Berlin a good investment?

[buyberlin]

Hi, Darrell from buyberlin here,

This is my first post here and I'm looking forward to some interesting debates on what looks like a great forum.

The Berlin Buy to Let market is beginning to flourish. Since the East has merged with the West, Berlin property is quietly becoming the bargain of the century. There are many options for purchasing property in Berlin. Berlin property costs around 90% per square metre less than comparable properties in London, yet average gross yields in London (and Paris) are now below 5%. You can take out loans at 4 to 5% in Germany and the return on that investment is above 6% and sometimes higher, as high as 8%. This means that a Berlin Property investment is currently one of the most sound investments you can make.

German property investment can be confusing especially if your only prior experience of purchasing a property is within your native homeland. Berlin Estate agents may be your first port of call to enquire about what Berlin properties they may have available. However even if you understand the German language, Berlin real estate or Berlin immobielien is a totally different process to that of most countries. We can find your German property for you and assist with your Berlin buy to let mortgage and furnishing of your Berlin property

[Moby Jones]

Originally Posted by buyberlin

Hi, Darrell from buyberlin here,

This is my first post here and I'm looking forward to some interesting debates on what looks like a great forum.

The Berlin Buy to Let market is beginning to flourish. Since the East has merged with the West, Berlin property is quietly becoming the bargain of the century. There are many options for purchasing property in Berlin. Berlin property costs around 90% per square metre less than comparable properties in London, yet average gross yields in London (and Paris) are now below 5%. You can take out loans at 4 to 5% in Germany and the return on that investment is above 6% and sometimes higher, as high as 8%. This means that a Berlin Property investment is currently one of the most sound investments you can make.

German property investment can be confusing especially if your only prior experience of purchasing a property is within your native homeland. Berlin Estate agents may be your first port of call to enquire about what Berlin properties they may have available. However even if you understand the German language, Berlin real estate or Berlin immobielien is a totally different process to that of most countries. We can find your German property for you and assist with your Berlin buy to let mortgage and furnishing of your Berlin property

What is the average net yield of a Berlin investment property at this present time?

[Moby Jones]

Ignore that , I've just seen the date of the opening post. As the OP has not been back I'll assume things did not pan out how he panned!

[Helen_M]

The Berlin Buy to Let market is beginning to flourish. Since the East has merged with the West, Berlin property is quietly becoming the bargain of the century. There are many options for purchasing property in Berlin. Berlin property costs around 90% per square metre less than comparable properties in London, yet average gross yields in London (and Paris) are now below 5%. You can take out loans at 4 to 5% in Germany and the return on that investment is above 6% and sometimes higher, as high as 8%. This means that a Berlin Property investment is currently one of the most sound investments you can make.

Mr. Darrell posted this message 2 years ago - and he was right! Then property prices in Berlin began to soar and now everyone is sure that it's a very good investment opportunity.

[Moby Jones]

Originally Posted by Helen_M

Mr. Darrell posted this message 2 years ago - and he was right! Then property prices in Berlin began to soar and now everyone is sure that it's a very good investment opportunity.

How have you reached that conclusion?

I'm certainly not sure and I have looked at it. Also, 8% is not a great return. With leveraged seller finance you can easily achieve 13% + in Thailand and over 20% in the US right now, today. If you know where to look.

[Helen_M]

Also, 8% is not a great return. With leveraged seller finance you can easily achieve 13% + in Thailand and over 20% in the US right now, today. If you know where to look.

IMHO stability is more important than quick income. Today - it is good, but we also have to think about tomorrow.

[Moby Jones]

Originally Posted by Helen_M

IMHO stability is more important than quick income. Today - it is good, but we also have to think about tomorrow.

The returns I mention are based on rents which have been stable for two decades. The return is only as high as it is because property prices have plummeted while the rents have remained the same. Therefore the 20% I mention is stable.

So how can you claim 8% is good?

Also, you never actually answered how you've reached your conclusion...

[scrumpy jack]

Berlin walls are notriousley weak! (sorry for the spam)

I would not feel comfortable purchasing in such shakey conditions!

[justme78]

The question itself is interesting. Comparing Berlin to London or Paris.

You can NOT compare Berlin to other capitals. Berlin is not Germany's "London".

Bonn used to be the capital for a long time - after the wall well Berlin was the capital again.

As a "real" capital was missing in Western Germany and Bonn is a boring small town with nothing interesting to offer.

After the reunition, politically Berlin had to become the capital again. But half of Berlin needed to be demolished and built new. So prices were down as land and buildings were almost free and there was no competition in buying anything. A lot of property didnt find buyers and you could get it at a court auction for 1 Euro.

Since then, prices increased and adapted again.

But still: Berlin has 25% unemployed people and if you rent out to people you need to check their background to ensure you get paid. Most Germans rent property and dont own property. So the legislation is pro-renters.
Even if they don't pay the rent, you can not just kick them out of your own flat.

Berlin is not "London" of Germany as there is hardly any jobs and most people don't have money.

Berlin is still a kind of "island" and many kilometers outside of Berlin is *nothing*. If you drive in any random direction from Berlin for 1 or 2 hours you can get houses for 5000 Euros and ghost towns start to appear as people move away into Berlin or other cities.

Rents in Berlin got more expensive but still are extremely low. So the property price compared to the annual rent it not an investment - you get better interest rates on a bank account. So if you buy property in Berlin, you assume property prices will increase in the long-term. This is speculation and right now I think Berlin is close to having reached the maximum prices.

If you look at Munich for example, the "secret capital" of Germany, rents are a lot higher. In the town center you pay 15 Euros / squaremeters - in the old time sometimes even 20 Euros / squaremeter. House prices are higher then in Berlin, but as the rent is also a lot higher, so Munich is often still the better choice - if you find something to buy.

As unemployement rate in Munich is around 2,5% and many people are rich in Munich, there is hardly anything left to buy - you need to wait and be patient and decide quickly to buy something. Munich is growing in the long-term - house prices never went down in Munich - only during the dot com phase when prices went down a little bit for 2 or 3 years.

You should never look at prices per squremeter alone - you need to look at:

- rent / squaremeter
- unemployment rate
- long-term prospective and growth rate
- long-term prospestive for economical growth

In the very-long term, Germany is NOT a good investment (e.g. 30 years) as there is more people dying then being born and there is a huge problem with the demographic development. Even if a baby boom started now, there will still be a lot less people in 20 years that will not pay taxes as they go to university until they are 26-28 on average.

So Germany will soon be a country of pensioners - and 1 working person needs to support 2-3 pensioners as the German pension system does not work. The German pension system relies on people being born to pay for the pensioners.

But in 2030 there will be too many penioners and only few people that will work and pay taxes.

If you want to invest in Germany, I would go for alternative cities or buy a forrest or farming land. Farming land is a lot cheaper then in the UK - and food will be even more valuable in the future.

Also you need to look at Germany not with a British view. The UK is more centralized then Germany. In the UK most companies and money is in London. Germany is more decentralized. There is many towns and people move to towns were they find jobs and are quite mobile. In London not many would move to Scotland because they found a job there.

Also the university is a different one. In Germany nobody care about were you went to universitiy, as all university degrees from all towns are treated equally. Names of universities do not matter on a job application.

Germany is quite different from the UK. Distances in Germany are also "shorted" as there is many motorways and often no speed limit. So 400 km can easily be reached in 2 hours by car on average - depending on the time when you drive and traffic situation of course. The railway system is also quite good and within Germany only distances like Berlin-Munich or Munich Hamburg are worth to go on a plane, although still many people prefer the train or car even for north-south or south-north trips.