Guts feeling

Berlin flat hunters may have googled this article many times (feb 2008), stating that big financial institutions had bought many flats in Berlin. The article was right in predicting a rise in Berlin rents (see previous post). And stating that big financial institutions had been buyers in Berlin: “Cerberus Capital Management and Goldman Sachs’ Whitehall fund have invested 2.1 billion euros since 2004”.

But were these institutions still “long Berlin” in 2008? Could those property be dumped on the market now, if something “went wrong”? According to this Financial Times article, they had sold the property back in 2007. Well, maybe because they wanted a quick buck from the investment, while tenants were happy to remain tenants without morphing into home owners.

It all comes down to your personal investment horizon. Our horizon is well beyond the decade…plus, we love Berlin. Our very personal evaluation of risk is a comparison between our income, the price of flats in Rome and the price of flats in Berlin.

Prices of flats in Berlin=sustainable, plus great city infrastructure. Hence: good value for money.

Prices of flats in Rome=defying gravity, plus poor city infrastructure. Living for your mortgage, no thanks. Hence: too risky.

It’s your personal evaluation of…value that matters in the end.


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