Berlin Is Banning Most Vacation Apartment Rentals

Looking to rent an apartment on your next vacation to Berlin? Starting Sunday, you can basically forget about it. From May 1, Germany’s capital is banning landlords from renting out apartments to short-term visitors, with only a few exceptions permitted.

The penalty for breaking the law is a substantial €100,000 ($113,000) fine — levied on people renting their homes, never on the guests themselves. There will still be some loopholes that allow a few vacation apartments to persist, but it seems that, in Berlin at least, the astronomical rise of Airbnb and other short-stay rental sites is effectively over.

The general lack of apartments in Berlin provoked the law change. Thanks in part to German rent laws that are stricter than most other European countries, short-term rentals are often more profitable for landlords than finding longer-term tenants. In a growing city, that has made good, affordable apartments harder to come by; vacation apartments have taken over large chunks of the most desirable streets, and permanent residents have been frozen out of the market. Estimates vary about the number of permanent vacation apartments in the city, with one recent article pegging it at 14,393 units, out of a total of 1.9 million dwellings in the city.

This has provided a windfall for some landlords (and tenants who sub-let on the sly), but it’s less welcome for the many people searching for their own apartments. Locals’ tolerance of loud, late-partying tourists in their midst has also been wearing thin. Many landlords aren’t pleased with the law change, especially people who rent out apartments short-term in areas that don’t have a problem with party tourism. The Berlin Senate’s ruling nonetheless reflects a general feeling across a city in which homes are getting harder to find: Berliners have had enough and they want their city back.

 

Read more here – http://www.citylab.com/housing/2016/04/airbnb-rentals-berlin-vacation-apartment-law/480381/

Berlin’s rental market a nightmare to many

The German capital’s rental market is undergoing dramatic changes. The amount of affordable apartments to rent is has been going down, and a trend reversal is not really in sight, as DW’s Janelle Dumalaon reports.

Couples, students and young professionals mill around in front of a building in south Berlin’s trendy Neukölln district, drawn by an advertised viewing of a studio apartment. Around 20, then 30 hopeful flat-hunters patiently trudge up the stairs to the fourth floor, to inspect the 40-square meter studio apartment.

An hour later, at another viewing for another, slightly bigger apartment a block away, the same group of people, save for a few additions, would run into each other again – and probably not for the last time. It came as a result of surprise to few of them – by now, most have learned that competition for an apartment to rent in Berlin is increasingly fierce, and only an exhaustive search bears fruit.

Berlin, once known for the cheap housing that’s attracted especially artists and other people from creative disciplines, is struggling to cover a demand that’s skyrocketed in the last years, pushed up by increasing migration to the city.

Lengthy landlord wishlists

“The competition is the hardest part,” said Angela Buch, a Berlin-based editor of scientific publications. I go to these mass apartment viewings, I’ve even been to one where 80 people came at a time.”

The demand means landlords and lessors really are spoiled for choice, Buch said.

“The application requirements for applying for an apartment are getting more and more outrageous,” said Bush. I’ve had to submit complete bank account statements, and many landlords want to see proof of permanent job contracts, which not that many people really have in Berlin.”

http://m.dw.com/en/berlins-rental-market-a-nightmare-to-many/a-19213690#fromDesktop&xtref=https%3A%2F%2Fwww.google.com%2F

Germans flock to property as interest rates fall and rents rise

Unlike his parents who rented their whole life, Berlin resident Sebastian lives in his own apartment and is considering buying a second property in the German capital as an investment to top up his pension one day.

For decades a nation largely of tenants and prudent savers, growing numbers of Germans are buying property, not just to own their homes but also in search of investment returns they can no longer earn on their bank savings.

This shift to a more U.S. or British approach to property is being encouraged by the European Central Bank’s cheap money policies and rising rents, especially in German cities.

A growing urban population and unexpectedly high immigration are pushing up a housing market where construction rates had been low for years.

“I’ve a private pension scheme, but despite diligent saving, it hardly yields anything due to the ultra-low interest rates,” said Sebastian, a 38-year old management consultant, who asked not to be named in full because he does not want clients to know about his personal financial affairs.

While Sebastian bought his first apartment six years ago to escape rising rents, he now wants to buy a second property as a private retirement fund.

In the years that followed the fall of the Berlin Wall, property prices in the city were significantly lower than in the likes of London or Paris. But the German capital is no longer a cheap place to live.

“The problem now is: it’s really difficult to find an apartment in Berlin which is not totally overpriced,” said Sebastian.

Figures from the European Union’s statistics agency show 52.5 percent of Germans lived in their own home in 2014, well below the EU average of around 70 percent. But this is sharply up from 2006 when, according to separate data from the German Federal Statistics Office, the level was about 42 percent.

Strong demand for homes is fuelling a construction boom that is helping to support the German economy while exporters, who traditionally drive growth, struggle due to a slowdown in some of their major markets such as China.

In the last three months of 2015, construction was one of the biggest growth contributors while net trade was a drag. In the first two months of 2016, building investment further increased, raising hopes of a strong first quarter.

However, concerns are growing that a property bubble may be inflating at least in some cities. If it bursts one day – a scenario that could be created by rising interest rates, higher unemployment and changing demographics – owners and lenders alike could be hurt, posing a risk to medium-term growth.

A shortage of affordable housing is also forcing poorer families out of cities, widening the social gap in one of Europe’s richest societies and raising tensions after a record one million migrants arrived last year alone.

BENEFITING FROM THE BOOM

So far, Sebastian has benefited from the boom. After studying in London and Boston where rent ate up a large part of his scholarships, he returned to buy a 100 square metre (1,100 square foot) apartment in Berlin’s then up-and-coming Wedding district. For the 120,000 euro ($135,000) purchase, he borrowed 100,000 euros in 2010 on an interest rate of 3.8 percent.

“From today’s point of view, this was a bargain,” Sebastian said, adding that he could now probably sell the flat for twice the price, if not even more.

Many others have followed suit. Comparing prices on property websites has become a hobby for many Germans and real estate is a frequent topic of conversation at parties.

“The demand for owner-occupied flats in Berlin has been booming since 2010 and it has increased in the last two years,” said Christian von Gottberg, a real estate agent at the Engel and Voelkers.

First-time buyers tell Gottberg how landlords are raising rents for a third time within a couple of years. “So whoever can afford it, and has the financial means to meet the bank requirements for the deposit, opts for their own apartment.” Continue reading here – http://www.dailymail.co.uk/wires/reuters/article-3556269/Germans-flock-property-rates-fall-rents-rise.html

most expensive luxury flat sold in Berlin

The priciest flat by space in Germany was not sold to the elites in business-rich Bavaria, nor in the billionaire-dense port city of Hamburg.

Berlin, whose unemployment rate stands at twice the national average, holds the title of selling the most expensive apartment on the German market, according to Engel & Völkers real estate agency.

That flat was sold recently for a whopping €19,018 per square metre in the central Mitte district, newspaper B-Z reported on Tuesday.

This put it slightly ahead of the most expensive flat in Hamburg at €19,000 per square meter.

Engel & Völkers had recently released an analysis of the German luxury flat market, examining trends from apartments on sale in the first half of last year.

“Many new real estate developments in recent years have seen Berlin catch up considerably in the premium market segment,” wrote Engel & Völkers in the report.

But Berlin, dubbed “poor but sexy” by former mayor Klaus Wowereit, still has some catching up to do to be overall on par with its richer rivals in the north and south.

While Berlin’s ritzy Mitte flat was the most expensive by price per square meter, Hamburg topped the charts for having the most expensive flat in absolute terms at €13 million, followed by one in Munich at €12.6 million. The most expensive flat on the market in Berlin during this time period was €5.6 million.

In 2014, Berlin set a record when it sold a €5.7 million apartment in Mitte.

But the Bavarian capital last year did have the highest average prices for luxury flats (defined by Engel & Völkers as the highest five percent of the market). Munich “dream homes” average €4.5 million, compared to €1.6 million on average on Berlin.

continue reading – http://www.thelocal.de/20160413/berlin-sells-off-germanys-most-expensive-luxury-flat

German property seen reaping ‘reward’ of potential Brexit

The UK’s loss is Germany’s gain, as international investors worried about the implications of a Brexit scenario look beyond the Channel to mainland Europe. The uncertainties surrounding the EU referendum in June are leading to a certain stagnation in the UK market, as investors delay decisions until after the results have been announced.
Germany, with its unquestioned stability and safe haven status, is a striking contrast and the obvious alternative to the UK, experts agreed at PropertyEU’s Germany Investment Briefing, which was held in London this week at the City offices of TH Real Estate.
‘There is definitely more investor interest in the market as sentiment has switched away from the UK to Germany,’ said Karsten Kohlmann, managing partner of Waterway Investments, a transaction advisor in commercial real estate. As revealed by the surprise findings of a recent CBRE global survey, Germany has just overtaken the UK as the European destination of choice for international property investors.

A chronic lack of core product, along with investors’ increasing willingness to move up the risk curve, are making non-core and niche markets more attractive. ‘You can always find investors willing to buy, even in secondary cities and even if the building quality or the location are not perfect,’ said Kohlmann.

 

Continue reading – https://propertyeu.info/Nieuws/e949af06-360c-4313-a745-5317b402847f/BRIEFING-German-property-seen-reaping–of-potential-Brexit

Europe’s Emerging Bubbles

MUNICH – The European Central Bank’s latest policy moves have shocked many observers. While the goal – to prevent deflation and spur growth – is clear, the policies themselves are setting the stage for severe instability.
The policies in question include setting the interest rate on the ECB’s main refinancing operations to zero; raising monthly asset purchases by €20 billion ($22.3 billion) to €80 billion; and pushing the interest rate on money that banks deposit with the ECB further into negative territory – to -0.40%. Moreover, the ECB has launched a new series of four targeted longer-term refinancing operations, which also carry negative interest rates. Banks receive up to 0.4% interest on ECB credit that they take themselves, provided they lend it out to private businesses.

read more – https://www.project-syndicate.org/commentary/european-central-bank-fueling-asset-bubbles-by-hans-werner-sinn-2016-03