1 Investment �
Investing in Berlin:
An Engaged Relationship
Berlin has become Europe’ s third most popular destination after London and Paris. This ever-growing interest in the German capital, and immigration to it, has led to increased demands for property to rent and buy, mainly from foreign investors. Despite this, real estate prices in Berlin remain almost too good to be true.
Berlin-“ die Perle an der Spree” or the Pearl on the banks of the River Spree- has been attracting foreign investment in real estate since its reunification in 1989. This is due to the fact that an investment in Berlin real estate still represents no real financial risk, high leverage, and stability.
German financial practice is conservative and the country remained relatively unscathed by the financial crisis that swept Europe in 2008. With its chequered past, Berlin is a lively vibrant city. It has an area of around 900 km ² with a population of around 3.5 million. It is one of Europe’ s greenest cities as well as a cultural, political and creative centre. A new airport, opening in the southeast, will enhance the German capital’ s role as a gateway to eastern and western Europe even more so.
The first requests began for joint venture investments from the Middle East from pioneers looking to invest in cities less obvious than London
Dr. Marc Schulten, founder and CEO at FFIRE, a financial management firm based in Berlin specializing in real estate investment, says that the German tradition of spending more on travel and cars, as opposed to property, means that the market is more open to investors from countries where home ownership is traditionally prioritized, most notably Italy, Spain, and Greece.
In fact, Berlin really began luring international investors in 2005 when Italian and Scandinavian investors bought up large amounts of residential real estate in former East Germany for refurbishment and subleasing.
Opportunists were deterred by the fact that a building owner may not, without significant tax loss, resell a building within ten years of buying it. So, the prospect of the bubble bursting, as in the US, is unlikely due to the stable and sustained nature of price increases.
The difference in real estate prices between Berlin and other German cities, like Munich and Hamburg, is remarkable. Dr. Schulten explains that historically, Munich’ s Marc Schulten
26 DORCHESTER April- 2013