| The economic environment | | | | into 2007. Especially international investors have |
| The outlook for the German economy is positive and | | | | absorbed record numbers of undervalued properties. |
| the economic upturn is continuing. 2008 will see a | | | | The turnover in 2006 went up by 50% to a record |
| change from purely export driven growth to more | | | | value of 15.8 billion Euro;. Naturally this has led to a price |
| growth support through domestic demand. For the first | | | | increase the initial yields of 8 to 10% are no longer |
| time in years significant raises in salaries are currently | | | | achievable in acceptable locations. The yields in top |
| negotiated and the consumer climate can be seen as | | | | locations are below 6% whereas good locations like |
| friendly. This will be associated with further reduction in | | | | Steglitz still produce offers between 6.5 and 7%, many |
| unemployment, as companies are prepared to take on | | | | of them with short term development potential (upside). |
| staff. Growth in the economy can be expected to | | | | The new rent table 2007 ("Mietspiegel 2007") has |
| stimulate the German property market. | | | | already shown increases in residential rents. The |
| The Local Aspect | | | | picture is variable though between stable and |
| In 2006 the Berlin economy grew by 1.9 % and 7,000 | | | | increases. |
| new jobs were created. While the growth is below the | | | | Is it not too late to jump on the train? |
| German average the increase in jobs and decrease in | | | | No, it is not too late! Attractive property, even at entry |
| unemployment is well above the average. These | | | | level is still coming into the market, with positive cash |
| figures reflect that numerous businesses have decided | | | | flow and a realistic expectation for capital appreciation. |
| to grow their business in Berlin or set up new offices | | | | Careful research is required to make sure the |
| and branches here. The focus is on media and | | | | information provided is met by the reality after the |
| innovative technology. | | | | purchase. Market knowledge is required or local |
| The population is stable at 3.4 million after a period of | | | | support is recommended. |
| migration in the 1990's into the newly available suburbs | | | | Conclusions |
| after the fall of the wall. | | | | The economic situation in Germany is positive with the |
| The German Property Market | | | | prospect of a longer period of prosperity. The Berlin |
| Germany has seen a major influx of international | | | | property market has three main value drivers: |
| capital to its property market over the last 2-3 years | | | | # Stable population development accompanied by |
| with record year 2006 which was considered a record | | | | new jobs. |
| year still being outranked by 2007. The year 2008 is | | | | # Long term commitment to the location by the |
| seen by most market players as a year of | | | | government and international business. |
| consolidation. Increasing numbers of institutional | | | | # Still low prices compared to other European capitals |
| investors will become sellers which should offer | | | | with yields that allow a positive cash flow after |
| interesting opportunities for smaller and private | | | | financing. |
| investors as it is unlikely that all sales will be in large | | | | With a follow-up article I will provide information about |
| packages. | | | | the rent in different parts of Berlin and different types |
| The Berlin Property Market | | | | of buildings. You will find this article on the authors |
| After years of stagnation the Berlin property market | | | | website below. |
| started a boom phase in 2006 which has carried on | | | | |