WHO BUYS IN BERLIN - The New York Times International Real Estate

By LISA KEYS

WHO BUYS IN BERLIN

Relatively low housing prices, combined with high-profile arts and culture, have attracted waves of foreigners to Berlin. Though the majority of international owners are West European, there is a strong contingent of buyers from Scandinavia, Eastern Europe and Russia, as well as interest from Americans, Japanese and South Africans, according to Michael Gilfoyle, managing director of Frontline Berlin, a real estate consulting firm.

MARKET OVERVIEW

When the Berlin Wall fell in 1989, investors and developers flooded the market, expecting droves of new arrivals. Instead, thousands of residents fled Berlin, seeking opportunities in the former West Germany. The result was a glut of homes on the market — a situation that persists today. There are around 150,000 vacant apartments in Berlin, according to Heinz Krueger, manager at Nordstadt, a real estate agency.

Still, in the past couple of years, as Berlin’s cultural buzz has grown, foreigners have buoyed the real estate market. There are many cheap rentals — approximately 88 percent of the city’s residents are renters, according to Mr. Gilfoyle — but home prices have risen in popular, centrally located districts like Prenzlauer Berg and Mitte.

Confidence in the market is growing; many residential construction and renovation projects are under way. Though the market has rebounded since bottoming out at the turn of the millennium (when government subsidies for construction ceased), prices remain far below those in the rest of Europe. “You really have to look hard to find something more than 8,000 euros a square meter ($1,068 a square foot),” said Mr. Krueger. “And that’s rare like a diamond.” He cited the “normal high price” as being is around 4,000 euros a square meter ($534 a square foot), while approximately 2,000 euros a square meter ($267 a square foot) will buy a high-quality, centrally located apartment.

BUYING BASICS

There are no restrictions for foreigners wishing to purchase real estate in Berlin, though all documents are written in German, and buyers (and sellers) must be present for a reading of the contract by a notary.

Most buyers should anticipate an additional 13.2 percent in “purchase-side costs,” said Boris Paterok, a lawyer who specializes in real estate. That figure includes a 4.5 percent property-purchase tax, a 6 percent commission, value-added tax, and notary and land registration fees.

Up to 100 percent financing is available for European Union residents; non-European buyers should plan on at least a 40 percent down payment, said Mr. Paterok. Buyers who need financing should estimate an additional 1 percent in purchasing costs for related fees.

USEFUL WEB SITES

www.berlin.de
www.berlinfo.com

LANGUAGES AND CURRENCY

German; Euro (1 euro = $1.40)


source: http://www.nytimes.com/2008/09/10/greathomesanddestinations/10gh-sale.html?_r=1&oref=slogin