Your Guide to Property Investment in Berlin
You are interested in property investment in Berlin ? You are at the right address! Get here more insights about the city’s main investment drivers and which type of buy-to-let properties to consider in Berlin.
Berlin is topping the global residential markets in Europe and worldwide for real estate investment. According to PWC real estate investors survey, Berlin real estate market is ranked among the top 3 best markets for investment in Europe. This ranking includes large German cities like Munich, Hamburg and Frankfort as well as European main cities like Paris and London and Barcelona.
Investing in the capital of Germany allows to benefit from a unique combination of attractive residential property prices, investment safety, high return on capital and long-term growth perspectives.
The capital of Germany is registering double-digit growth in several sectors like Fin-tech, green energy and tourism. It is also worldwide recognized for its unique lifestyle, business-friendly climate, quality infrastructure, digital business, cultural events sector and as a major touristic destination.
Berlin is also the most international city in Germany. It is very popular worldwide, especially among creative people, digital experts, artists and entrepreneurs.
In order to choose the right property investment in Berlin, our team offers you a 360° service and will guide you fully throughout the purchase process.
Why to choose Berlin for your real estate investment?
Investment safety in Germany
Investing in real estate in Berlin is first investing in Germany, the second exporting country worldwide and the leading economy in Euro zone. It represents today simply the safest country for business and investment in all Europe. Berlin also has a powerful growing economy and is the European leading city for start-ups with 70% of Germany venture capital investments of Germany’s top 100 start-ups. In addition to its position as the political capital of Europe, it has impressive business growth rates in sectors such as infrastructure, services and tourism.
Housing supply shortage
The capital of Germany has a record residential occupancy rate of 98,5%. It means that for landlords, there is absolutely no issue for finding tenants. This due to an extremely high demand for housing and a big shortage of properties for rent or for sale. The city has the lowest ownership rate in the country with less than 20% of homeowners (52% average in Germany), which sustains the long term housing sale demand. This housing market Supply-demand shortage is pushing real estate prices up especially with the increase of the city’s population by 50 000 new people each year from Germany, Europe and worldwide.
Lowest property prices in Europe
Berlin real estate prices are the lowest among all capital cities and large cities in Europe and Germany. With only 4630 euros per square meter average residential property price, the apartments in central districts are two to four times less expensive than Paris, Rome and London. With such a good value for money, stunning long-term price growth perspectives and strong economic momentum Berlin is attracting worldwide international investors. It also reached the top global ranking for best global markets for property investment.
Huge price development potential
Investing in buy-to-let in Berlin is a great value for money. Real estate prices has been sharply increasing in the city with around +10% per year. This is due to the high demand for rental and purchase and the shortage of housing supply. On the other side, the dynamism and growth of the city economy is attracting billions of investments to the city as well as a new highly skilled and creative people. This positive trend is attracting investors worldwide and Berlin property investment volume has being multiplied by 3 to reach the ca. 10 billion euros mark per year.
Tax advantages in Germany
Buying a home in Germany allows to benefit from the unique advantage of up 100% tax upon resale after just 10 years. As a buy-to-let investor in Berlin, you will also benefit from several tax advantages for your rent income rent income. Expense like interest payments on mortgages, management costs and purchase side costs (i.e. brokerage fee, property registration costs) are also relieved from yearly rental income. With all the tax relief advantages, smart buy-to-let investors could often lower down their tax rates on rental income to almost 0%.
Unique quality of life
Berlin is ranked the 3rd best city worldwide in terms of quality of life by Monocles’ Quality of life survey. Berlin is the most international city in Germany. It’s a safe city with a developed infrastructure, where one can enjoy freedom, nature (35% of the city is composed of parks, lakes, rivers and gardens), rich culture and a unique atmosphere and lifestyle. The capital of Germany is also worldwide appreciated for its rich and dynamic cultural life and represent a major destination for art lovers, musicians and creatives. Berlin is also quite with international entrepreneurs and start-uppers.
Berlin represents a safe haven of property investors who want to combine investment safety with long-term profitability.
Still you have to get the right expert advice in order to secure your successful property investment in Berlin!
How to choose the right investment property in Berlin?
Whether you are a private or a professional investor, our international real estate agency in Berlin will guide you throughout all the investment steps. We provide you our expert assistance in order to secure a profitable property investment in Berlin with a strong growth potential.
First Citiz Berlin offers a 360° investment service and a portfolio of over 100 properties in Berlin’s most sought-after areas
For a buy-to-let apartment, it is always good to target the central districts of the city with easy access to public transportation and where the housing demand is higher and more international.
The most central sought-after areas in Berlin are Prenzlauer Berg, Mitte, Kreuzberg, Neukölln, Friedrichshain, Schöneberg, Wilmersdorf and Charlottenburg. For reasons of profitability, you could opt for a buy-to-let apartment in an upcoming district location like Tiergarten, Wedding, Moabit or Steglitz where the rental demand is also high, but the purchase prices are slightly lower. Here, one could secure a real estate investment in Berlin with a higher yield compared to a more central location.
Invest in a period property
Period properties in Berlin are highly sought-after especially for self-use buyers. So investing in a period buy-to-let in Berlin is a good idea from reselling perspective. Period properties are subject to rent regulation and the rent should not exceed a certain level.
On the other side, tenanted properties are usually sold at discount compared to to vacant apartments. In this view, investing in a period apartment that is already tenanted would make you benefit from a discount on the sale price compared to a vacant apartment. .
Example: A vacant period 2-room apartment is worth 350.000 euros
You can potentially buy a similar apartment , but already tenanted, at only 245.000€.
Indeed, vacant apartments in Berlin are ca. 50% more expensive than the already tenanted ones.
This price difference is explained by the extremely limited number of vacant properties in the city that has more than 98% occupancy rate.
Our advice: if you do not plan to use yourself the property in some time, it’s better, investment-wise, to buy an already tenanted apartment.
With this you could not only secure already a 50% potential capital gain but also buy a flat in a central location in the capital of Germany for a discounted price per square meter!
When buying an already tenanted apartment, you will benefit from 3 combined profitability effects for your investment property in Berlin:
- Capital gain from the initial discount on the price
- General market price increase, currently around 7-10% per year
- Total tax exemption when selling a property in Germany after 10 years of ownership.
Combining these factors would lead to outstanding investment return levels for your buy-to-let in berlin.
Invest in a new-build property
Buying an apartment in a new development in Berlin offers the important advantage of not being constrained by the rent regulation applicable to period properties. Therefore you will be able to rent your Buy-to-let in Berlin without any rent level restriction. It is is still possible to find new central developments with affordable prices in best locations like Mitte, Prenzlauer Berg, Charlottenburg and Wilmersdorf. This price difference is even more perceivable if you intend to buy a luxury property in the German capital. New-build properties have also the advantage of having more functional plans than for the period buildings (Altbau in German). They benefit also from state-of-art energy performances standards like KFW-50 (consumption below 50kwh/m2/year). New-development apartments benefit as well from a strong demand both for rental and resale. Otherwise, if you buy a new property in Berlin at an early development stage, you can benefit from a discounted price compared to comparable already built apartments. Buying an off-plan property, allows also to split the price over several settlements.
At the end, your property investment objective in terms of property type preference, investment yield and long-term profitability will be the main factors to determine the most suitable real estate investment in Berlin for you. Please, do not hesitate to get in touch for a free consultation about real estate market, property prices, city areas and the different property investment options in Berlin.
With the 360° service package, First Citiz Berlin team stands by your side throughout all the investment transaction steps: market analysis, property selection, qualification for a mortgage in Germany, purchase process management and property management. With our agency you can plan your buy-to-let investment in Berlin in all serenity!