Luxury Condo Sales Strong in Berlin

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A new report indicates that Berlin, site of Germany’s biggest housing market, is experiencing substantial and sustainable growth in condominium prices. The trend is expected to continue, driven by both domestic and foreign buyer demand.

Nikolaus Ziegert, Managing Partner of Ziegert - Bank und Immobilienconsulting GmbH, said that condominiums in the Mitte district will experience substantial growth. Within five years, he expects the luxury-tier properties to reach a 10,000-euro price level. The area’s current level, which stands at 4,500 to 6,000 Euros per square metre, is presently comparable to other downtown districts.

Mr. Ziegert says that Berlin presently offers potential for both opportunistic buyers and investors with long-term goals. Economic development is both broad and stable, there has been a demographic growth of 80,000 people this year alone, and building activity is currently slow. It all contributes to a positive price trend in the city’s housing market.

There are highly favourable opportunities for buy-to-let investors. Although Berlin residents are slowing embracing home ownership, many of them will continue to rent, even if buying becomes the more affordable option.

New units in Mitte are expected to yield rents of over 4 percent. Recent legislation has capped rents in period buildings, but rental income from newly built units can go beyond 6 percent, especially if they include high-end furnishings. In recent years, more foreigners have moved into Berlin, increasing the demand for furnished apartments.

Mr. Ziegert said that the agency recently sold four out of 64 high-end condominiums to Swiss people, while the others went to buyers from China, Australia, the US, the UK, Russia, Italy, France, Spain, and Luxembourg. Emerging buyer groups include people from Sweden and New Zealand, who have an affinity for newly-built homes in Friedrichshain. More Israelis have also been investing in Berlin over the past two or three years.

The number of property sales that exceed 5,000 Euros per square metre increased by 46.5 percent last year. Demands for more expensive Berlin apartments are focused on the highly desirable districts of Mitte, Charlottenburg, Kreuzberg, Prenzlauer Berg, Schöneberg, Wilmersdorf, and Zehlendorf.

Higher-end housing like the Mitte penthouses designed by Daniel Libeskind tend to be snapped up by eager buyers as soon as they are placed on the market. The Palais Varnhagen has 49 luxurious apartments and huge penthouses that are priced from around half a million to 5.5 million Euros (£4.3million).