The real estate market in the German capital remains extremely dynamic and each year attracts a great many national and international investors who purchase properties to rent under a range of formats.
Prices are continuing to rise, although the intensity of this increase has decreased somewhat recently, brought about by a significant deficit in the supply of housing in relation to demand.
This increase is due in part to a clearly attractive price compared to other European capitals and other German cities and a strong positioning of Germany within Europe (1st European power, 2nd world exporter), and also to the interest a great many European and global companies have shown in the city by establishing their headquarters there.
What property should be invested in ?
There are several possibilities available to the prudent investor, with safe and perennial investments an achievable aim :
1- Buy one or more assets in a high-quality new-build scheme and benefit from the latest technological innovations and environmentally friendly programmes, with excellent public transport links and shopping facilities in a central district of Berlin.
2- Invest in an older building (Altbaugebaude) renovated with great care and attention to detail. There are a range of different styles to choose from, showcasing the history of the citydespite the conflicts of the second world war : the Neo-classical style dating back to the industrial revolution, the Art Nouveau movement which appeared at the end of the 19th century and examples of the school of Bauhauss from the 1920s.
3- Investing your capital in an older, but well-localized building with main features (foundations, bearing walls, structural framing and façade) ranging from high-quality to in complete need of renovation (doors, windows, interior insulation, electricity, partitions, etc...).
This type of acquisition can be interesting for any contractor-investors with restoration know-how.
One of the principle advantages is the price per square metre (from 1000 € per m2 excl. taxes)
The downside is that investors must possess sufficient technical knowledge to manage the renovation or have the ability to pay professionals to restore on site.
What type of rental ?
1. Furnished rentals of medium-term duration ranging between 3 months and 2 years
2. Furnished or unfurnished rentals of long-term duration of over 2/3 years
3. Furnished seasonal holiday rentals of very short duration ranging between 2 and 7 nights (on average).
1. Furnished rentals with medium-term durations ranging between 3 months and 2 years :
We recommend this type of investment for the following reasons :
Average duration stays enable the investor to gain a higher yield than for a conventional unfurnished lease because tenants are willing to pay a higher price per square metre for a furnished and well-maintained property in an ideal location as an alternative to a long-term stay in a hotel.
With this type of arrangement, the investor can expect to charge 20-25 Euros per m² and to achieve an occupancy rate of 80%.
With this type of rental, the investor has control of the terms of the lease and retains a certain flexibility in terms of rental income, unlike traditional unfurnished rentals.
As reported in ’Die Welt’ in December 2013, furnished property is currently experiencing a boom in Germany. This is due to the fact that more and more companies rent these types of apartments for their employees when they are relocated abroad for professional reasons.
This current rental fashion is working extremely well. Tenants who rent for a medium-term duration look for property which is more comfortable than a hotel room. They want to live like real Berliners in their own private spaces and are thus willing to pay a little more for the experience.
In terms of rental management, specialised leasing companies can be entrusted with the rental of these top-of-the-range properties to businesses in search of furnished apartments with short or medium term contracts for the use of their employees.
2. Furnished or unfurnished rentals of long-term duration would be appropriate for an investor wishing to stake money in the long term.
Rent will be less high but the cost of management will also be less and the lease renewed less frequently.
The profitability will be based on capital gain which may prove interesting in medium or long term.
3. Furnished seasonal holiday rentals of very short duration ranging between 2 and 4 weeks have exploded over the past five years and are currently very widely available (+ 15,000 dwellings).
This type of investment is always very high-value because there are large returns with highly flexible contracts allowing the investor to reserve the accommodation for certain periods in a personal capacity.
However, this type of lease is being carefully monitored. The German authorities are seeking to limit the number, with a view to reserving access to housing for citizens of Berlin.
We will of course inform our clients of any changes in current legislation.
In conclusion, whether seeking a medium or long-term investment, it is easy to understand why so many people decide to purchase property in Berlin.
The potential for capital gain on well-chosen property in the centre of Berlin is very real, which is not or is no longer the case in other European capitals.
Unlike in some European capitals, the heart of Berlin, in particular the Mittedistrict, is an ideal location for families, with its many schools, shops, impressive transport network, reasonable prices and sense of tranquillity.
Berlin, in addition to its historic interest, enjoys incredible finesse in terms of its art, culture and architecture, with the main artistic movements of today having initially been established in the German capital.
Finally, Berlin is a very pleasant place to live. It is constantly in motion, rich in events and boasts a great many parks in which locals can take the opportunity to enjoy a pleasant break in the heart of the city.
Please do not hesitate to consult us should you wish us to find you the ideal property corresponding to your investment requirements.
Jean-Marie ROLIN
De Laverne Consulting
’Luxury Search Properties’
CEO and Founder
+ 33 6 7828 9166
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