Location, location, location!

The Aflatinberlin mantra! Location, location, location! An interesting (even if not surprising) article today:
Wednesday, October 14, 2009 @ 17:51 PM

written by Peter Talkenberger

How is the property market in Berlin doing these days? Contrary facts and opinions are the order of the day. But also really good news. In this article we publish an interview which we had with an architect, who overlooks the “scene” from his office in Friedrichstrasse “Am Checkpoint Charlie”.

Ingo Ronski leads the office “Ronski + Burke Architects and Engineers” together with his Partner Fergus Burke.

Mr. Ronski, you as architect and project development planner know the Berlin real estate market since many years. What changes did you notice in the recent months?

I.R.: Recently quite obviously a much smaller number of International Investors is searching to buy on the Berlin market. Subsequently the prices dropped and the situation once again has become interesting for buyers.

So you feel the financial crisis effects Berlin very strongly?

I.R.: Certainly. We notice that especially in the area of residential property. You feel the financial crisis in Berlin by seeing some larger developments stopped or by slower and fewer transactions taking place. We do not in particular notice major vacancies. Around Friedrichstrasse you still find some vacant office areas. For those who are seeking to rent the situations is quite relaxed.

What is your estimate for the market? Will prices, as many say, drop remarkably especially in the German capital city?

I.R.: They dropped already. I am curious of the crisis will have even harder effects. Nevertheless I believe in Berlin as a good future market, still. Berlin will develop and prosper further, even if slowly. Berlin is very widespread as far as property is concerned; the location and the micro situation are more important than in other cities which I know of. Well known sought after areas will stay stable, per my opinion.

The hotel development boom of recent years has cooled down mostly. Apparently this market has reached a point of saturation. Nevertheless the last big surprise was the announcement that the high rise building at the Zoo will now be developed – the so-called Zoofenster-Hochhaus near the Kudamm. The famous Waldorf Astoria Hotel will move in, five stars plus, 15 floors, 300 rooms. Apparently the arabs still have good money for investment despite the financial crisis.

How do you preview the price development for land and developments around the newly planned International Airport BBI?

I.R.: A lot of industrial parks, business centers and similar developments have been planned. Our office worked on a master plan for an Irish investor to develop a large area in the region of City Schoenefeld. Planning here is for logistics an residential. Many developments were presented at Expo Real in recent years. One of the developers who I know recently counted over 20 projects in that area. Its foreseeable that some developments will fall by the wayside, because not (yet?) enough tenants or users in view. Nevertheless, it has been decided to close the other Berlin airports – Tempelhof already closed down recently and Tegel will follow – and that means that many firms around the former airports will move to BBI and that means there will be a good demand for rental space.

Tourism numbers have been rising in Berlin in recent years and the airport of Tegel is at the limits of its capacities. One is discussing already if the planning for BBI is for the right size or too small. I am expecting many positive impulses for the City and its economy from the new international flight connections to and from BBI.

If one looks a bit more south east of the Schoenefeld Airport area you find land for unbelievably low prices. Is it worthwhile to buy land and just wait?

I.R.: The question is what the community development plan says. If there exists a so-called B-plan, one has to determine carefully what development is approvable per the plan. I would not risk to invest into residential developments, the distance to the center of Berlin is too far and many suburban areas are not well connected to the public transport system. As I already mentioned, the competition is very strong, and whoever buys and develops there, has to bring a good financial cushion as the yield will only come in distant future.

Where do you see particular risks in the Berlin market, now that the “Hype” is over?

I.R.: As already pointed out, in Berlin nothing is more important than location, location, location. In no other city the value appreciation is so tightly coupled with the location. The gap between good and bad locations will become larger.

What would you recommend in particular?

I.R.: To live in the central areas where the buildings from the founding period – late 19th century – can be found. That are areas like Prenzlauerberg, Kreuzberg, Schöneberg etc.

A last question regarding your firm. How is the current situation, what are you specializing in?

I.R.: As a German-Irish office we work mainly for English speaking property investors who want to invest in Germany. Our niche is to accompany real estate business from the beginning to end, like purchase, conversion, refurbishment, assessing appreciations, and to educate the client in English about this. Our customers are Irish, British and Australian investors, but also more and more German clients. At present we have ongoing projects in Berlin, Hamburg and Cologne and are working on some major studies for armed forces in North-Rhine Westfalia.

1 Response to “Location, location, location!”

  1. 1 Online Stock Trading October 21, 2009 at 9:42 pm

    Hey, I found your blog in a new directory of blogs. I dont know how your blog came up, must have been a typo, anyway cool blog, I bookmarked you. 🙂 🙂

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