The Case For Investing In Berlin’s Real Estate

Article written by Christian Schulte Eistrup, managing director of Optimum Asset Management, 2 January 2018, in Wealth Briefing

Berlin has changed considerably in recent years, yet it remains one of the most compelling market opportunities and appealing cities in Germany. The capital still offers excellent value; provided a proactive investment approach is taken.

We were an early entrant to the Berlin property market in 2006, when the city was not so popular. However, as evidenced by the city’s fourth successive appearance atop PricewaterhouseCooper’s Emerging Trends in Real Estate survey, Berlin has entered new territory.

The property market in Berlin is booming and offers great value to businesses. It is one of Europe’s most dynamic destinations for tech companies, large and small. The Sony Centre deal in November was one the largest European real estate deals in 2017.

Furthermore, the city is now among the most popular tourist destinations in the EU – recording the fastest expansion in the total number of nights spent in tourist accommodation between 2005 and 2015. On this metric, Berlin has seen almost twice the rate of growth for London.

While residential prices have been rising, they remain good value compared to other major capitals such as Paris or London, where prices per square metre are at least five times higher. Berlin remains a high-growth, supply-constrained city. With one of the highest GDPs per inhabitant in the country, low unemployment and healthy wage growth – the economic fundamentals here are strong. (Eurostat, 2017)

The city has also benefitted from the continuing transfer of government ministries from other parts of Germany and according to Berlin’s Senate, the population is set to grow by more than 250,000 by 2019. With this comes ever-increasing demand, including for home ownership, and pressure on the occupier supply/demand imbalance – the potential for real estate value growth is significant.

A proactive approach to asset management is key to generating strong risk-adjusted returns. This approach can generate an uplift of up to 80-100 basis points in yield, by focusing on mismanaged properties. This requires a more strategic analysis of single assets and concept creation for spaces; inspired by a combination of a property’s architectural aspects and the profile of intended tenants.

Take, for instance, properties in the range of €10 million ($11.9 million) – €50 million. Property at this price point is often out of the reach of private investors, but below the radars of institutions. For example, we recently purchased buildings located around Stralauer Allee that were, in a previous life, retail warehouses. With retailers struggling due to online competition, the properties were reimagined around the concepts of media and technology. This attracted higher yielding, future focused tenants such as Porsche Digital Lab.

Within Berlin’s residential stock, there is still unrealised value to be unlocked by buying high-quality buildings whose characteristics make them eligible for a condominium conversion strategy. A building purchased in the fashionable district of Charlottenburg, for example, can result in an uplift of €3,000 per square metre.

Based on our experience spanning over ten years in Berlin, there is real estate in several other selected cities that is beginning to match the capital as the best source of attractive returns with low underlying risk.

Potsdam, Dresden and Leipzig all exhibit the occupier supply/demand imbalance that attracted investors to Berlin in the first instance. The three markets offer modest risk, but with even more affordable prices and attractive yields. Each are growing centres of technology, education and industry and offer investment opportunities comparable to Berlin, specifically with regards to mismanaged but high-quality properties.

Cologne, Düsseldorf and Hamburg also offer further opportunities, on a selective basis, to participate in the positive macroeconomic and property fundamentals.

In Berlin and across these six other locations, office and residential vacancy rates are falling and demand continues to increase year on year. Some have become concerned that markets could become overpriced and thus dampen returns on new investments. In our view, strong population growth coupled with rapid property and rental price growth are clear indicators of Berlin’s prosperity.

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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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Brexit is making Germany even more juicy for real estate investors

Article written by Jill Petzinger for Quartz Media

It appears the real estate sector is no less susceptible to Brexit jitters than the financial one. As the months drag on with no clear UK plan on how to exit the European Union in sight, real-estate investors are eyeing up more predictable, lucrative places to put their money—and stable haven Germany is proving a major draw.

A survey released this week from auditing company PwC and the Urban Land Institute found that Germany’s capital Berlin tops the charts as the most attractive European city for investment and development potential. Berlin, Frankfurt, Munich, and Hamburg grabbed places in the top six cities in the Emerging Trends in Real Estate 2018 report, which interviewed 818 people from the real-estate industry. London’s 2018 “overall prospects” are ranked 27th.

Picture from Markus Schreiber

Real estate investment in Germany in the last year came to €68 billion ($79 billion) up from €54 billion last year, and outstripping the UK’s €66 billion worth of investment in the last year.

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Brexit impacts real estate as investors favour Germany over UK

As British researchers focusing on all sectors of the UK economy continue to attempt to confirm if Brexit will have a positive or negative impact on the market as a whole, new figures suggest investment-friendly sentiment is in the early stages of turning its back on Britain. Despite record investment in London, particularly in early 2017, German real estate opportunities have eclipsed the desirability of their UK counterparts for the first time – possibly in anticipation of a wider financial shift toward the mainland following Britain’s divorce from Brussels.

(. . .)

Just one week later, however, a new study from online real estate investment platform BrickVest has suggested the opposite. The online financial marketplace allows clients to invest in institutional quality real estate globally. Leveraging data from its platform and a survey of 3,500 professional real estate investors from a number of the world’s largest economies, the company has concluded that the continuing saga of Brexit is having an impact on the attractiveness of UK property. According to the analysis of BrickVest’s latest Commercial Property Investment Barometer, 33% of investors named Germany as their preferred destination.

This is the first time that Germany has been chosen as the number one region to invest in ahead of the UK, which was selected by just over a quarter of respondents, at 27%.

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Berlin Retains Top City Billing in Emerging Trends 2018

Berlin has been ranked the top city for investment and development for the fourth year in a row by Europe’s real estate community.

The German capital came first out of 31 cities in Emerging Trends in Real Estate Europe 2018, the annual forecast published by the Urban Land Institute and PwC. The report is based on the opinions of more than 800 property professionals.

(. . .)

Equity and debt are expected to be just as plentiful in 2018, despite the threat of rising interest rates, while this year’s high levels of investment are forecast to continue.

The fact that German cities once again took four of the top 10 spots in the report’s score card of prospects ‘is no surprise’ says the report’s section discussing Markets to Watch. ‘Germany has been steady state for a long time now. With Berlin, people truly believe it’s going to become a major city’, a pan-European financier says.

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Article written by jane Roberts, in Market Watch.

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,”

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.


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.

Real Estate in Germany Growing as Wave of Mergers and Acquisitions Rise

German real estate is seeing a wave of mergers and acquisitions rise with low interest rates offering investors an open window for growth.

Mergers and acquisitions are on the rise in Germany’s real estate segment as industry players look to capitalize on low interest rates and a virtual standstill in property prices. Unlike neighboring countries who are experiencing unsteady growth rates. In a report by Gulf News, Vonivia, the top dog of real estate joined the fray and revealed plans of offering €14 billion or $16 billion for its nemesis Deutsche Wohnen after its failed bid to acquire LEG Immobilien.

Spain Remains Top European Property Investment Target, Germany Second

According to Knight Frank, active investors see Spain as the top investment target in Europe, with Germany following close behind in 2015.

Knight Frank’s recent European poll showed 27% of over 150 investors identified Spain as their preferred investment target for next year, clearly indicating the strength of its recent recovery with values still well below their previous peak.

Humphrey White, Head of Capital Markets at Knight Frank Spain, comments “The fundamental rationale behind investing in Spain is even stronger than this time last year. Prime CBD office rents have risen by 20% over the past 12 months, but remain nearly 40% below the 2008 peak, and both footfall and sales have been increasing in dominant shopping centres for six consecutive quarters.”

Over a quarter (25.4%) of attendees chose Germany as their preferred target.  Results mirror the buoyant investment activity seen in the country, with a total of €30 billion invested in property during H1 2015, an increase of 35% compared to H1 2014.

Joachim von Radecke, Head of German Desk at Knight Frank in London, comments “The increase is driven by the rising flow of foreign capital into the country and the 50% increase of domestic investor activity.  Foreign investors’ share of the German market continues to grow, and now accounts for almost 60% of all transactions in H1 2015.

“We saw the usual trend towards the “big five” markets – Berlin, Frankfurt, Munich, Hamburg and Düsseldorf, with 78% of total office transactions recorded in these cities.”

The UK again featured strongly in this year’s poll, attracting 17.4% of the votes, on the back of the continuing recovery which has now extended to the UK regions.

Chris Bell, Managing Director of Europe at Knight Frank, comments, “The UK is well ahead of the rest of Europe in terms of the property cycle and has already seen significant yield compression.  However, it is encouraging that rental growth is beginning to re-emerge more widely across Europe, helped by the strengthening of occupier demand and the steadily falling availability of good quality space exacerbated by the lack of development over the preceding recessionary years.”

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