Wednesday, 18 January 2017

South China Morning Post: Berlin Offers Opportunity and Frankfurt, Stability

When looking at your home market it is sometimes useful to hear what others are saying. Especially Berlin seems to be everybody's darling in the forecast for 2017 and there are good reasons for it ... and bad ones.

Here are some quotes from the South China Morning Post (link to full article):

When considering Berlin property, affordability springs to mind – homes are a fraction of the price compared to London and Paris. First time buyers and investors – who may feel intimidated by prices in first-tier cities, but still want a foothold in Europe – are looking to the German capital, where there is good investment potential.
Unfortunately, this reminds of advertisements 10 years ago like: "Buy an apartment in Berlin for the price of a parking garage in London". It did not mention that the rent for the apartments in question was the same as those of a parking space in the top parking zones in London. Why? Let's not go there, you know the Ferraris I'm talking about.

Next quote:
These are exciting times for Berlin. Formerly run-down neighbourhoods have been transformed into fashionable, hip hangouts. Infrastructure development is rolling out, from a new international airport with connections to the Berlin S-Bahn and the wider regional and national railway grid, to new international hotels and retail sites rising up around the city. A large regeneration area directly behind the central train station will bring Berlin another centre of commerce, with integrated retail sites and mid- to high-end residential properties.
The development of so-called "run-down" neighbourhoods has a name, it's called "gentrification". This comment is not about the social impact on the locals but about the fact that apparently investors looking at affordability are lured into regions where there is very likely strong resistance to rents promises in the sales documents and no established environment for high rent tenants. People who look for affordability are not the right trailblazers, especially if they are investing their life savings.

But then Berlin has a lot to offer for investors, international and local - but not the "mid to high end" developments popping up in "no man's land" around Chausseestrasse or around Ostbahnhof. Our recommendation is looking for a single existing property in a mature neighbourhood with social infrastructure, shops and people. It will definitely require more effort than picking "apartment 138" from a glossy brochure that does not exist yet and certainly does not have a tenant paying a net rent of 15 Euros per square meter per month - but then belief is everything in the religion of real estate.

Here is the "I thought so...": We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.


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