Spring in Berlin’s property market…

It’s Spring also on the Berlin’s property market…we closed our 2 small deals at the end of 2007 (bottom of the market) and during the dire phase of the crisis (March 2009).  The market had looked quite during 2008 and 2009, with less interesting offers and real estate agents complaining about a “drought” of foreign customers. Also, Altbau were difficult to find during the banking crisis because people preferred to hold on to their property rather than to cash to be put in those same bank accounts which looked a bit riskier all of a sudden.

But we start to see some signals that things are changing.

a) Greece problems and Peripheral Europe budget deficit woes. From anecdoctical evidence, it appears that Southern Europeans are coming back to Berlin en masse looking for deals. Some want to leave their countries (we suppose this regards the young) some others want to invest their savings in a country perceived as safer as their home land. Some others think that compared with their home towns, Berlin offers unbeatable value. Well, we fall in this category since 2007.

b) News spotted on the Wall Street Journal this morning: GSW is a likely candidate for being one of the biggest real estate IPOs in Europe. That should be a good sign.

c) Germany locomotive. Today the data released show that Germany’s manufacturing activity is picking up strongly. We’re not yet in Phase 3 (pick up in Consumption) but Phase 1 – restocking – and Phase 2 – capital investment – are already producing a manufacturing and industrial production upswing.

Last year Berlin’s property values went up by about 4%, whereas in other markets prices were either plunging or remained sticky (Rome). This means that Berlin still offers compelling value…but not quick profits.

For the long term, and before inflation picks up again (after all the subprime crisis was absorbed by enormous amounts of cash pumped in the economy by Central Banks, sooner or later this cash will fuel inflation), Berlin looks still interesting to us. Two years after, it was a good investment. Low risk, slow return, but great value.

Photo: GSW Immobilien Headquarters, @ Checkpoint Charlie Berlin

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