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Property market profile: Berlin

By Surrenden Invest | May 18, 2016

If you’re eager to look to Europe for strong investment opportunities, you may be surprised to learn that the German capital offers an increasingly buoyant property market that is enjoying excellent growth. Read on to discover why Berlin is now a key location for forward-thinking investors.

The state of the market
London may notoriously be enjoying the most active property market in the EU, but Berlin is hot on its heels and is becoming one-to-watch within the European investment community. With the city’s population set to grow by well over 7% before 2030, fuelled in part by the large number of refugees soon to be welcomed by Germany, the need for new housing is at an all-time high – but, as is often the case in such thriving cities, developers are not building enough properties to keep up with demand.

According to figures from 2014, only 5,208 apartments were completed in Berlin during a twelve month period. This equates to just 1.5 apartments per thousand residents – a rate that’s much lower compared to the country’s other major cities, and that reflects the extent of the shortfall.

Approximately 12,000 properties have been promised in 2016 but forecasters admit that the city should in fact be providing at least 15,000 new units over the same period if demand is to be adequately met. Naturally, this imbalance presents a golden opportunity for buy-to-let investors.

A landscape dominated by tenants
The owner-occupation rate in Berlin remains low at just 15%, with the majority preferring to rent. However, this does represent an increase of 5% since the fall of the Berlin Wall back in 1989, and experts predict that more and more residents will choose to purchase their own property in the coming years. This predicted trend towards ownership will mean that investors are likely to get the best of both worlds when they seek out opportunities here; they can expect strong, consistent rental yields, but will also benefit from a robust sales market if and when they decide to sell.

Key locations for consideration
So the real question is, which regions offer the best deals for property investors?

Berlin has 12 districts, spreading from the densely-populated centre to boroughs on the outskirts of the city that include Reinickendorf to the North and Treptow-Köpenick to the South East. Mitte – as the name suggests, ‘middle’ – is arguably attracting the most attention, largely due to the fact that it has enjoyed extensive regeneration over the last ten years. On average, the price of apartments in Mitte grew by over 28% in 2015, and local rents increased by an impressive 7%, a statistic which is well above the local average.

Those keen to invest a little further away from the heart of the city should look to Friedrichshain-Kreuzberg, another centrally-located district that is continuing to perform well. Neukölln, however, is perhaps the investors’ borough of choice in 2016, having established itself as a truly up-and-coming area that saw an increase in property prices of over 40% last year.

With an impressive economy, a uniquely bohemian culture and a fast-growing population, Berlin offers a fantastic range of investment opportunities to those looking to expand their international portfolio. Contact Surrenden Invest today to discuss high-potential investments in Germany.

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