Real estate property investment in Berlin
Property investment in Berlin represents a great value for money.
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 property 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 Berlin allows to benefit from a unique combination of attractive residential property prices, investment safety, high return on capital and long-term growth prospects.
The German capital 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, 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 has also a powerful growing economy and is the European leading city for start-ups with 70% of Germany venture capital investments of German top 100 start-ups). In addition to its position as the political capital of Europe, the has impressive business growth rates in many sectors such as infrastructure, services and tourism.
Housing supply shortage
The German capital 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 property prices up especially with the increase of city population by 50 000 new comers each year.
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 prospects, and strong economic momentum Berlin is attracting worldwide international investors. It also quickly reached the top global ranking for best markets property investment prospects.
Huge price development potential
Property 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 population. This positive momentum is attracting property investors worldwide and Berlin property investment volume has being multiplied by 3 to reach the ca. 10 billion euros mark per year.
Attractive German tax regulation
Buying a home in Germany allows to benefit from the unique advantage of up 100% tax upon resale after just 10 years. The tax benefits do not concern on capital gains but also rental income for buy to let property investors. 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 German city with is known for its safety, developed infrastructure, natural spaces and parks (35% of the city is composed of parks, lakes, rivers and gardens). Germany’s capital is also worldwide appreciated for its dynamic cultural life and represent a major destination for artists and business starters.
Berlin represents the new ‘El Dorado’ of property investors who want to combine investment safety with long-term profitability.
Still one has to get the right advice and agent service in order to secure a successful property investment!
How to choose the right investment property in Berlin?
Whether you are a private investor or whether you buy properties as part of your business, our real estate agency in Berlin will guide you throughout the search and selection process in order to secure a profitable property investment with a strong capital growth potential.
First Citiz Berlin offers you a 360° investment service and a portfolio of more than 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 both the highest and the most 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 property investment with a higher yield compared to a prime top location.
Investing in an existing period property
Since 2020, a new rental cap on period properties was adopted by local authorities so for the level of rent for those properties is from now on limited. In this view, it would better to buy an already tenanted property with the same rent level but with a lower price per square meter.
Typically, an already tenanted apartment for sale at 4000 € per sqm would have a value of up 6000 € per sqm if it were vacant.
This represent around 50% more in the price so better to go simply for an investment in an already tenanted flat. 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 one.
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 only 4000 euros 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 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 of your initially invested capital!
Investing in a new-build property
Buying an apartment in new-build development in Berlin offers the important advantage of not having to follow the rental regulation and therefore to be able to rent the property without any rent price restriction. Unlike other large European cities, it is still possible to find new-build investment opportunities at affordable prices in a central top location 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. Also, if you buy an off-plan property in Berlin at an early property development stage, you might benefit from a reduced price compared to comparable already built condominiums. 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 for you.
We offer you a preliminary comprehensive consultation about real estate market, property prices, city areas, expected rental and capital growth prospects.
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.