Dienstag, 6. Dezember 2005

Why Invest In Berlin?

Berlin Germany is set to offer real estate investors buying property in Germany substantial capital gains.

Berlin real estate offers overseas property investors a greeat opportunity to benefit from low prices with great potential for capital gains. Berlins proerty prices are still low and represent the lowerst prices in any European City. This situation will not last forever and already multi national are moving in buying large buildings.

Recently Prudential Real Estate Investors announced that it has acquired the famous Ewerk office situated in the heart of Berlin. The Ewerk, a former transformer station built in 1928, was renovated during 2004 and 2005. Its 157,000 square feet is comprised of 85 percent offices and 10 percent apartments. It’s walking distance to Checkpoint Charlie and right next to the well-known Potsdamer Platz, which features the Daimler-Chrysler Areal and the Sony Center.

Housing market histrory in Berlin is key to understanding why Berlin prices are so low.

The opening of the Berlin Wall (1989) and the reunification of Germany (1990) there was an incredible wave of optimism and expectation for Europe’s largest economy and it’s newly created capital city - Berlin. The pent-up demand particularly from the East Berliners was immense. The conclusion at the time was that the city required a massive investment and construction programme in all sectors (residential, office space, hotels etc).

Insite a German based real estate consultancy business is convinced that Berlin as the next big thing in German and European real estate investment.

The Berlin construction boom of the early nineties coincided with both the reduction in residents and more importantly their purchasing power together with an increasing unemployment level.The net result was a fall in the price of property and rents, an increase in the availability of office and residential space without an appropriate increase in demand.

Between 1994 and 2004 new property prices fell in Berlin by 30% and rents by 15%.The disposal of large property portfolios by public authorities further undermined price levels.
Property prices in most European countries significantly increased those in Berlin stagnated or fell. Berlin now represents the most competitively priced property in Europe.

Only 12% of Berliners own their property compared with over 20% in Hanover, Hamburg, Munich and Stuttgart. Overall in Germany, 43% own property and the trend is rising!

Tourism increased by 16% in 2004 alone. In excess of 2,000 four and five star hotel rooms have been built in the last 3 years including Ritz-Carlton and Radisson. There were 14 million overnight stays in 2005 compared to 11.2 million in 2003. British tourism increased by 22% in 2006 alone.

Air traffic into Berlin airports is up by 8% in 2006 and flights arrive from Ireland (Belfast, Dublin and Cork) and the UK (Bristol, East Midlands, Glasgow, Liverpool, Manchester, Newcastle, Gatwick and Luton). A new airport (Berlin Brandenburg International) is under construction which will bring significant levels of investment.

In the ten years between 1990 and 2000 net migration from Berlin totalled almost 200,000 people. Migration stabilised in the years 2000-2003 with little change to the net total. The latest statistics (December, 2005) indicate that over 7,000 people arrived during the year. Berlin is growing again!

What this all adds up to is Berlin offers a investment opportunity

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