Until early March, Germany had spent five months without a government. Not that Berlin’s property market noticed: over the past year, prices have increased 12.7 per cent on average per square metre, according to local estate agency First Citiz, continuing years of substantial price gains.
Berlin has long attracted a certain type of house-hunter. Cool almost to the point of cliché, the city’s attractions include affordable rents, a thriving arts scene, good universities, a rich history and nightclubs that stay open continuously from Thursday to Monday.
Domestic and international buyers alike have also been encouraged by a strong national economy, with growth reaching a six-year high in 2017 and Germany posting the largest current account surplus in the world. Although a real estate transfer tax of 6 per cent - usually paid by the purchaser - applies to Berlin property, any seller who has owned their home for at least 10 years is not taxed on any profits from the sale, explains Dhaker Haj-Ali, property investment advisor at First Citiz.
The city’s population grew by around 50,000 in each of the five years to 2017, according to official figures. Many new arrivals relocate with their companies, says Robbie Stewart, an associate director at estate agency Savills, who co-ordinates transactions for companies across Europe. “Half of what I’m doing is in Germany. That’s German companies growing themselves, but a lot of new occupiers in the tech space are moving in too,” he says.
Company relocations have increased since the UK’s vote to leave the European Union, adds Stewart. Businesses are tempted by greater political certainty, he says, and the fact that Berlin is “still so much cheaper than [London tech hub] Shoreditch.”
Germany’s open-door policy towards refugees has also factored: last year 186,644 asylum-seekers were registered by the Federal Office for Migration and Refugees, with many coming to Berlin. This has helped keep occupancy rates for commercial and residential properties buoyant, with both hovering at around 98 per cent, according to First Citiz and Savills.
High demand and moderated supply have helped drive prices up — last year’s double-digit growth was by no means exceptional. “This is the third or fourth year where it’s been around 10 per cent,” says Mr Haj-Ali. Figures from his agency show increases of 10.1 per cent in 2015, and 9.6 per cent in 2016. Despite the years of high growth, Berlin remains relatively affordable for international buyers: prime property in the city costs roughly a third of that in London per square metre.
The areas where growth is fastest, according to Haj-Ali, are Mitte in central Berlin, Prenzlauer Berg to the north, Friedrichshain in the east, and Kreuzberg and Neukölln to the south. The most desirable pockets in each neighbourhood are known as Kiez and often have a village-like atmosphere, adds Mr Haj-Ali.
“Those areas are very nice and the cost of living is very affordable for international buyers. We expect prices to continue moving up,” he says. Professional services firm PwC is in agreement, placing Berlin top of its ranking of European cities for real estate investment for the third year running.
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