Berlin’s property market – maximising returns

August 3, 2016

Are you chomping at the bit to invest but not sure which way to turn? Feeling a bit cautious given how future relationships with Germany and other European Nations might pan out?

But you’d still like to invest and get the upside yields in a stable economy, but don’t like the yo-yoing exchange rates with the Euro at the moment?

Berlin investment propertyWell I am fresh back from a visit to Berlin to check out the property market there. What impressed me was the relaxed feel of a city at ease with itself.

Now we know that Germany is widely regarded as Europe’s largest and most stable economy and is well-regulated from both a legal and banking perspective. This manufacturing mecca, with a GDP of 3 trillion dollars and a population of 81m, is one to be aware of.

A report by PWC ULI Emerging Trends in Real Estate 2016 does an annual sanity check on key markets to watch, on a number of dimensions including real estate. Berlin comes out as Number 1 on the list of five leading cities for investment, followed by Hamburg, Dublin, Madrid and Copenhagen.

Why? Berlin is a technology, media and telecommunications hotspot. The German capital, draws in overseas investors as well as local ones, not only owing to its future prospects, but because it also offers relatively inexpensive assets.

What about Berlin’s property market?

Berlin also compares favourably to other German cities in terms of the competitive pricing of its property.

On average, German rents are rising slowly, with a 9 per cent increase in the three years to 2014*. Between 2013 and 2014, rents in Berlin went up by more than 9 percent (JLL). But rents in popular districts in fast-growing cities, including Berlin, Munich and Hamburg, have ascended to 40 per cent in the same period. With 40,000 new inhabitants each year, demand for rental property is strong.

New laws have been brought in recently to protect the city’s property market so that it doesn’t mimic other burgeoning cities like London – unaffordable in parts of the centre. The aim is to retain Berlin’s character, diversity and affordability by keeping sale and rental prices at a reasonable level. In London, that’s especially true: the monthly sqm price for renting a prime central London apartment now ranges from £51 to £64, while in Berlin, the average sqm rental price is less than €10.50 (£7.50). While London tenants reportedly spend 72 percent of their earnings on rent, Berliners pay out just over 20 percent**

What does Berlin’s new regulation mean for property investors?

Under the rule change, inner city landlords will only be able to raise rents by up to 10% above the local average for similar properties when taking on new tenants. Although, newly built properties and those that have undergone wholesale renovations, will be excluded from the restriction, in order not to discourage investment in building projects.

This means if you want to invest with a developer who focuses on refurbishments or brand new off-plan developments, this ruling shouldn’t affect your investment. If you want to invest as a buy-to-let landlord in Berlin or look at alternative ways to invest and maximise your returns and protect against exchange rate fluctuations, then e-mail us info@property-venture.com

Our clients get regular updates on hot deals and the latest changes in the property market. Want these? Go here

Please get in contact to chat your plans through by telephone +44 (0) 1932 849 536 or contact us

Property Venture® is an award-winning, European Investment property company who helps build portfolios and the purchase of holiday homes in Europe, with common-sense advice.

The focus is mainly greater Europe: German property investment, buy-to-let and homes in Poland, UK investment property, Spanish city and Costa property, Managed Leaseback in France, Cypriot homes

On the Advisory Board and a Member of the Association of International Property Professionals (AIPP) the business has been vetted, approved and voluntarily commits to Industry Regulation and the Professional Code of Conduct. We are known for our quality customer service and non-pressurised approach to sales. Take a look at what our clients say

PWC assesses business envioronment, real estate capital markets, sustainable technology, the green agenda, and as a place to live * ImmobilienScout 24, online broker **Wohnungsboerse

Related Posts Plugin for WordPress, Blogger...
Tags: , , , , ,
  • Paul

    As a German, all the data in this article are correct.

    This big downside in Berlin are taxes and fees.

    The notary (solicitor) charges a percentage of the price, 2%+VAT. Berlin itself charges 6% fee as property sales tax. Agency fees are high, often 6%+VAT, but of course can be avoided. Registrar fees are fixed but also measure a few hundred EUR. Yearly property tax is very low though.

    If you sell your property with profit in less than 10 years, you are taxed again on the profit.

    So buying in Berlin has massive fees.

    • Louise

      Hi Paul,
      Thanks for taking time to pop by and comment. Yes there are always expenses in a property transaction in any country. Overall these costs are still less than some countries like Spain or France. For example overall costs are about 13% of any transaction in Spain and higher in France. In the UK it is really dependent on the Stamp Duty (Land sales tax) threshold the purchase price falls into. It is better to consider it as a longer term investment, that way the amortisation period is sensible rather than short-term flipping or a speculative transaction. Or there are other property-related ‘investment’ vehicles that can be considered for some qualifying investors

      • Paul

        Could you write an article or publish a chart with a by country fee schedule?

        UK seems to be by far the cheapest for small private properties when it comes to tax and fees. US and CA are also very cheap.

        FR and ES are 9% and 8.5% tax on purchases on my list, so very high indeed. But always hard to find non-native sources for these things and there are exceptions and different rules everywhere. A comprehensive guide from a professional would be nice.