Berlin is bursting at the seams with energy, innovation, technology, people and economic growth. It also offers property investors unprecedented opportunities. Some call it the bargain of the century.
Throughout the ages famous people from Frederick the Great to Albert Einstein, Marlene Dietrich and the playwright Bertolt Brecht, among many others, have called Berlin home. Today this vibrant city attracts the world’s best technology talent, leading figures in the liberal arts, top bankers and industrialists, and millennials by the score. In fact, in a 2018 Nestpick study Berlin was crowned the World’s Best City for Millennials out of 110 cities.
Ever since the fall of the Berlin Wall, this dynamic metropolis has reinvented itself in leaps and bounds. It has become the number one destination for property investors from around the world. Compared to cities like London or New York, it offers investors two to three times more value per square metre, yet the projected growth in value is also higher. Let’s take a closer look at what makes this city so attractive and valuable.
Property demand outstrips supply
With tech giants like Google and Tesla having a presence that draws the best global talent here or the trendy lifestyle and liberal arts scene making it a millennial favourite, the pull of Berlin is such that it has become Europe’s most populated city with 3.76 million residents. The city is also Germany’s capital as well as a centre for world-class education, the arts, digital media, medical research and above all, technology.
These factors have made Berlin an increasingly desired location for a favourable rental demographic with 70% of its population aged below 35 years. In turn this has stimulated a steady movement towards smaller, centrally located dwellings in line with shrinking family sizes and the mobile lifestyle of millennials.
Its workforce, already greater than that of both Paris and London, is growing steadily. According to leading independent real estate consultancy Knight Frank, it is expected that 20,000 additional housing units will be needed each year over the next decade. With only 16,956 apartments being completed in 2018, there is an under-supply of at least 87,000 units. Against this background and with bottlenecks in building permit approvals, demand for property far outstrips supply, and is likely to continue doing so.
With investment in infrastructure and high connectivity being two key elements when considering property investment, Berlin comes out tops. The new Berlin Brandenburg International Airport scheduled to open its doors in October this year, will further bolster that distinction. The airport will provide direct links to the financial capitals of the world and have an anticipated 35-million annual passenger capacity, with plans to later increase it to 50 million.
Berlin also proudly boasts the largest central railway station in Europe serving a metropolitan system of 19,000km of rail lines that connect to all other nearby major hubs. Because of its efficiency in public transport that provides high connectivity, Berlin has the lowest ratio of automobiles per capita of any tier 1 German city.
Safe haven for investors
As a leading world economy, a founding member of multilateral institutions like the G8 and of the European Union, and with a GDP of EUR4 trillion, plus continued economic growth and political stability, Germany has earned itself a reputation as a safe haven for international capital. Even in the face of current global uncertainties, sentiment remains positive for 2020 and beyond, thanks to a robust labour market and increasing domestic consumption.
Efficiency is at a peak with an unemployment rate of 3.1% - fractionally over half the EU average of 6%. Furthermore, a total of EUR88 billion was invested in commercial and residential real estate across Germany in 2019, an increase of 8% over 2018. Germany has high levels of safety for off-plan investment while capital gains tax falls away after 10 years. All if this makes the country, and particularly Berlin, a highly attractive and safe investment destination.
It is no wonder then that PwC and the Urban Land Institute's 'Emerging Trends in Real Estate: Europe 2020' report - an index that focuses on liquidity and connectivity – placed Berlin first in the category for ‘Expected Increase in Capital Values’.
Attracting corporates, start-ups and talent
It is these factors combined that has attracted some of the world’s leading corporates to Berlin, among them Elon Musk’s Tesla which is constructing Europe’s first Gigafactory just outside the city. And the Europacity regeneration scheme, a 61-hectre development of office space and housing in the heart of Berlin, is attracting prestigious entities such as PwC, KPMG, Total and 50Hertz to the city.
All of these developments will undoubtedly attract more highly skilled talent to a city which already boasts the highest level of foreign talent in well-established tech start-ups, second only to California’s Silicon Valley. In this respect Berlin has become the city of choice for digital media, medical research and technology companies. Some 70% of all of Germany's digital and technology start-ups are based here, with 4.1 billion euros in venture capital being invested in Berlin last year.
Transcultural diversity and youthful innovation
Berlin’s historical heritage and charm, combined with green spaces, a leading role in Europe’s art scene, excellent job prospects in booming industries, and occupying a position at the cutting edge of the 4th Industrial Revolution, is what sets it apart. As a city of contemporary art production, it rates second only to New York in importance.
These characteristics, together with its transcultural diversity, its youth-centric innovation and its contemporary vibrance, are the things that have made Berlin the World’s Best City for Millennials. It is a city filled with potential and opportunity for the discerning property investor.
Contact Carrick Property for more information
Carrick Property can help you to further explore the exciting possibilities and opportunities of Berlin’s property market, as well as others. To set up a meeting with one of our property investment specialists, contact us at [email protected].
Carrick Wealth is a registered South African financial services provider specialising in South African and international financial planning and integrated wealth management solutions. Carrick is also licensed in Zimbabwe and Malawi, and holds three global licences in Mauritius. Carrick at all times maintains its independence with regard to product providers and asset managers, providing bespoke risk assessment, financial planning and other services to high net worth individuals (HNWI). Through our own qualified and experienced wealth specialists, as well as through partnerships with industry leaders in the fields of foreign exchange, tax, international property, offshore bank accounts, trusts, wills and estate planning, Carrick is able to provide the highest levels of service for your financial planning and investment requirements, both offshore and domestic.