Investors pile into Berlin’s booming real estate

Article written by Emily Perryman in JLL real views

Overseas investors are pouring money into Berlin’s real estate sector, attracted by the German capital’s burgeoning economy and strong growth prospects.

After a record third quarter, which saw almost $3 billion of capital flowing into the city, Berlin has become the third most popular European destination for cross-border investment in 2017.

High-profile deals included the €1.1 billion acquisition of the Sony Center by Oxford Properties and Madison International Realty – one of the largest single-asset deals in the European property market this year.


Berlin, meanwhile, saw GDP growth of 2.7 percent in 2016, making it the strongest growth state alongside Saxony. The city’s population is also expanding quickly and is expected to increase from 3.5 to 4 million by 2035, according to the Cologne Institute for Economic Research.

Rising prime rents, which have risen around 7 percent since the start 0f 2017 to €29 per square meter per month, have further fuelled investor interest.

Kadelbach says: “Germany is generally regarded as a safe haven and Berlin, as the capital, is the first choice because of its positive economic growth and demographics. Investors from all over the world, including the Americas, France, Norway and Asia, are attracted by its stable political environment and dynamic rental growth.”

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Is Germany the next property investment market for Hong Kong investors?

Article written by Ian Sigmund in the South China Morning Post

With Brexit uncertainty, the US being overbought and high interest rates in Canada and Australia, Germany could be a viable option among developed markets

As the Hong Kong market continues to heat up, Brexit uncertainty, and other global markets appearing priced in, investors in Hong Kong are increasingly looking to western Europe, specifically Germany.

Germany, despite boasting Europe’s largest economy and population, has not always been a natural destination for Hong Kong investors seeking to invest in property overseas. Perhaps due to an Anglo-centric bias from Hongkongers, and other jurisdictions closer to home, the German property market has hitherto been overlooked for some years.


There is a marked housing supply-demand imbalance in major cities across Germany, which is particularly prevalent in Berlin and Frankfurt, and increasing with flourishing migrant populations and a birth rate that has risen to a 33-year high. This supply deficit is forecast to remain at levels of up to 40 per cent until 2030.

In Germany’s capital, 40 per cent of the population is under 35 years old and the city ranked third on the 2016 Youthful Cities Index. Berlin’s growing number of start-ups and new businesses is also fuelling population growth and a youth-centric culture, with 400,000 new residents expected by 2030.


For investors looking to purchase micro-flats, the main draw is the very attractive rental yields that they offer. The small square-footage of the units allows owners to rent them out at costs that, compared to the average property or full-sized home, are relatively high per square foot, but that are also affordable to tenants who might not be able to afford to live in a larger property in a central location.

For example, Neukölln has the second highest rental growth in Berlin only behind Friedrichshain, its more developed neighbour, and its popularity keeps increasing as more shops, restaurants, bars and cafes keep opening week on week. As a result, the studio flats have high yields – up to 6.4 per cent compared to the 3 to 3.5 per cent average in Berlin.

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