Property investors put off by high prices at home in London or overseas in Paris should look to Berlin for their next capital property investment.
The German capital lags way behind London and Paris when it comes to property prices, with a one bedroom flat in the mitte (central Berlin) costing around £100,000 compared to the much pricier £2 million you can expect to pay for a one bedroom flat in Mayfair.
However, Berlin is rising as the next investment hotspot with huge investment into the infrastructure of the city.
A new international airport is being built with connections to the Berlin S-Bahn and the wider regional and national railway grid. Regeneration of the area behind the central train station is also due to bring a new centre of commerce to the city.
New international hotels and retail developments are springing up and many districts that were formally neglected and run down are being transformed into fashionable areas for the in-crowd.
The ‘Factory Berlin’ technology club is a good example of new investment entering the city, housing many of the new technology companies such as Twitter, Uber and SoundCloud.
Mark Elliott, Associate Director with JLL’s International Residential Property Services team, can see the growth potential of the city.
He commented: ‘When you have affordable real estate, good quality of life and an attractive atmosphere for young, dynamic talent, and then add in a new international airport and other revamped infrastructure, you start reaching a tipping point. Eventually property prices are going to start catching up with London.’
Development in infrastructure and high-end properties has been neglected over the past ten years, leading to strong rental demand for the relatively small amount of properties available.
This has resulted in average rental income growth of 3.9 per cent per annum over the past five years, which coupled with low purchase prices can offer strong rental yields to potential landlords in the German capital.
Mortgage interest rates remain at historically low levels of below 2 per cent, making property financing very affordable.
The new international airport is due to open next year, so now could be the time for overseas property investors to invest in Berlin and benefit from the increased demand and property price growth that is sure to follow.
Strong potential equity growth, backed up by increasing rental yield in a stable economy is a combination difficult to resist when it comes to investment.
It seems Berlin may have it all.