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High hopes for Berlin Boom

26th September 2007 | back to article listings BACK    print this article PRINT

Germany has been the poor relation in terms of European housing markets, being the one Eurozone country to experience negative house price growth in the past five years, with a five per cent fall during that time, according the recent Halifax survey of European property prices.

Berlin has in turn been the poor relation in a country which has seen the once mighty West German economy struggle to absorb its weak eastern neighbour. The city may have become the capital of a whole nation again, but the economic problems have lasted long after the wall crumbled, with unemployment soaring in the 1990s as subsidies to both the former East and West vanished faster than an edifice of communist concrete.

One of the major features of the economy when it comes to property in the city is the low rate of owner-occupation. While the nationwide percentage is in the low 40s, just 15 per cent of Berlin residents own their own homes, according to Berlin Capital Investments.

However, states the company, this is starting to change. Announcing the sale of a new block of apartments in the wealthy south-western suburb of Zehlendorf, it has expressed confidence that the capital is beginning to boom again, which spells good news for property investors.

Director Fergal Creed said: "Strategic investments made over many years in re-establishing Berlin as a major city are now paying dividends. The economy is stabilising, consumer confidence is rising and this together with a number of other factors, is having a positive effect on the German property market."

Mr Creed added that the company believes this is an "excellent" time to invest in the capital's property market, noting that "there is strong demand for both sales and rented accommodation, particularly at the luxury end of the market".

The announcement by Berlin Property Investments is far from the only vote of confidence being expressed in the city, of which there have been many. The development of the property market might be seen as an extension of the improving economy, highlighted by rapid development as the ever-changing skyline reaches upwards.

Another such endorsement has come from property developers Ballymore, which has put its money where its mouth is on the issue and announced today an investment worth €155 million (£108.5 million) in the Kudamm Karee, a development which included new apartments alongside restaurant and retail space on what it describes as "the most important shopping street in the German capital".

That such funds are being spent on both property and other economic activities, particularly ones which assume a growth in spending power such as retail, may bolster further the suggestions that Berlin is starting to boom. Now may just be the time for property investors to head to a city that is rapidly reinventing itself.

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