Mittwoch, 3. September 2008

Investment ranking: Berlin above London!

The German capital is in favour with investors and occupies a position among Europe's top group - only a year ago it was trailing far behind.

Berlin - The global financial crisis holds Europe's property markets in a stranglehold - with one exception: Berlin.

While in London, Paris and Madrid the prices of office blocks, shopping centres, condominiums and penthouses are plummeting, the market in the German capital has remained surprisingly stable. Berlin's appeal on major international real-estate corporations becomes evident in a recent survey carried out by financial consultant PricewaterhouseCoopers (PwC) and the renowned research institute Urban Land (ULI) among some 500 international real-estate experts.

According to this survey, the German capital has gone up in the ranking of European cities from position 25 to rank nine within a year. The PwC experts see Berlin's potential particularly in residential real estate. Excerpts from "Berliner Morgenpost" (13 March 2008) and from a study by PricewaterhouseCoopers (PwC) and Urban Land (UL)In spite of international crisis: new major investments in Berlin real estateMorgan Stanley buys the "Sony Center" - Swedish banking group SEB takes over the "Daimler City" complex on Potsdamer Platz: over € 2 bn. invested for two of Berlin's prestigious realties.

On Berlin's prestigious Potsdamer Platz another building complex is changing hands. The huge Sony Center, which opened in June 2000, will be sold to a group of investment funds led by Morgan Stanley and including Corpus Sireo and John Buck, announced the Japanese electronics giant. The property's yield lies around 5 percent - the exact sale price was however not disclosed. Insiders believe it to be around the 600 million euro mark, yet this was not confirmed by the investors.

Last December, Sweden's SEB bank bought the complex of 19 buildings on Potsdamer Platz belonging to the Daimler Group for 1.4 billion euros, as both companies announced. Daimler will continue to use half of the office areas on the complex. The sale of the prestigious property is part of the Daimler's strategy to part with operationally unnecessary properties.

Excerpts from "Berliner Morgenpost" (1 March 2008) and Spiegel online (2 March 2008)

Berlin rents up by 2.8% on average - and by up to 50% in top locations!

The demand for housing in Berlin is increasing, and the rents are now going up too - with rises of up to 50% for new lettings. Rents in Berlin are on the rise, according to Berlin's rental index for 2007 and the BBU (the Berlin-Brandenburg Housing Association) report on the housing market. The calculations of Berlin's rental index show that the average rent has increased to 4.75 euros per square metre for 2007, 5.9 percent above the 2005 prices. This increase becomes more noticeable when one compares the average rent in Berlin with the actual rent one has to pay today for a new letting. The current average rent for re-rentals lies exactly at 5.90 €/m2 - 24.2% higher than the average rent as calculated in the rental index.

This is the conclusion of the report on Berlin's housing market based on a study carried out by the consulting firm Jones Lang LaSalle on behalf of GSW. The report, for the purposes of which more than 85,000 housing offers were evaluated, focused on new lettings in the German capital. Price increases for new lettings of up to 50% were ascertained in four out of Berlin's twelve districts. The Jones Lange LaSalle analysts believe that this trend will continue in the following years, as they expect an increasing demand and a further decline in new construction.

Source: Berlin rental index 2007; Housing market report Berlin 2007 and 2006Rising prices for Berlin's housing: demand six times higher than supply The fast-increasing number of households on the one hand and a totally inadequate supply of new completed residences on the other put Berlin's housing market under pressure. Housing prices and rents will exhibit a sustained increase. This is the conclusion of the recent "Housing market report Berlin", compiled by the consulting firm Jones Lang LaSalle and annually commissioned by GSW.

According to the report, the growing population (+20,000 in 2007) as well as higher incomes and declining unemployment figures push the demand for housing in Berlin.The biggest catalyst for the increasing demand for housing is however to be found in Berlin's demographic development: on the one hand the birth rates in Berlin are the highest in Germany (again 5% higher than last year), and on the other there exists a continuing trend for single households. Demographers calculate that the average number of persons per household in Berlin will drop from 1.8 occupants today to 1.6 by 2015. These results alone will create a demand for 235,000 additional apartments over the next seven years. In stark contrast to the strong demand, the construction of new housing units in Berlin is declining due to the high costs involved - a mere 1,609 units were completed between January and June 2007, 26% less than over the same period in the year before.The enormous gap between rising demand and declining supply will lead to further increases on housing prices and rents in the following years. Excerpts from the housing market report Berlin 2007, a study by Jones Lang LaSalle on behalf of GSW, which surveyed 85,000 apartments for rent and 1,785 offers for sale between January and June 2007.

Denis Gorce-BourgeBusiness Developement Manager Chase Devonshire

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