Posts Tagged 'GSW'

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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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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