Kiez attractiveness

We enjoy reading the local press and reportages about each single Bezirk in Berlin, in order to stay tuned with what’s going on in our Kiez also when we’re not in town.

Beim B-max Bezirksvergleich schneiden Mitte und Tempelhof-Schöneberg am besten ab.

Der Stadtteil Mitte verzeichnet seit Jahren reges Bau- und Gründungsgeschehen, viele Unternehmen wünschen sich für ihren Berliner Sitz eine attraktive Adresse im Herzen der Hauptstadt. Es ist daher keine Überraschung, dass Mitte den ersten Platz belegt. Punktgleich mit an der Spitze liegt Tempelhof-Schöneberg. Der Bezirk mit den größten Industrieflächen der Stadt hat fast immer das obere Drittel erreicht.

„Es überrascht mich nicht, dass unser Bezirk so gut abschneidet“, sagt Ulrich Misgeld, Chef des Lichttechnikunternehmens Semperlux. „Wir fühlen uns gut aufgehoben in Tempelhof-Schöneberg.“ Man spüre etwa, dass das Team der Wirtschaftsförderung sehr aktiv sei. Außerdem mache sich bemerkbar, dass sich Bezirksbürgermeister Ekkehard Band (SPD) selbst um die Unternehmen im Bezirk kümmere. „Als wir unser Unternehmensnetzwerk Motzener Straße gegründet haben, hat uns der Bezirk nicht nur mit Worten, sondern auch mit Geld unterstützt“, berichtet Misgeld. Voraussetzung dafür ist, dass der Bezirk für so etwas Geld hat: Im Gegensatz zu manch anderem Bezirk steht Tempelhof-Schöneberg auch in der Haushaltsführung gut da.

Auch Tanja Mühlhans, die sich in der Senatswirtschaftsverwaltung um die Belange der Kreativ-unternehmen kümmert, weiß, dass die sich am liebsten innerhalb des S-Bahn-Ringes niederlassen. „Studien zeigen, dass sie sich in bestimmten Straßenzügen ansiedeln“, sagt Mühlhans. Das ganze werde dann zu einem Selbstläufer. „Viele gehen dahin, wo sie schon andere kennen.“ Das mache auch Sinn. So könnten Synergien genutzt werden. „Die kurzen Wege sind wichtig.“

Möglicherweise werde das Ranking in wenigen Jahren aber auch ganz anders aussehen. Der Flughafen Berlin-Brandenburg werde auch Unternehmen der kreativen Szene nach Treptow-Köpenick locken, erwartet Mühlhans. Schon jetzt wächst in Oberschöneweide eine kreative Szene heran. Größtes Projekt sind die Schauhallen, die in einer ehemaligen Fabrikhalle der AEG entstehen sollen. Auch andere Bezirke sieht Mühlhans in einem Prozess. „Es gibt eine Reihe bei denen man merkt, dass sie mit Herzblut dabei sind.“ Tempelhof-Schöneberg, Pankow und Neukölln gehören für sie dazu.

Wo entstehen neue Jobs, wo werden besonders viele Firmen gegründet? Die Veränderungsprozesse sagen viel aus. Überraschend: Bezirke, die insgesamt sehr gut dastehen, fallen hier zurück.

Berlin hat in den vergangenen drei Jahren insgesamt einen Beschäftigungsboom erlebt, die Zahl der Arbeitslosen sank von 330 000 Anfang 2005 auf zuletzt unter 220 000. Der Zuwachs an Beschäftigung verteilt sich jedoch sehr ungleichmäßig. Mitte, Friedrichshain-Kreuzberg und Reinickendorf haben prozentual das größte Wachstum an sozialversicherungspflichtigen neuen Stellen erlebt. Auf der Verliererseite stehen mit Charlottenburg-Wilmersdorf und Tempelhof-Schöneberg zwei Bezirke, die insgesamt zu den wirtschaftsstärksten gehören. Wieso gerade hier die Zahl der Arbeitsplätze gesunken ist, vermag die Arbeitsagentur nicht zu erklären.

Vom Gründergeschehen profitieren vor allem die Innenstadtbezirke. Den Bezirken mit großen Hochschulen kommen zudem die Ausgründungen von Studenten und Wissenschaftlern zugute. Dabei fällt auf, das Treptow-Köpenick von den naturwissenschaftlichen Instituten der Humboldt-Universität in Adlershof offenbar nicht so stark profitiert hat, wie Steglitz-Zehlendorf von den Ausgründungen der Freien Universität.

Neben der Anzahl der An- und Abmeldungen von Unternehmen spielt natürlich die Qualität der Investitionsprojekte eine Rolle. Denn in der Gesamtzahl der Gewerbeanzeigen sind auch Kleinstbetriebe verzeichnet, die zum Teil nur vom Inhaber gegründet wurden, um eine Phase der Arbeitslosigkeit zu überbrücken. Die Berliner IHK veröffentlicht regelmäßig das Dokument „Neue Firmen – Neue Arbeitsplätze – Neue Investitionen“. In ihr werden Projekte angeführt, die viel Aufmerksamkeit erregen.

Mitte taucht in der Liste am häufigsten auf. Dahin zieht es zum Beispiel Verbände, die die Nähe zu den Bundesministerien suchen, wie den Verband der Angestelltenkrankenkassen mit 200 Mitarbeitern. Auch Hotelprojekte wie das der Scandic-Gruppe am Potsdamer Platz und Touristenattraktionen wie das Riesenrad Great Berlin Wheel streben ins Zentrum. An zweiter Stelle rangiert der Bezirk Treptow-Köpenick. Im Umfeld der Flughafenbaustelle BBI bauen Unternehmen wie Lufthansa Bombardier Aviation ihre Standorte aus. Im Wissenschaftspark Adlers-hof investieren Unternehmen wie die Solartechnikfirma Solon oder der TV-Produktionsbetrieb Studio Hamburg. Adlershof hat ein Standortmarketing etabliert, von dem andere Bezirke noch lernen können. Allerdings muss daran erinnert werden, dass die Gründung des Wissenschaftsparks nicht auf den Bezirk, sondern auf das Land Berlin zurückgeht.

Ganz am Ende der Liste, mit nur zwei Einträgen seit 2006 steht Steglitz-Zehlendorf. Womöglich gab es mehr interessante Projekte, die in der IHK-Liste nicht auftauchen. Aber dann hat der Bezirk zumindest ein Kommunikationsproblem: Investitionsvorhaben, die niemand wahrnimmt, sind keine effektive Werbung für den Standort.

source: Berlin Maximal

Rental yields and the financial crisis

New York Times article – Great Homes and Destinations, Germany

MARKET OVERVIEW

Though there was a construction boom in the 1990s after the unification of East and West Germany, the property market in Germany has been relatively flat over the past decade, according to Tobias Just, head of real estate research for Deutsche Bank. Prices are growing slightly in desirable markets like Berlin and Munich, but Mr. Just said most markets were holding steady or experiencing a slight downturn. “We haven’t had a rapid growth period like other markets,” he said, “so there is nothing to correct.” The stability may also be ascribed to Germany’s conservative mortgage system. Over 90 percent of the mortgages issued in Germany have fixed interest rates, and borrowers typically put down 30 percent of the purchase price. “This is a nice cocktail to prevent prices from going through the roof,” Mr. Just said.

Germany’s tenant-friendly laws are another factor in keeping property prices down. Rent control is strict, and evictions are slow and expensive for property owners. The laws favor tenants because “most of the electorate is renting,” he said. Roughly 50 percent of all residential units in Germany are rentals, and many are owned by the government or by nonprofit public welfare agencies. Although there was an influx of foreign investors buying rental units from 2003 to 2006, prices stayed stagnant because of an oversupply of rental units.

The market for luxury homes in the Munich area is small but strong, according to Christian Ehbauer, owner of Re/Max Exclusive in Gruenwald. Older luxury condominiums in Munich cost 6,000 to 9,000 euros per square meter ($695 to $1,040 per square foot), but some new units sell for as much as 12,000 to 16,000 euros per square meter ($1,390 to $1,850 per square foot).

Well-appointed single-family homes in Gruenwald or Starnberg, suburbs south of Munich, cost 1.4 million to 2.8 million euros ($1.7 million to $3.5 million), but Mr. Ehbauer has seen mansions with lake frontage in Starnberg sell for as much as 8 to 12 million euros ($1 million to $15 million).

Berlin Residential Real Estate Market Outlook 2009

A survey of 118 cities in Germany has seen the average rent level in Berlin at 5.58 Euro per sqm per month net rent. This takes Berlin to rank No. 55 with Munich in the lead with an average net rent of 11.36 as shown in a study published by the association of the Berlin-Brandenburg housing corporations. Even in small cities like Jena (7.06), Greifswald (6.49) or Lübeck (6.07) the average rent is currently higher than in Berlin.

Yet another indicator for the development potential of the Berlin residential market. With the current price level for Investment Property at early last year’s level and growing numbers of pressured sales due to “De-Leveraging” where investors sell properties to generate fresh cash the yields have improved significantly. Recently some big investors in the Berlin market like ORCO Germany have sold properties between 2 – 20 % below their book values.

The take-up by the market is relatively slow as most banks require up to 40 % equity to match their lending. “Equity is king” and those who have it can cherry-pick. Any relaxation in this area will depend on the development of the financial crisis and any forecasts on this a currently very vague.

Credit Crunch Could Boost German Property Market

(OPENPRESS) November 26, 2008 — According to a survey by travel portal kayak.co.uk 60 percent of Britons have no intention of canceling their winter holiday plans because of the economic downturn. Meanwhile, Grahame McKenzie of tourism website Travel Mole, has predicted that the global downturn will cause Britons to holiday in locations within Europe, such as Spain and Italy, naming France, Italy and Germany, he added:

“Potentially there may be an upsurge in ferry bookings, so people will be able to shove all their stuff in a car and just jump in with their kids and everything.”

Liam Bailey, chief market analyst for overseas property portal Property Abroad gave us his views on the reports:

“Firstly, it is possible that the findings from the Travel Mole survey go against Grahame McKenzie’s predictions — for this winter anyway — of course depending on whether or not some of the 60 percent have made their winter holiday plans to go further afield than Europe, which I believe is a fairly safe bet. McKenzie’s statements give no indication of whether he meant this winter only or winters for however long the ‘credit crunch’ lasts.” While it is highly likely that some people will decide to holiday in Europe, most Britons already do holiday in Europe, so I can’t see there being a ‘massive upsurge’, but even a slight upsurge could generate a boost in European property markets.”

“McKenzie being right would make the biggest difference to Germany, because German property traditionally has very low rental yields, because of government restrictions, and because of the fact that very few Germans own their own homes meaning that most rentals are residential. This would — possibly very quickly — give Germans the ability to raise their rental rates on short-term leases only, because the government would see the positive effect this could have on the economy combined with the increase in tourism.”

More on Altbau: Berlin article in DOVE Case

After the Il Sole 24 Ore supplement, also the patinatissimo DOVE magazine dedicates a special section to Berlin beautiful flats. Once again, I think this is only a partial point of view of what one can find in Berlin…but it’s worth having a look…

Check it out on the Speciale Centro Storico link…The high ceilings, the Eiche parquets, the stucco well represent the Altbau we love. As per the information on flats, normally Expose’ contain more info, so consider that just an excerpt of what you would normally receive from your Makler.

On the same magazine, in the Archive, you can find an article on house boats in Berlin (there are also a couple of hotels like that, I’ve been told by friends!).

And, after Zehlendorf and the 50s, the Aufbau-style, some material about living in a Plattenbauten 70s flat….bof bof…

Well. This is all very nice and informative. Now back to old, dear Schoeneberg! 😀

Germany postpones privatisation of property firm TLG

from The Guardian Online….

BERLIN, Nov 6 (Reuters) – Germany has postponed the planned privatisation of state-owned property company TLG Immobilien GmbH due to difficult market conditions, the Finance Ministry said in a statement on Thursday.

The delay follows last month’s postponement of the multi-billion euro initial public offering (IPO) of rail operator Deutsche Bahn due to market turbulence.

TLG Immobilien, which was originally created in 1991 to handle the sale of real estate belonging to the former communist state of East Germany, was due to be privatised later this year.

The firm, which has been active as a buyer on the market since 2000, had property assets worth more than 1.4 billion euros ($1.8 billion) as of the end of 2007. It is one of the largest real estate companies in eastern Germany.

“Due to difficult conditions in the international financial markets, there are currently no expectations for a successful privatisation,” the Finance Ministry said. “The company will thus remain in government hands for the time being.

“But the in the medium-term the privatisation remains on the agenda,” it added.

Just days ago the ministry said preparations for the privatisation were heading toward their final stages.

According to media reports, potential buyers of TLG included U.S. investment companies Lone Star and Oaktree.

In 2007, TLG made a net profit of 52.4 million euros, according to figures on the company’s website. (Reporting by Gernot Heller and Dave Graham, editing by Will Waterman)

Functional flats from the 50s

When we started visiting flats we noticed that the first clivage is between Altbau und Aufbau.

The majority of flats that are featured in ads online and on the newspapers are those that we nicknamed “Aufbau”,  since they date from the 1950s or the 1960s and were built following standardized plans. The use of space is intensive and clever, ceilings are not particularly high (still, they are higher than in Paris), and even small surfaces do have a nice layout.

Once you have visited a dozen of them you already know what to expect when you visit another one. The smallest flats feature a functional bathroom, a small but effective kitchen, and a Wohnzimmer with a balcony (sometimes as small as 1 sqm, a smorker’s balcony, but definitely there) that doubles as a bed room.

In some cases there are indeed surprises, like this flat’s interesting small hot house for the plants. Our Maklerin (and good friend) F. explained to us something quite logical, ie that in post-war Berlin people spent their holidays on the balcony: having dinner outside, doing some gardening. The small hot house was conceived for storing plants in the winter. In-house it would be too hot and they would take up too much space, whereas the small hot house provided a transitional temperature ideal for storing the pots of plants.

Our architect B. said that he is always amazed by the generally very good quality of design of these 50-years old flats. Very rational and functional, but never poor. You clearly have the impression that through standardization the administration needed to re-build vast amounts of the city and to house thousands of people, but good design was provided together with housing. In every Kiez you can spot the 50s flats, even in the middle of Altbau compact blocks you can still spot where the odd bomb cancelled one building, the 50s geometric lines mend up the shattered urban texture.

During our first flat expedition in august 2007, we “missed” two flats like these. The first was really small but in a fantastic location, in Motzstrasse close to the beautiful Viktoria-Louise Platz. Our bid for the flat was preceded by someone else’s…this was our first disappointment. Because disappointments happen, all the time, when you are looking for a flat. You fall in love with a location, a layout, a sort of je-ne-sais-quoi and then…it’s gone.

The second was close to Rathaus Schoeneberg, facing a nice small piazza, a standardized 1950s building. Recently renovated, and with a nice black marble staircase. Because these buildings are indeed simple, but they were conceived very well at the time. Space for storing your bicicles in the courtyard, Keller downstairs, very frequently they have lifts (quite rare in Berlin), they have nice stairs, made of stone and with windows. Simple, but very dignified and easy to maintain, never grotty. These are dignified buildings.

This time we were the first on the list! We had very clear ideas about the flat we had just visited, we did the offer after less than one hour by fax and confirmed it by visiting the Makler in her office before lunch. We did notice that this Makler looked somewhat unsure or hesitating, but when we handed her the duly filled in form with our signature and offer (she was selling formerly State-owned flats at a fixed price, on a first-come first-served basis) she said that we were the first to have done a bid, so it was just a matter of checking data and starting to talk about notary issues.

We went back to Rome, expecting an e-mail to kick-start the purchase process, but never heard anything from her anymore…she would not answer e-mails or phone calls, nor return messages. Eventually she sold to someone who did an offer after ours. Just because she didn’t feel comfortable in “dealing with foreigners”.

So we discovered that even in the reliable Germany it happens to meet The Unreliable Makler. I must admit, all the flats we visited fitted at a 99% rate the description in the Expose’. Both the Expose’ and the Makler talk are very, very transparent and reliable, reality fits description, a nice feeling compared with our past experiences when renting in Paris and Rome, where Makler equals absurd jargon and unrealistic descriptions.

We did meet with so many Makler in Berlin and the vast majority of them do not speak a single word of English, but are extremely helpful and professional. We make an effort in German, they reduce the speed of their talk, and the discussion goes on. Their Expose’ are immaculately detailed, full of pictures, so the visits are quite easy.

But apparently, there is 1 dumb Makler in Berlin, and we met her!

Bottom line: sound disappointment, feeling of being cheated on, loss of time and opportunities. Because we had seen other interesting flats, but then committed to this specific one and did not pursue the other transactions. Our first expedition to Berlin in august 2007 (10 days of our holidays) ended up with a lot of research and a big disappointment…But research is never a loss of time. You will capitalize on it.

Nevertheless, we still are fascinated by the quality of design of the 50s. Our friend in Moabit with the help of Mr B. (the architect) renovated one of these flats and the result is absolutely gemuetlich…on the balcony there is space for pots of Erika and Hypericum.

Considering all the criticism attracted by the balcony-missing Schlange or Snake-building between Moabit and the Spree, during the 50s they had an idea or two on how to build apartments, even on a tight budget…

O. Reuter / Luftbildarchiv Berlin

thrilling choices

Well, no, we are not thinking of having 39 Stufen (steps) in the flat, but just one…

During our June trip to Berlin, our architect B. came up with an original solution. Why not fitting a step between bed room and living room? That would give a bit of movement to the flat and help solving electrical and plumbing issues, since we do need to build a step in the bathroom anyway…so half of the flat would be raised by 17cm and that would be quite nice.

Our project was perfected by B. during the summer and eventually we were discussing about having sliding doors between living room and bed room (you can’t fit double-winged doors if there is a step in between two rooms, right?).

The polish-berliner Firma confirmed to us that it would be feasible and it would look quite nice (eine sehr schoene Wohnung!).

But after careful thinking we had to call it off this week. The step in the bed room would cause a couple of technical problems which were not visible on paper. The biggest problem is that we had not realized how much our windows in the bed room to-be are…low. These used to be kitchen and bathroom windows, and they were accessible laterally so to say. But once kitchen and bathroom are destroyed (well…they’ve been bombed last week) and you can actually face the windows…oh boy, are they low!

Add on top of that a floor raised by 17cm, a shiny new parquet…and opening the window in the morning would cause a vertigo!

So, keine Stufe. But the positive side of it is, we can go back to double-winged doors…and our charade is solved.

Our Berlin Wall is coming down!

It’s time to tear down our Berlin Wall! The paper-thin walls built after WWII in our 1914 Altbau must go! They alter the original plan of The Flat and we want to restore the prussian beauty of the magnificient ceiling (almost 4m) and boiseries.

We have checked the materials: the big walls are very sound, the ceiling structure is very traditional and is in pristine condition, it looks as it was put together yesterday, with its bamboo light structure. That one is going to stay there. The ugly 70s plastic fake wood ceiling cover is going.

Also the beautiful old oak parquet is ok and is definitely going to stay. The heavy iron heating system is fabulous…as the arched window is one of the reasons why we bought this flat…but first of all, let’s get rid of those walls added 60 years ago…

Location, location, location!

Just back from beautiful Berlin dressed up for Fall, and here is an article on the real estate market.

Location is the most important factor. This is why you need good shoes (and a bike) when looking for flats. You can indeed find something very expensive and hype, or very cheap but in no-man’s-land.

My personal feeling is that during this phase of the financial crisis Sellers who are individuals are waiting before parting with their properties, because they do not feel so confident about holding cash.

At the same time, there could be financial institutions who had borrowed in order to do big developments who may give up. So…the market is in wait-and-see mode. Keep your options open, then…

If you click the title you will see also many comments to this article. You already know AflatinBerlin’s view…

a) Berlin is a value story, not a speculation one – that was a few years back…no quick bucks here.

b) Berlin Maklers are very professional. It is true that the majority do not speak English but the Expose’ are so detailed and the descriptions so close to the reality that you can do your scouting even if you do not speak German. When you get closer to the transaction you will ask for a professional translator’s help…the German Embassy provides always a list of professionals you can trust.

c) there is not just Plattenbauten (=monotone apartment blocks), so…look for location, location, location!

d) there is more to it than Prenzlauerberg!! (we are going West)

Timesonline October 17, 2008

Berlin is cool and property is remarkably affordable

Apartments in the trendy parts of the German capital go for as little as GBP 45,000

Berlin is pinning its hopes on the young. More than half its population is below the age of 35, media companies are flocking to the city and, with three excellent universities, it is establishing itself as the biotech and research capital of Germany.

The Government has invested €75billion (£59 billion) to improve the infrastructure of the city, enticing expatriates to find a home there or invest in residential properties. This, combined with numerous cultural and scientific places of interest, is only adding to the city’s attraction.

The recent privatisation of the public housing stock has led to a small increase in the number of homeowners. However, the city has a strong rental culture – only 14 per cent of local people own their home – and with the rents low and laws heavily favouring the tenant, there is little to drive the domestic market.

Charles Peerless, a director of Winkworth’s international department, concurs: “Berlin is exactly what the current housing market needs. With its huge rental market, it is a safe investment. The ‘less risk and less reward’ strategy is what most long-term investors are choosing.”

The choice in Berlin ranges from the former East German high-rise blocks near Alexanderplatz and the experimental living communities of Kreuzberg to the Neo-Classical buildings of Prenzlauer Berg and Friedrichshain. The latter are the most popular with foreign investors.

These large apartment blocks, with their elegant stucco façades, were built in the early part of the 20th century and offer spacious, high-ceilinged accommodation that is usually ranged around an enclosed garden square. Most of these properties have been sold off in volume to investment companies that are extensively refurbishing, adding central heating, double glazing and modern kitchens and bathrooms. The buildings have been re-roofed, the communal gardens landscaped and all interiors redecorated, with the aim of increasing rents and, in turn, improving capital values.

Andreas Pichotta is one such developer. As a passionate Berliner and admirer of the city’s architecture, he makes his projects as much a labour of love as an investment, although he knows what will make him money. “The most important part of the investment business is getting the right location,” he says. “There is an abundance of very cheap, unrefurbished property in the city but if you buy in the wrong place you are doomed.”

He uses his local knowledge to choose the buildings that he buys and refurbishes with great care. He has made good investments in Prenzlauer Berg and Friedrichshain. Prenzlauer Berg is an area of the city undergoing a renaissance. There is an abundance of restaurants, cafés, bars and eclectic boutiques. Many of Berlin’s media, arts and student population live here. It was not bombed in the Second World War so there is a wealth of old-style apartment blocks. Many have been restored to enhance their traditional features, creating picturesque squares where regular farmers’ markets attract affluent locals.

The area has the highest birth rate in Germany. It became very fashionable in the late 1990s and those who moved there then are now in their 30s, young professionals with families, looking for larger apartments. The location is perfect for commuting into the city and, accordingly, rents are beginning to rise.

Perhaps an even better investment might be the slightly shabbier area of Friedrichshain, in East Berlin, which contrasts with the more gentrified and expensive areas of Prenzlauer Berg and Mitte. After the Berlin Wall came down, Friedrichshain began to develop a reputation as a young district. Its lower rents attracted artists and students; its multitude of empty flats also attracted the attention of West Berlin squatters. It retains its slightly run-down atmosphere – which gives it its character.

(excerpt)

Zehlendorf and the 60s

In the New York Times, an article with a nice slide-show about a refurbishing done by an american couple. Excerpt…

Within Berlin, a Modern Suburban Home

Richard L. Harbus for The New York Times

Harvey Friedman and Cynthia Barcomi-Friedman live in a modern, two-story building in the Zehlendorf district of Berlin.

It isn’t every day that you find a wild boar and its 10 babies wandering around a city neighborhood.

But for Harvey Friedman, a Pittsburgh-born actor, life in Berlin has included a series of such encounters. And when he describes them, his theatrical background comes in handy. (Mr. Friedman will soon be seen in American theaters as Joseph Goebbels, the Nazi propagandist, in “Valkyrie,” starring Tom Cruise, which is scheduled for release Dec. 26.) Mr. Friedman stands and flaps his arms to re-enact the flight of a giant crane, which recently descended from the roof of his house in the Zehlendorf district. He has also seen foxes rummaging through the trash.

Mr. Friedman has been a resident of this upscale neighborhood — and an acquaintance of its wild inhabitants — since 2005, when he bought a home here with his wife, Cynthia Barcomi Friedman, a Seattle native who owns two popular Berlin coffee houses, both called Barcomi’s.

In stark contrast to the sumptuous villas that line the streets in Zehlendorf, the Friedmans’ home is a modern two-story building in white. A boxy room that juts out from the first floor is in the Bauhaus style, Mr. Friedman said. “Bauhaus only went to 1933,” he added. “However, the influence is completely manifested here. There is nothing ostentatious. Form follows function. This is just a living room with a view,” he said pointing to the herb garden through the window.

Built in the 1960s, the property was only the second place that the family viewed after deciding to buy into Berlin’s bargain-filled housing market. “You couldn’t buy a one-bedroom flat in London for what we paid for this house,” said Mr. Friedman, who declined to disclose the purchase price.

Houses in the neighborhood average around 3,000 euros per square meter ($390 per square foot), according to area real estate agents, who note that redevelopment of a former United States military base in Zehlendorf has attracted foreign investors.

“Prices in Zehlendorf have always been pretty stable,” said Brian O’Connor of the Berlin-based AdHoc Immobilien. “It has always been a middle-class West German neighborhood. But in private home sales, you are more likely to see foreigners invest in more central areas like Mitte or Prenzlauerberg.”

The 250-square-meter (2,690-square-foot) home sits on 1,400 square meters (a third of an acre) of land, along with 13 pine trees.

The Friedmans have retained the house’s ’60s-style décor, with Mrs. Barcomi Friedman bringing period artwork and furniture from her late mother’s home in Seattle to fill the living room.

Outdoors, in addition to the herb garden, there is a pond, and a garage that houses Mr. Friedman’s 1979 MG Midget. There also is a long stone structure that the family uses to hold firewood and other odds and ends. Mr. Friedman suggested, over a cigar on the patio, that it must have been built as a bomb shelter. “It is so solid,” he said. “I’m sure that is what the original owner had in mind.”

The neighborhood is close to the Schlachtensee and Krumme Lanke lakes and sprawling local forests, where Berliners often come to swim and hike. The Friedmans say the large houses in the district and its slow pace of life remind them of American suburbs.

But there are differences. “It is not as hectic here as in the U.S.,” Mrs. Barcomi Friedman said. “I feel the kids are really safe, and you don’t have the fear factor you have over there.”

Flight to quality: long-term investors eyeing Berlin?

An interesting article about the not so sexy, not so leveraged, not so spectacular Berlin real estate market. There was no bubble, there is value for money, and in these uncertain times Germany is perceived as being the uber-safe location in Europe. The prudent authors of AflatinBerlin agree with this view! ;D

German property may soon lure sovereign wealth

The Guardian

By Dave Graham

BERLIN, Oct 9 (Reuters) – Sovereign wealth funds (SWFs) from Asia and oil-rich nations may be set to jump in to the German real estate market, helping to support a sector which has been knocked down but not out by the financial crisis.

Sales of commercial property surged to record levels in Europe’s biggest economy last year, but they slumped in the first half of this year as bank losses, the credit crunch and fears about the economic outlook dampened investor appetite.

Banks and other institutional investors have scrambled to hoard cash as money markets froze, which should open the door for cash-rich funds from China, Singapore and oil producers in the Gulf region, said DZ Bank analyst Christine Schaefer.

“You have these big state funds considering acquisitions,” she said. “And the Russians may be looking to make strategic investments here too. Germany is a stable option.”

Peter Starke, head of the investment division at real estate firm Aengevelt, said the publicity-shy funds were probably already buying in Germany via specially created holdings.

“I can think of two players from the Arabian region whom I strongly suspect are backed by wealth funds,” he said. “But the thing is, they don’t exactly walk around with signs around their necks saying ‘sovereign wealth fund ABC from country XY’.”

If SWFs invest enough to support or even boost property prices, it should help stabilise investment and domestic consumption, said MM Warburg economist Carsten Klude.

In contrast to countries like Spain, Britain and Ireland, Germany did not experience a major housing boom in past years. As a result, its residential market has held steady in 2008, helping offset a big drop in commercial property transactions.

Marcus Lemli, capital markets chief for property services firm Jones Lang LaSalle in Germany, says commercial turnover could drop to as little as 20 billion euros ($27.4 billion) in 2008 from a record 55 billion last year.

NO MORE LEVERAGING

The correction has been felt right across the country.

In the first half of 2008, revenue from sales of office, retail and other business premises were down by 75 percent in Berlin, the biggest single market, official data show.

Investment in offices in Cologne fell 82 percent over the same period, and by 68 percent in Munich. In Duesseldorf, spending on all types of real estate was down by half.

The drop in activity reflects the disappearance of highly leveraged foreign financial investors, who bought up big German portfolios before the credit crunch hit.

Even if liquidity returns to credit markets soon, some observers say investment will be tailored to long-term returns of the kind favoured by SWFs and German open-ended funds.

For now, though, investors remain cautious and prices may need to fall further before SWFs part with big sums of money.

“A lot of people also think we’re heading for a recession, though we’re not actually there yet,” said Tobias Just, a property expert at Deutsche Bank in Frankfurt. “These new investors will need more certainty about this before they move.”

A government source told Reuters on Wednesday that Berlin would soon cut its 2009 growth forecast for Germany to below 0.5 percent from a current estimate of 1.2 percent.

For now, the property market itself is giving little away, said Berlin estate agent Gottfried Kupsch.

“Basically nothing else will be sold this year,” he said of the capital. “What we’re hearing is that banks have closed their books for the year. It’ll probably last till February at least.”

INDIRECT STAKES

Germany’s housing market, where the majority of homes are rented, is also seen as a safe, if unspectacular bet.

House prices fell in Britain by over 12 percent in August year-on-year, and in Spain by nearly 5 percent, industry figures show. German house prices, by contrast, were broadly flat this summer, according to data from financial services firm Hypoport.

JLL’s Lemli said the SWFs which enter Germany are likely to buy stakes in property management firms rather than invest directly — a strategy that is already underway in Europe.

On Tuesday, the Singapore government’s wealth fund said it had raised its stake in U.K. real estate company British Land Co Plc to more than six percent.

SWFs could invest as much as $725 billion in global commercial real estate by end-2015, CBRE forecast last month.

One source of bargains may be asset sales by cash-strapped firms as the credit squeeze reaches the corporate sector.

“I think there will be more deals where owner-occupier retailers are pushing the margins and keen to sell their real estate,” said Iryna Pylypchuk, an analyst at property consultancy CB Richard Ellis (CBRE).

“And I think there is going to be more pressure from the banks. So I think market activity will pick up later this year.”

(Editing by Patrick Graham)