German House Price on Fire!

Germany’s housing market price rises have been accelerating for several months. In a country where the housing market has historically been extraordinarily stable, this is a significant shift.

The reasons?
Strong economic growth, 1.1 million refugees, high work-related immigration, weak construction supply and low interest rates.

The German housing market was one of the few that avoided a slump in the wake of the 2008-2009 global financial crisis.

German house price changes:

In 2009, the price index fell by 1.9% y-o-y (-2.7% inflation-adjusted).
In 2010, prices bounced back, rising by 3.6% y-o-y (2.2% inflation-adjusted).
In 2011, house prices rose by 4.7% y-o-y (2.7% inflation-adjusted).
In 2012, house prices rose by 4.6% y-o-y (2.5% inflation-adjusted).
In 2013, house prices rose by 3.2% y-o-y (1.8% inflation-adjusted).
In 2014, house prices rose by 3.7% y-o-y (3.5% inflation-adjusted).
In 2015, house prices rose by 5.6% y-o-y (5.3% inflation-adjusted).


Statistics of price rise during the year Q2 2016:

In North-East Germany:

In Berlin apartment prices rose by 7.7% to a median price of €3,036 (US$ 3,301) per square metre (sq. m.). The median price of one- and two-family houses rose by 4.6% y-o-y to €2,104 (US$ 2,287) per sq. m.

Hanover had the strongest y-o-y apartment price hike in Q2 2016, rising by 10.02% to €2,172 (US$ 2,361) per sq. m. However, one- and two-family houses increased by only 1.33% to €1,719 (US$ 1,869) per sq. m.

In Dresden, median apartment prices rose by 1.79% to €1,987 (US$ 2,160) per sq. m., while one- and two-family houses increased by 6.35% to €1,995 (US$ 2,169) per sq. m.

In Hamburg, median apartment prices increased by only 1.41% to €3,480 (US$ 3,783) per sq. m. One- and two-family houses rose by 2.57% to €2,325 (US$ 2,528) per sq. m..

In West Germany:

Dusseldorf had the highest apartment price increase in the region, rising by 7.62% to a median price of €2,261 (US$ 2,458) per sq. m. In contrast, the median price of one- and two-family houses fell by 1.57% to €2,163 (US$ 2,352) per sq. m.

In Cologne, median apartment prices rose by 5.79% to €2,474 (US$ 2,690) per sq. m. One- and two-family houses had a price increase of 1.92% y-o-y to €2,099 (US$ 2,282) per sq. m.

In Dortmund, median apartment prise fell by 3.05% to €1,300 (US$ 1,413) per sq. m. Prices of one- and two-family houses also fell by 1.06% to €1,872 (US$ 2,035) per sq. m.

In South Germany:

Frankfurt had the weakest y-o-y apartment price hike in South Germany, increasing by 3.29% to €2,600 (US$ 2,827) per sq. m. The same is true for its one- and two-family houses, which rose by only 1.44% to €2,219 (US$ 2,413) per sq. m.

Apartments in Munich enjoy the highest y-o-y price hike in the region, increasing by 10.52% to €4,821 (US$ 5,241) per sq. m. One- and two-family houses had a price increase of 5.75% to €3,627 (US$ 3,943) per sq. m.

In Stuttgart, apartment prices rose by 9.07% to a median price of €2,519 (US$ 2,739) per sq. m., while the median price of one- and two-family houses rose by 8.29% to €2,525 (US$ 2,745) per sq. m.

Berlin’s still cheap, but….

Berlin’s rising rents and overstretched supply of living units is a problem that’s not going to go away on its own. While rents in the German capital are still comparatively cheaper to rates one would find in London, Paris or major US cities, Berliners also generally earn less than their counterparts in other world metropolises.
But Berlin is playing catch-up with its global peers –and the current tightness on the rental market is just a symptom of that.
“Since reunification in 1990, and structural problems have existed for a long time, and now the city is transforming into a world-class city,”

The Facts and Figures that Support Charlottenburg’s Investment Case

(Part Two of Two)

In Part Two of our introduction (Part One here), we reveal who lives in the area and the numbers behind the investment case that highlight why this City-West location is so appealing to real estate investors.

Home to Wealthy Berliners, Creative Students and Young Families

Charlottenburg has always attracted Berlin’s wealthiest and chicest residents, ever since Sophie Charlotte commissioned the stunning Schloss Charlottenburg. Today, the district counts politicians and local celebrities among its affluent residents. The area has previously been likened to London’s Fitzrovia.

Charlottenburg’s high-end villas and spacious apartments are typically larger than the average in Berlin, with many featuring balconies, garden access and cellar space as well. Wide roads and pavements, elegant avenues lined with trees and classic 19th century architecture make this an attractive and refined neighborhood.

Yet, despite constant development in this busy city centre district, Charlottenburg still offers quiet corners of oasis and pockets of greenery, including playgrounds which attract many middle-class families to the area. To the east, Charlottenburg borders Tiergarten Park, a vast expanse of lakes and woodland in the heart of Berlin, comparable to London’s Hyde Park.

Charlottenburg is also an easy commute to the CBD and other prominent employment areas. The Strasse des 17. Juni runs eastwards from Charlottenburg Gate, through Tiergarten Park, to the famous Brandenburg Gate – connecting Charlottenburg with Berlin-Mitte (Central Berlin) in just a 10-minute drive. What’s more, the prime central location of Charlottenburg as an inner-city district inside the S-Bahn ring (train network) means this area is unrivalled in location as well as class.

In addition, Charlottenburg boasts a large student population due to two local universities: the Technical University of Berlin and the Berlin University of the Arts. Combined, they have a population of over 30,000 students.

Facts and Figures: Charlottenburg as an Investment

Charlottenburg is one Berlin’s best-performing property markets. A traditional, mature and middle-class neighbourhood, rather than an ‘up and coming’ district, Charlottenburg is an evergreen location for property investment in Berlin. Every property in the entire district is considered to have a sophisticated, premium and much sought-after address.

As of the end of 2015, Charlottenburg was reported to have a population of over 330,000 (CBRE). A strong continued pattern of population and price means there is a predicted population growth forecast of 6.1% before 2025.

Therefore, it’s no surprise that demand far outstrips supply and value is rare. Land for new builds is scarce in City West locations such as Charlottenburg-Wilmersdorf. As of January 2017, there were 460 apartments, either under construction or planned, per 100,000 residents – well below Berlin’s average of 890 per 100,000 residents (CBRE).

Exploring Charlottenburg: a mix of old and new in central Berlin

(Part One of Two)

The traditional neighbourhood of Charlottenburg-Wilmersdorf, named after historic aristocrat Sophie Charlotte of Hanover, Queen consort of Prussia, has long been an area associated with affluence and culture. Ever improving, this district is known for its brilliant mix of old and new, with many residents choosing to live in the area because of the unique combination of rich history and comfortable modernity.

A Long History of Affluence, Culture and Commercial Value

An independent city until 1920, Charlottenburg was then incorporated into Greater Berlin and became known as the ‘New West’ during an era known as ‘The Golden 20s’. At this time, the many theatres, cinemas, bars and restaurants which populated the district gave Charlottenburg the title of Berlin’s leisure and nightlife capital.

This reputation ended with the rise of the Nazi party and the area was heavily damaged in World War II, by both air raids and the Battle of Berlin. However, after 1945, the area quickly regained its influence by becoming the commercial city centre of newly-divided West Berlin.

Charlottenburg Today: A Luxury Retail Destination and Upmarket Residential District

Post-reunification, Charlottenburg is still known as one of the most upmarket areas of the city, with high-end bars and restaurants attracting a bourgeoisie crowd of wealthy residents and visitors.

A shopper’s paradise, Charlottenburg’s famous Kurfürstendamm (often abbreviated to Ku’damm) has been likened to London’s Bond Street and Paris’ Champs-Élysées; the Ku’damm shopping boulevard is packed with designer flagship stores and boutiques, while KaDeWe is the largest department store in Europe.

Aside from being Berlin’s biggest retail destination, Charlottenburg has preserved its historic status as a diverse cultural hub. The area is home to a range of museums, hotels and theatres; an Olympic Stadium from the controversial 1936 Olympic Games; an opera house; Germany’s oldest mosque still in use; and West Berlin’s Chinatown on Kantstrasse, dubbed ‘Kantonstrasses’ after the Canton area of South China.

Of course, Charlottenburg’s most iconic landmark is the picturesque Schloss Charlottenburg (Charlottenburg Palace, pictured above), which is the largest surviving royal palace in Berlin.

A Popular, Established Neighbourhood with a Bright Future

The ruins of Charlottenburg’s Kaiser Wilhelm Memorial Church date back to the 1890s, but today they stand alongside towering hotels and contemporary office blocks on the Ku’damm. This mix of old and new best defines the character of Charlottenburg and ultimately, Berlin’s ongoing transition from a city divided to a global-minded metropolis that is looking to the future.

Berlin’s not perfect, but Samsung is right: it’s more fun than London

Felix Petersen, managing director of Samsung Next Europe, reportedly says that his company will not set up its headquarters in London. It’s just “not a fun place to live unless you are really rich”, is the rationale. Instead, Petersen and colleagues will set up shop in Berlin, hoping to find a home that is both far more enjoyable and affordable.

Club in Berlin - Photograph: Christian Jungeblodt for the Guardian

As a Berliner, I can give Petersen some idea of what he can expect.

Certainly, there are things to say about London, where I lived for 14 years before moving to Berlin. The last time I was there, very recently, a signal failure saw the cancellation of all trains between Paddington and Slough in the very middle of rush hour. No rail replacement bus services were arranged: people were simply expected to trek home with the aid of suddenly exorbitant taxi fares. For one of the most expensive transport systems in the world, there didn’t seem to be much bang for your buck. It seemed to be a fitting metaphor for a town apparently desperate to become Geneva-on-Thames.

One can see why Petersen’s eye might settle on Berlin, for it has long been seen as a mecca for tech startups, with its lower costs allowing them to recruit and retain young talent. Samsung’s arrival may mark a greater maturity of that market, allowing younger companies to rebase in a capital more easily accessible than London or San Francisco.

Petersen and colleagues will find much to love in Berlin. There are parks, lakes and forests within a short train ride, nightclubs on which the sun never sets. There are theatres, food markets, streets of endless bars.

. . .

Link to the article

Berlin Workers seeking Home away from Home

Short term employment contracts on the rise as Berlin booms
Millenial contract workers seeking home comforts face reduced options since AirBnB ban

An interesting survey was recently conducted by a travel expenses company showing that alternative options for business travel were becoming increasingly popular and that Berlin was the fifth most popular business travel destination across all cities in the UK, France and Germany.

Given that we are in a day of disruptive innovation, it is no surprise that workers, as much as tourists, want to stay in less conventional accommodation or locations when they travel and use platforms such as AirBnB to find them.

It might be for the home comforts of a bedroom, lounge and kitchen or to get a better sense of the area in which they’re staying. It may simply be to save money. Unfortunately for Berlin, these options have been on the decline since the restrictions brought in last year, making it harder for short term contractors looking for a home away from home.

There is a real possibility that the city of Berlin will become the victim of this change. It’s a burgeoning city with falling unemployment, a rising population, strong educational facilities and significant investment into the city’s infrastructure. The tech companies are arriving and booming, new industries are opening up; as a united city it is still in its infancy, but we mustn’t forget that it is a capital city and to fuel its growth it needs to provide flexible solutions to maintain social mobility and give entrepreneurial companies the opportunity to grow.

This means, as much as anything, providing affordable accommodation for short term workers, often drafted in to fill skills gaps for specific projects or corporate objectives. The recent survey made it clear that whilst hotels were still popular, the demand for alternatives from Millenials in particular, is driving a booming market in alternative business accommodation.

Hotels, as much as they try to evolve, still lack basic home comforts. Hotels will forever sit firmly on the side of tourism and short-term travel, not residence, and many young contract workers want to feel as if they are living in the real Berlin, in a comfortable apartment that has been furnished like home, with their own food in the fridge, neighbours to speak to and local amenities to enjoy. If Berlin doesn’t fill the gap in supply for such accommodation, Berlin’s industries will struggle to bring in the talent they need for the time they need it. Six months of living in a hotel is not what many workers want these days, not to mention the exorbitant cost for the company.

Companies like AirBnB have launched into business travel successfully but Berlin’s restrictions are making it harder for the city’s companies to house short term workers. The situation is exacerbated by the fact that many landlords are seemingly unaware of the option available to them to provide short term, furnished accommodation to the city’s workers through alternative means, such as Buy Berlin’s Corporate Furnished Service.

If landlords fully furnish their apartments, they can be rented out to companies seeking fixed, short term rental contracts for their employees. The tenancy agreement is different to your standard tenancy, allowing landlords to have more control over their property and the rental price. It is a highly successful model that benefits all parties involved and is proving particularly popular in city centre districts and those located near to major project hubs, such as the airport.

BuyBerlin

Buy Berlin Investments is an independent property company that provides turnkey services to global investors, both individual and institutional, who wish to purchase real estate in Germany’s capital city, Berlin.

Established over ten years ago, the company recently expanded into Asia with the opening of its Hong Kong office, providing on the ground customer service in English, German and Chinese.

BuyBerlin supports its clients every step of the way – it seeks the very best properties, assists investors through the intricacies of financing, taxation and German legalities, and provides ongoing asset management in the form of property management, rentals, furnishings and eventual resale.

Berlin’s AirBnB landlords find alternative option for lettings

Corporate furnished letting service is ideal for landlords with city centre apartments affected by the crackdown on short term rentals
Tenancy contracts from three months plus higher yields make this an attractive alternative


It has been nearly nine months since the Berlin government initiated a ban on the majority of short term rentals in the country’s capital. The ban was deemed necessary to help manage what was seen to be Berlin’s escalating rental prices and to support the city’s hotel industry, for which the likes of AirBnB and Wimdu were getting the blame.

With approximately 12,000 rooms available at the time, the vast majority were concentrated in the most popular districts of Berlin, the same areas where many short term workers seek convenient apartments whist working in the city.

Darrell Smith, founder and director of estate agency Buy Berlin, explains that workers who are forced to stay in hotels or serviced apartments for the duration of their contract are the ones suffering the most from this change. “Having a place to stay that feels like home when you’re working in different cities around the world is what online platforms such as AirBnB were so effective at supplying. Despite the new legislation, these apartments can still be made available. What many landlords do not realise is that they can offer their furnished apartments to professional tenants on a short-term basis without facing the rental price restrictions of long-term contracts and can earn considerably more income as a result.”

There are significant benefits to this model; landlords can charge whatever rent they feel is appropriate. As an example, a typical one bedroom apartment of 55 square metres would generate EUR1,375 per month, nearly double what an equivalent unfurnished apartment would fetch. The contracts can be from three months to one year and the rent is packaged with a mandatory monthly clean, which the tenant must pay for.

Buy Berlin has seen a sharp increase in enquiries for corporate lets as Berlin continues to grow as an economic powerhouse, drawing in more business and more people. Smith continues, “Expatriates are looking for centrally located properties which are renovated or in very good condition and vary in size from 30 square metres to 100 square metres. Typically they work for multinational companies (CAC 40, Fortune 500) that often pay the rent for the tenants. We also work with relocation companies on behalf of their clients, and film companies are frequently in contact given that Babelsburg film studio is so near to Berlin.”

The most popular apartments are those found in the most centrally located districts such as Mitte, Prenzlauer Berg, Friedrichshain, Kreuzberg, Charlottenburg and Wilmersdorf.

Berlin’s AirBnB Vermieter finden eine Alternative

Möblierter Vermietungsservice für Berufstätige ist ideal für Vermieter mit City-Center-Wohnungen, die von der Regulierung kurzfristiger Vermietungen betroffen sind.
Mietverträge ab drei Monaten und höhere Erträge machen dies zu einer attraktiven Alternative.


Es ist nun fast neun Monate her, seitdem die Berliner Regierung ein Verbot fast aller kurzfristigen Vermietungen in der Bundeshauptstadt ausgesprochen hat (Zweckentfremdungsgesetz). Dieses Verbot wurde als notwendig angesehen, um dabei zu helfen, die Hotelindustrie der Stadt zu stützen und die Berliner Mietpreise zu regulieren. Hierbei wurde in der Hauptsache die Nutzung von bereits jetzt schon zu knappen Wohnraum für kurzfristige Vermietungen, z.B. an Touristen unterbunden, für deren Eskalation unter anderem die Vermietungsportale AirBnB und Wimdu mitverantwortlich gemacht wurden. Das große Ziel dieses Gesetzes soll sein, den vorhandenen Wohnraum auch allen Mietern langfristig zur Verfügung zu stellen, um so den chronischen Wohnraummangel in Berlin einzudämmen.

Die überwiegende Mehrheit der zur damaligen Zeit etwa 12.000 verfügbaren Zimmer konzentrierte sich auf die beliebtesten Bezirke Berlins und wurde größtenteils an Touristen vermietet. Diese Gebiete sind die Gleichen, in denen viele Pendler möblierte Wohnungen während ihrer Beschäftigung in der Stadt suchen.

Darrell Smith, Gründer und Direktor des Immobilienbüros BuyBerlin Investments, erklärt, dass Berufstätige, die für die Dauer ihres Arbeitsverhältnisses gezwungen sind, in Hotels oder möblierten Wohnungen unterzukommen, diejenigen sind, die am meisten unter dieser Veränderung leiden. “Einen Raum zu haben, der sich wie ein zu Hause anfühlt, wenn man in verschiedenen Städten auf der ganzen Welt arbeitet, ist, was Online-Plattformen wie AirBnB so gezielt anbieten können. Trotz der neuen Gesetzgebung können diese Wohnungen noch verfügbar gemacht werden. Was viele Vermieter nicht wissen, ist, dass sie deutlich mehr Einnahmen erzielen können, indem sie ihre möblierten Wohnungen kurzfristig berufstätigen Mietern anbieten, ohne dabei von Mietpreisbeschränkungen langfristiger Verträge betroffen zu sein.”

Es gibt erhebliche Vorteile für dieses Modell, unter anderem können Vermieter jegliche Miete verlangen, die sie als angemessen betrachten. Als Beispiel würde eine typische Ein-Zimmer-Wohnung mit einem 55m² Schlafzimmer EUR 1.375,00 pro Monat Miete kosten; fast doppelt so viel als eine gleichwertige unmöblierte Wohnung kosten würde. Die Verträge können von drei Monaten bis zu einem Jahr dauern und der Mietvertrag kann auch eventuelle Service-Leistungen, wie z.B. eine obligatorische monatliche Wohnungsreinigung, für die der Mieter zu zahlen hat, enthalten.

BuyBerlin Investments verzeichnet einen starken Anstieg von Anfragen für Vermietungen an Berufstätige, während Berlin weiterhin als wirtschaftliches Zentrum wächst, welches immer mehr Unternehmen und Menschen anzieht. Smith fährt fort: “Auch Auswanderer suchen nach zentral gelegenen Immobilien, die renoviert oder in sehr gutem Zustand sind und in der Größe zwischen 30m² bis 100m² variieren. Meist arbeiten diese für multinationale Unternehmen (CAC 40, Fortune 500), die oft die Miete für Ihre auswärtigen Angestellten zahlen. Wir arbeiten hier z.B. mit Umsiedlungsgesellschaften, die im Namen ihrer Kunden agieren, aber auch Filmfirmen sind häufig mit uns in Kontakt, da das Babelsberger Filmstudio so nah an Berlin ist.”

Die beliebtesten Appartements liegen in den zentral gelegenen Bezirken wie Mitte, Prenzlauer Berg, Friedrichshain, Kreuzberg, Charlottenburg oder Wilmersdorf.

Berlin identified as the top five ‘opportunity’ markets for expansion of the serviced apartment sector across Europe

Dublin ranked Globally for serviced apartment sector

International real estate advisor, Savills have identified Dublin, Stockholm, Amsterdam, Berlin and Barcelona as the top five ‘opportunity’ markets for expansion of the serviced apartment (also known as the ‘Extended Stay’) sector across Europe.

Dublin, Stockholm, Amsterdam, Berlin and Barcelona were all ranked highly due to them having sizeable corporate and overseas visitor markets with strong outlook in terms of GDP and employment growth. But more importantly they also had very constrained stock levels relative to their overnight visitor market.

According to Savills, €416.5m was invested into Europe’s Extended Stay sector in 2015, a year-on-year increase of 32.9%.

The majority share (90%) was invested into the UK, with Germany (7%), Switzerland (2%) and Belgium (1%) at the forefront of activity within what is a relatively immature asset class on the continent.

In order to identify the new opportunity markets for this sector, the Savills research team analysed the following factors within a matrix of 35 European cities – the presence of large corporates, GDP and employment growth forecasts and overnight visitor market and supply drivers (current stock relative to overnight visitor including that of hotels) for the sector.

Commercial research director at Savills, Marie Hickey says, “We anticipate that evolving consumer trends of millennial business travellers and the success of AirBnB in highlighting alternative accommodation options, such as Extended Stay, across Europe will help the sector further tap into existing unmet demand.”

Source: Link to the Business World’s article

Berlin becomes first German city to make rent cap a reality

Berlin has become the first city in Germany in which rent-control legislation has come into force in a bid to put the breaks on some of the fastest rising rents in Europe.

From Monday, landlords in the capital will be barred from increasing rents by more than 10% above the local average. Such controls were already in place for existing tenants but have now been extended to new contracts.

“The rent ceiling is very important for Berlin because the difference between the rent paid in existing contracts and new contracts is so high,” said Reiner Wild, managing director of the Berlin Tenants’ Association. “The other problem is that we have 40,000 more inhabitants per year. Because of this situation the housing market is very strong.”

Berlin is pioneering the rent cap after the national parliament approved the law, aimed at areas with housing shortages, in March. Berliners say flat-hunting is becoming increasingly competitive.

“We were looking for the best part of a year,” said Vlasis Tritakis, a student. He, his partner Sofia and their 18-month-old son moved out of a flat-share into a one-bedroomed apartment in the district of Kreuzberg in April.

But sooner or later they will have to find a place big enough for his son to have a room of his own. They say they don’t stand much of a chance against competition from potential tenants with better finances. “I don’t know how we will do it,” said Tritakis.

Although rents are still low compared with other European capitals, Wild says it is vital to keep the city affordable for lower-income residents. “We don’t want a situation like in London or Paris,” said Wild. “The reality in Paris or London is that people with low income have to live in the further-out districts of the city.” (read more)

Germans turn their backs on renting with new property boom

Is German property set to soar? On 13 June, Phoenix Spree Deutschland floats in the UK, giving armchair investors instant exposure to German real estate especially in Berlin.

German real estate has a slightly flat investment reputation. When the Wall fell, general optimism spilled over into property. A mini bubble grew, then got stuck. It was thought that corporations would move to Berlin. They didn’t. Decline set in.

Phoenix took flight when a group from UBS began investing in Berlin. Soon, others wanted to chip in. “We left UBS in 2006 and raised about €90m from high-net worth investors,” says Mike Hilton, fund manager at Phoenix.

Read more here – http://europe.newsweek.com/german-property-set-soar-fund-floats-london-327759

Bundesbank sees property overvalued in German cities, but no bubble

Residential property prices in German cities are overvalued by 10-20 percent, and even more in some quarters, but there is no property bubble threatening the entire financial system, Bundesbank chief Jens Weidmann said.

“For Germany as a whole, there is no discernible substantial over-valuation of residential property,” Weidmann said in the text of a speech for delivery in Munich on Wednesday.

Germany did not face the risk of a property bubble as credit growth was not particularly dynamic, and most banks remained fairly conservative in their loan issuance.

But Weidmann said residential property price rises in Germany in recent years had been concentrated in cities, particularly large cities like Munich, and these prices were now significantly over-valued.

“We estimate that prices are between 10 and 20 percent above the values that would be fundamentally justified,” he said, adding that over-valuations were even greater in popular areas of big cities.

“In summary, one can say of the German property market: vigilance is absolutely appropriate, but alarmism is unwarranted.”

Source – http://www.reuters.com/article/2015/03/25/germany-bundesbank-property-idUSL9N0P701R20150325