becoming increasingly urbanised, with the major cities growing much faster than the national average. Berlin, for example, has had positive net migration of 200,000 people (100,000 households) since 2005, while only 40,000 new homes have been built over that period.

German households have benefited from the country’s strong economic position: unemployment was just 6.3 per cent in October 2014 and the workforce is at an all-time high. Net salaries have been growing as a result. Attitudes towards debt, meanwhile, remain very conservative. German households have some of the lowest debt levels in Europe at just 160 per cent of gross domestic product – the UK is 204 per cent, the Netherlands is 252 per cent and Sweden is 295 per cent. And while Germans are not keen on taking on big mortgages, they also have much more limited access to finance. The prevalence of loans available to low-income families or high loan-to-value mortgages remains limited, and buy-to-let levels are negligible in comparison to the UK, for example. We believe that these limitations have helped prevent the strong speculative appreciation in prices that we have seen in other countries.

Original Article – http://www.ftadviser.com/2015/04/16/mortgages/mortgage-products/german-property-uber-alles-Uj0GJL4BoM4yYTB2EbGUBJ/article.html

Braking bad

WHO doesn’t like affordable housing? Press reports about sharp rent rises in big cities prompted Germany’s two biggest parties, upon forming a coalition in late 2013, to attempt to turn into law the irresistible proposition that everyone should be able to put a roof over their head without hardship. The result is a “rent brake”, due to be applied later this year, which limits increases in prices. As with all price controls, it is likely to lead to a black market, while crimping supply. That, in turn, would hold back investment in an economy that needs more of it.

Germans buy cars, not houses: just 46% of Germans own their homes, the lowest rate in the European Union. But the idea that this nation of renters is being squeezed by greedy landlords is not borne out by the data (see chart on next page). In fact, Germans have done rather well from renting: apartments have grown even as families have shrunk. In the former West Germany (for which data go back furthest), apartment size per inhabitant has more than doubled since 1956-57, from 18 to 39 square metres. Meanwhile, throughout Germany, the proportion of net pay spent on rent has stayed constant for 30 years, at about 23%.

(Read more)