Berlin Property an investment market

Berlin real estate offers overseas property investors a great opportunity to benefit from low prices with great potential for capital gains. Berlin's property prices are still low and represent the lowest prices in any European City. Recently Prudential Real Estate Investors announced that it had acquired the famous Ewerk office situated in the heart of Berlin. The Ewerk, a former transformer station built in 1928, was renovated during 2004 and 2005.

So why is Berlins housing market full of cheap property? A little research into Berlins City history reveals why Berlins property prices dropped and never caught up with other European cities.

The opening of the Berlin Wall (1989) and the reunification of Germany (1990) resulted in a wave of optimism. The expectations for Europe's largest economy and it's newly created capital city Berlin were high. The pent-up demand particularly from the East Berliners was immense. The conclusion at the time was that the city required a massive investment and construction programme in all sectors.

The Berlin construction boom of the early nineties coincided with both the reduction in residents and more importantly their purchasing power. This coincided with an increase in unemployment levels. The net result was a fall in the price of property and rental values. Berlin witnessed an increase in the availability of office and residential space without an appropriate increase in demand. Between 1994 and 2004 new property prices fell in Berlin by 30% and rents by 15%.The disposal of large property portfolios by public authorities further undermined price levels.

Property prices in most European countries significantly increased while those in Berlin stagnated or fell. Berlin now represents the most competitively priced property in Europe.

The people of Berlin like to rent property with only 12% of Berliners owning their properties compared with over 20% in Hanover, Hamburg, Munich and Stuttgart. This lack of demand has kept prices low and provides buyers with ample supply of Berlin tenants.

Tourism has increased by 16% in 2004 alone. In excess of 2,000 four and five star hotel rooms have been built in the last 3 years including Ritz-Carlton and Radisson. There were 14 million overnight stays in 2005 compared to 11.2 million in 2003. British tourism increased by 22% in 2006 alone.

The indications are that Berlin is set to boom and the time appears to be now for overseas property investors to head for Berlin.

About the Author:

Nicholas Marr is the CEO behind overseas property website at www.homesgofast.com . His position means that he is contact with hundreds of real estate agents and developers world wide. This has enabled him to gain a unique insight into international real estate markets from those who work in them at first hand. www.homesgofast.com/home/Germany/