German Property Newsletter
Berlin: Where to Buy, What to Avoid
February 2007
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In this issue you will find:
-- 1) Surpassing All Expectations
-- 2) Berlin: Where to Buy, What to Avoid
-- 3) Exciting Opportunities for All Budgets
-- 4) Tell Us What You Think!
Hello and welcome to the February edition of our German Property Newsletter.
With the winter slowly coming to a close it’s good to see the beginning of the busiest season for the property industry, with several events and exhibitions underway. That being said, we’ve had a very exciting start of the year and it’s hard to imagine being any busier.
In this issue we bring you the most important economic and investment news from Germany. And, for those of you who wish to capitalize on the rapidly emerging number one market for property investment, a close look at Berlin, with an overview of all its districts.
So, if you want to know which areas to put your hard earned cash in and which to stay away from, read on…

1) Surpassing All Expectations
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Economic success

In 2006 German economy has grown at its fastest pace in seven years. After an unexpectedly strong performance in Q4 2006 (3.7% growth y/o/y), real GDP in 2006 increased by 2.9% (seasonally adjusted) and 2.7% (unadjusted), according to German statistics office.
The high growth was based on foreign trade as well as increased consumer spending and rising investment. Despite the strong euro, German exports hit record levels in 2006, increasing by 15.9% y/o/y.
One of the dark clouds hanging over Germany for some time has been the January 2007 VAT increase from 16% to 19%. Two months later the clouds are rapidly clearing. Business confidence has bounced back after a January low, proving the effects of the VAT hike to be very short lived. The German recovery is still very much intact and more and more voices are speaking of a new economic boom for Germany.

Along with a remarkable unemployment drop last year, Germans have also seen rising incomes. In Q4 2006 net national income increased by a high 4.5% y/o/y. And, this month, IG Metall, Germany’s largest industrial labour union, was seeking a wage increase of 6.5%. This is expected to trigger demands for wage rises of workers all over Germany.
All this is of course excellent news for you, the property investor. It means upwards inflationary pressures on rents and property values which should bring even better yields and capital growth for those involved in the German market.
So, if you’re still sitting on the fence, it may be time to get down and grab your piece of a fine German property!
Record year for German property?
The performance of the German economy is a strong indicator for the expected development of the local property market. And global investors seem to agree.
Last month even more blue chip capital gave Berlin its voice of confidence. With firms like Sony and Daimler Chrysler making large investments in commercial property and Terra Firma buying up swathes of apartment blocks the multi million flow of capital is showing no signs of abating.
DIC Asset, a Frankfurt based property company which went public in May, bought a portfolio of 55 German properties for 585 million euros. Standard Life Investments (one of the biggest investors on the planet) made their first move into the German market by investing 91 million euros as part of their European Growth Fund.
Stock market investors have also been looking to get a slice of the cake (although why pay two layers of management fees?) with Deutsche Land raising nearly 150m euros on the AIM market to invest in Germany. And, private equity real estate manager Garigal has purchased over 240 million euros worth of retail property in Germany.
Recently released figures show that in the last 12 months investment volumes into Germany have increased over 140% to 50 Billion euros. With around 15 billion euros invested in Berlin alone last year (not surprising as prices per square meter are 15/20% of London or Paris).
With all of this already happening this year and February only just coming to a close, 2007 is showing all the signs of being a record breaking year for German property.
Can you afford to wait to get involved?


2) Berlin: Where to Buy, What to Avoid
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While German property in general is considered strongly undervalued, this is even more true about Berlin. On the one hand, the German capital has successfully reinvented herself as one of Europe’s most attractive business destinations. In the last few years numerous international companies have chosen Berlin as their European base, building its reputation as a business services, IT, research and creative industries stronghold.
On the other hand, Berlin property prices are among the lowest in Europe – even compared to the new member states – and only 50-60% of other main German cities. It’s no wonder that the German capital and EU’s 2nd largest city (and larger than Munich, Frankfurt and Cologne together) has been the main focus of global property investors.
After the frantic post-reunification construction boom and overdevelopment, tax incentives leading to disastrous real estate speculations, and decade long economic problems, Berlin has seen its property values plummet by up to 60%. Even though the market has now turned and prices started to grow again last year, they are still significantly lower than in the early 90’s.
With the long awaited triggers for growth now taking place, it’s no doubt Berlin will catch up with the rest of Germany. And, with German property values at a fraction of those in other main EU economies, the upside potential is unprecedented.
But, as an investor, you want to buy wisely, to take advantage of strong rental demand and highest growth potential.
So, which are the areas to look at, and which ones to avoid?
Since detailed description of each of the Berlin districts is out of scope of this newsletter, we have prepared an in-depth report for you. You can download it at the following link:
http://www.alphare.net/memos/BERLIN_DISTRICTS.pdf
Berlin is divided into 12 districts (some of the original 23 districts were joined in 2001 to create the current 12). For a brief introduction please read on… For details, please have a look at the link above.
(01) MITTE – consists of ‘old’ districts Mitte, Tiergarten, Wedding
The original Mitte district forms the very centre of Berlin, and is today one of the most prestigious and expensive areas of the German capital. After reunification Mitte has seen the largest transformation, with new developments, retails and office complexes of stunning modern architecture, hotels, galleries, cafes, restaurants… Many famous tourist sights are located in Mitte and the boulevards Unter den Linden and Friedrichstrasse are also internationally renowned.
Tiergarten, named after Berlin’s largest park, houses most of the new government buildings including Chanceller’s offices, the monumental parliament buildings, as well as many embassies and the residence of the German president. The former no-man’s-land Potsdamer Platz (with a part of preserved Berlin Wall) features ultra-modern highrise office and entertainment complexes. The architecturally stunning Hauptbahnhof (main rail terminal) opened in 2006 and is Europe’s largest and most breathtaking rail junction.
Mitte is in most parts a very good location, Tiergarten medium to good (with still several overlooked parts requiring renovation but with excellent potential). Wedding, the original working class district, today boasts high immigrant numbers and a high unemployment rate. While there are some more popular parts of Wedding, buying here needs much more care as chances of getting it wrong are not small.
(02) FRIEDRICHSHAIN-KREUZBERG
Friedrichshain, a very trendy and popular residential area north of the Spree river, and Kreuzberg, with a much more multicultural (mainly Turkish) feel on the southern side of Spree, have both been attracting huge interest from investors, although Friedrichshain is considered more desirable. Friedrichshain is also one of the areas where demand for housing is higher than supply and apartments tend to rent out very fast.
The Media-Spree area on both sides of the Spree has been attracting large numbers of international companies mainly in IT, media and high-tech sectors. It’s also seeing some of the largest developments Berlin has seen for years, with prestigious office buildings and towers, a massive entertainment arena, as well as luxury lofts planned for completion in the next 2-3 years.
(03) PANKOW – Pankow, Prenzlauer Berg, Weissensee
Prenzlauer Berg is today one of Berlin’s best locations, hugely popular with tenants as well as home buyers. It features mainly classic turn of century residential buildings, most carefully renovated in recent years.
Weissensee has its good and bad parts, and care is required when buying. Pankow is, in most part, well established.
(04) CHARLOTTENBURG-WILMERSDORF
The most prestigious district of Berlin, both Charlottenburg and Wilmersdorf are highly sought-after and have virtually no bad parts. Good to very good in most parts, with medium area in Charlottenburg-Nord.
Many of Berlin’s famous tourist sights, most of the city’s 3-5 star hotels, designer emporiums, shops, Germany’s largest shopping boulevard (Kudamm) and Europe’s largest department store (KaDeWe) are located here. So is the green villa quarter Grunewald, home to many prominent Berliners.
(05) SPANDAU
At the western end of Berlin, Spandau has partially retained its original village feel and is popular with families looking for a quieter environment.
(06) STEGLITZ-ZEHLENDORF
Steglitz-Zehlendorf is the district with the highest income per household in Berlin. Highly established and sought-after, it features apartment blocks as well as many houses and high-end villa colonies, and lots of green spaces (in particular in Zehlendorf).
(07) TEMPELHOF-SCHOENEBERG
The international airport Tempelhof is located to the north of the Tempelhof district. Shoeneberg, as one of the areas least damaged in WWII, has retained many original buildings. It also boasts many restaurants and bars, and is popular with middle-aged singles and younger families.
(08) NEUKOELLN
Known as a bastion of crime already in early 20th century, Neukoelln’s reputation is no better today. With serious social problems, high crime, 25% unemployment, high immigrant population, and many infamous highrise housing estates, most of Neukoelln is best to be avoided.
(09) TREPTOW-KOEPENICK
The largest district with lowest population density, three quarters of Treptow-Koepenick are formed by water, woods and parkland. It is more of a family-type district. However, it also houses Berlin’s tallest office building, several research institutes, as well as many technology companies.
(10) MARZAHN-HELLERSDORF
Infamous for its vast concrete panel block housing estates from the 1970’s, high crime rates and social problems, Marzahn is similarly to Neukoelln one of Berlin’s (and Germany’s) worst reputed areas. Many people have left Marzahn in the last decade and this trend still continues.
(11) LICHTENBERG-HOHENSCHOENHAUSEN
Lichtenberg, with many solid period blocks (part renovated part not) and good transport links and infrastructure, is often considered to be the next in line to be regenerated. Similarly to the now hugely popular Friedrichshain located to the west. Some have objections to Lichtenberg due to it’s reputation of being somewhat of a neo-nazi stronghold.
(12) REINICKENDORF
Reinickendorf has many faces; vast water and woodland areas, a mix of period blocks, several areas with houses and villas, as well as 60’s and 70’s housing estates. Several industrial production sites as well as the Berlin-Tegel airport are located here.
You can read or download a more detailed overview here:
http://www.alphare.net/memos/BERLIN_DISTRICTS.pdf
As the major global players have been discovering for the last 2 years, Berlin offers fantastic potential with its rock-bottom prices and strong rental returns. However, as in any market, it’s important to know where and what to buy. And that’s why we are here to assist you.

3) Exciting Opportunities for All Budgets
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After the huge success of our latest central Berlin apartment release, we have now prepared similarly exciting investment opportunities for you. The properties tend to go very fast, so if you have missed out in the past, register your interest now to get ahead of the crowd!
Whether you are interested in single apartments or blocks, or even commercial properties, we have something for all budgets.

We currently offer residential units in desirable areas of Berlin from as little as 30k GBP. Apartment blocks with strong yields and in good locations ranging from 500k GBP to several millions, and as well as commercial properties in main German cities. Please see Berlin property, German property - for further details.

Alternatively email us at info@alphare.net detailing your requirements and we will be happy to provide you with all the information you need to break into this exciting and lucrative market.

4) Tell Us What You Think!
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We would love to hear what you think of this issue of our newsletter. We hope you find the information useful and wish you best success in your investment activities. And of course, if you have any suggestions for upcoming issues that you'd like to share with us, please send them!
Just e-mail us at:
info@alphare.net
We are looking forward to seeing you next month. In the meantime, if you have any questions or would like to request further information, please email or call us at our offices.

Best wishes,
Your team at Alpha Real Estate Investments
Berlin property, German property, Slovakia Property -
81 Oxford Street
London W1D 2EU
Tel: + 44 (0) 207 851 3570
Fax: + 44 (0) 207 851 3571

__________________
Bob Sheth - Administrator @ TotallyProperty.com
You can contact me by using the Contact Us link at the bottom of the page. Or email me on administrator [at] totallyproperty.com.

I have a lovely renovated large studio flat in Charlottenburg in an elegant period about (1900) building on the main Schloss boulevard about 80 metres from the Schloss.
The apartment has had new electrics,new plumbing, new ceilings, new parket floors, painted and plastered, new showeroom and is about 380 square feet in size. I am looking for a quick sale and would welcome any advice about how to acheive a quick sale, whilst I'm aware of a few companies they all deal in bottom end of the market properties and this one is certainly not that.

I am willing to accept less than the market value but require a quick sale to re-invest the cas in another poject so a quick sale is priority and many of the agents I've heard of seem to take months to sell properties.

Any help or advice most welcome.