UK and European businesses, such as the Terra Firma bank, have been attracted to Berlin by low start up costs and cheap commercial office space. These multi-million pound investments are bolstering the Berlin property market, which has experienced a dip in the last few years.

"The growth triggers that Berlin property investors have been waiting for are starting to occur, with prices in Charlottenburg, Wilmersdorf and Shoneburg seeing small rises after years of declining or static prices," commented Stuart Law, chief executive of Assetz. "It is a unique situation to have property prices in a capital, as they are in Berlin, which are half those of the surrounding cities of Munich and Frankurt. With economic conditions remaining favourable, it is inevitable that the Berlin property market will catch up, as the UK-led phenomenon of buying your own home continues to spread rapidly through Europe."

Assetz is currently marketing a block of 16 residential period apartments in a desirable location near to Fehrbelliner Square, Berlin. Prices start at £53,262 for a one-bedroom apartment, and increase to £127,410 for a 133 metres squared three bedroom apartment.

One Brit who has chosen to invest in the Berlin property market is Alan Jackson, a civil engineer who currently resides in Abu Dhabi. He was attracted to Berlin by the prospect of high property rental yields and long-term capital return.

"After studying various locations, we decided to invest in Germany and in particular in Berlin property, as this seemed to have all the right ingredients to become one of the most successful markets in Europe," he says. "Germany has been renowned as having one of the lowest property ownership levels in Europe, with nearly 50 per cent of the population renting property rather then investing. However, times are changing, and with better financial packages available and a strong influx of foreign investors recently, the property market now looks set to prosper."

Jackson and his wife have purchased a two-bedroom apartment in Uthmannstrasse, Berlin for £39,970.

Financial investment advisors IMOINVEST has predicted that property rental prices in this Berlin district will reach 10.92 per cent in the near future, rendering Jackson's apartment a profitable investment. In fact, a strong property rental market is seen across Berlin.

"It is the strength of the rental market, coupled with higher yields than most other European cities and extremely low prices, which make the Berlin property market an excellent, low risk investment prospect," confirms Petra Gajdosikova, managing director of Alpha Real Estate Investments. "Among other healthy denominators, the key factor in placing Berlin top of the list is its domestic rental market."

Alpha Real Estate Investments is currently offering 15 renovated period apartments in the Prenzlauer Berg area of Berlin. Close to public transport and amenities, prices start at £30,000 for a one-room apartment. Alpha Real Estate Investments expects that buyers will see a 5.5 per cent annual yield on the units, which are all currently let.

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For further information about Berlin property:
Assetz
Imoinvest
Alpha Real Estate

Buying property in Berlin, Germany
Before you invest in the German and Berlin property market, it is important to understand the difference between German and English tenancy, writes John Howell, senior partner of The International Law Partnership LLP.

The position regarding tenants in Germany is very different from the position in the UK or Ireland. This is partly because so many more Germans rent property (they have not yet seized the idea that everyone should own their own house) and partly because of the hang-over from the old Communist and Socialist era. As result, you find many more ordinary middle-calls tenants than you find here.

When you buy a property you may find that there are tenants already in it. This can, of course, also happen in this country. Just like in this country, if you take over a property with tenants you and your lawyer must be very careful to establish precisely what their existing rights are and to document the relationship between you. As in this country, tenancies can be brought to an end but (if they are protected tenancies) only on certain limited grounds. If you wish to get rid of a tenant already in a building your lawyer must advise you precisely about your rights.

It is possible to raise the rent of apartments in Germany but in many cases the tenant will enjoy protection, and so any increases, in those cases, would have to be within the limits allowed by the law.

If the seller is selling an apartment with a sitting tenant and you prefer to take delivery with no tenant it is by far the best if you make the seller deal with getting rid of the tenant rather than to take responsibility for doing this yourself. In many cases it can be very difficult to remove a tenant.

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Article published on 23 March 2007