Is Berlin property still worth investing on?

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The source of the following article is a real estate agency, still you may want to check a couple of figures…

“Berlin property is still worth investing in. Despite the downturn in the global economy, Berlin property is still worth investing in, according to property experts. Due to the many years of economic isolation for the city, the value of Berlin property remains relatively low in comparison to other European centres and has space to grow.

Berlin property offers a good deal for investors who wish to add a long term and stable investment property to their portfolio. The cost of rents are climbing steadily across the city, statistics reveal a recent rise of 6%, while property values have dropped.

At the same time, the pool of investors showing an interest in property has declined. Rents are increasing, and will continue to increase, because of demand outstripping supply. There are various reasons for this. Demand for good accommodation rising • An increase in the number of people moving into the city. Records show that in the first 6 months of 2008, around 8,500 people moved to Berlin. Multinationals such as Sony have chosen to locate their European headquarters in Berlin.

• A decrease in unemployment rates means that there is an increase in people willing to spend money on space. In the 1990s, the unemployment rate was nearly 20%. By 2008, this rate had decreased to 12.4%. Despite a spike in unemployment during 2009 due to the economic downturn, unemployment figures are not expected to return to previous highs. Decline in rental stock

• As in any city, it is expected that a certain number of properties will fall into such serious disrepair that they will be deemed uninhabitable by authorities. The general rule of thumb is 1% of the housing stock. Berlin will lose around 6,000 homes a year.

• However, property development in Berlin has been slow. In 2007 only 3,718 new homes were built. By September 2008, the number of housing permits issued to builders was lower than the 2007 total.

• A number of properties have been bought by foreign buyers for business or holiday homes, thus taking them out of the rental pool.

• With a tougher economic climate, it has become more difficult for builders to access funds that would sustain a large development project.

These three factors together have increased the attractiveness of Berlin property, so much so that the Chairman of the managing board of the GSW has said “anyone with the financial means to do so should buy now”. Experts advice and consultancy services for investors who are considering purchasing investment property in Berlin”.

Source: Katrin-Maja Maehl – Berlin Investment Property

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