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German property sparks jet-to-let interest

24th January 2007 | back to article listings BACK    print this article PRINT

With significant economic gains and low prices, Berlin is fast becoming one of the more favourable European capitals for jet-to-let investors.

The government is selling off large quantities of housing after a decade of suffering with a flat market but as this accommodation moves into private ownership, rents are being pushed up, according to Berlin Capital Investments.

For investors used to British or Spanish prices, the potential for cheap property in Berlin is remarkable: a two-bedroom apartment in Berlin now costs an average of 80,000 (52,700) whereas Londoners would expect to pay around five times this amount.

In addition, the buzz around the German property market has induced an unprecedented level of competition among German banks, who are diversifying their mortgage products, making it easier for investors to finance their acquisitions.

But Germany offers more than just cheap properties. The country is home to Europe's largest economy and is currently undergoing economic reforms which aim to rid it of the high levels of unemployment and inflation that have plagued its population over recent years.

Earlier this month the German Federal Statistical Office reported that the country's economy grew by 2.5 per cent in 2006 compared with the previous 12 months, indicating that some of these reforms are already beginning to have a positive effect.

These improving economic conditions are certainly advantageous to investors looking to get a good deal on their mortgage repayments but could also spell an opportunity in the city's profitable rental market.

Only 13 per cent of Berliners own their own home compared with around 80 per cent of British and Irish, illustrating the vast differences in the way they approach the property market.

Buy-to-let is booming in the UK at the moment but renting has always been a part of German culture representing a large potential domestic market if investors look to secure some extra income.

But there is also a large potential for renting to foreign tourists in Berlin, one of Europe's most visited capital cities. The impact of the World Cup has been overwhelming positive, not only in terms of increasing the country's consumer confidence and boosting its economy but also in enhancing its reputation around the world.

The city is highly popular among tourists interested in history, with the Berlin Wall providing one of the most poignant reminders of the city's turbulent past. There are also 175 museums in all containing everything from artefacts from the 14th century to war memorabilia. One of its primary attractions is the Reichstag, the seat of the federal government which was destroyed by fire in 1933, rebuilt by the Nazis and flattened in World War II, before being resurrected in the 1960s.

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