Recently portal ee24.com wrote a lot about the residential and commercial real estate in the south of Germany. In particular, recently we've published interviews with experts from Stuttgart and Munich.
Munich is leading by the cost of housing in Germany. And what about Berlin, the largest city in the country? Metropolitan status, cosmopolitanism and plenty of opportunities in the city attract more and more new residents that increase demand, contributing to the growth of property prices.
Why, then, Berlin can not "catch up" Munich? We decided to ask this question to one of the world's leading experts on real estate of Berlin - Marc Wiese, CEO of Sanus AG. The company operates since 1996 and is among the five largest developers in Berlin.
Big city of Berlin
- What are the most attractive areas of Berlin for buyers of apartments?
- Our company has an internal rule: we build in plots which can be reached by car in half an hour. Our office in locarted in the centre of western Berlin, in Kurfürstendamm, so we only work inside of the circle line of subway. I am talking about the best areas, such as Charlottenburg, Mitte, Friedrichshain. Thus, we build only in the best locations in central Berlin.
- What is the level of prices for your objects?
- The German capital's market is now booming and the demand for apartments in Berlin remains high. Price is the main reason for the attractiveness of Berlin on the international market, in particular - among Russian investors. They got used that usually the property prices in the centre of capital starts from €10 thousand, but the prices for apartments in Berlin are two times lower. For example, high-quality apartments in one of ours residential complexes can be bought at €5 thousand per sq.m.
In general, average price of apartments in Berlin is €2,500-3,000 per sq.m, if we are talking about the whole metropolitan area. And if we talk about the centre, the prices, I believe, are two times lower than you have in Russia, while the housing is of high quality and beauty.
- What will happen to property prices in Berlin in the medium term?
- I think that in the future we won't see such a sharp increase in prices that we've seen, but investors can confidently expect a small stable growth of housing cost.
- Germany is known as a country where people prefer to rent rather than to buy. Is it still true?
- The situation is changing gradually. Annually 40 thousand new residents come to Berlin, and I would say that since 2004 or 2005 the demand significantly exceeds supply, number of apartments is not enough, prices are rising, so that many people have decided to invest and buy an apartment.
Some of our apartments are for renting out and others are for sale. We sell apartments in condominiums, and we also build apartment buildings with apartments for renting out, and we sell the entire building. I think that construction of buildings for sale is the main and best business for us. Prices for these buildings are very affordable, mortgage rates in Germany are extremely low, so major investors are happy to buy large properties.
- What do you think about real estate markets in other big cities in Germany?
- Munich, Hamburg and Cologne really differ from Berlin. They are less populated so their markets are very small, and when a free site appears, developers immediately buy it and start construction. In Berlin we have a large number of sites for construction, where is possible to realize modern projects of new architectural styles. Berliners are very open for everything new, and they like to see modern buildings.
In other words, markets in Munich, Hamburg and Cologne are already established, you can't make a good business there. In contrast, Berlin still offers good opportunities.
- How do strict rules on new construction in the Berlin centre affect your business?
- That's right, we have certain plans of neighborhoods development, certain construction rights and responsibilities that we must fulfill. But it is not difficult. For example, if you want to build something in the centre of Moscow , you will face to a bunch of restrictions. A policy of Berlin authorities aims to create new housing.
Every year the population of Berlin increases by 40 thousand people, and we need to build 6 thousand new apartments annualy in order to supply them with housing. Therefore we can easily get all the building permits and start construction in 3-6 months.
Foreigners in Berlin feel like they are on home ground
- Are Russians interested in Berlin properties?
- This is definitely the case. Russians are strongly interested in residential real estate in Berlin. We have a lot of Russian investors. So we thought, why not go to Moscow and meet with Russian buyers in Russia (the interview took place in autumn 2013 in Moscow. - ee24.com).
- Except of Russians, who else buy property in Berlin?
- The main foreign buyers of real estate in Berlin are citizens of Russia, Israel, Spain, the United States, Arab countries. They take the chance to buy an apartment in Berlin, attracted by the low prices in comparison to other world cities. The benefits of such an acquisition are obvious. At the same time due to the high standards, houses and apartments in Germany are famous for quality.
German laws protect owners: there are a registry of real estate and notary services, so you can be sure of full legality of the transaction. If you deposit money in a German bank you may be assured that nothing will happen to them. We do not have "bad" banks.
- What impact do new residents have on Berlin?
- The population of Berlin is 3.5 million people. Unlike small towns, several markets do coexist in the German capital. You can see how rapidly districts of Berlin change their images. New people, things are humming. Cosmopolitan city is open for everybody. Ask Russians who live in Berlin. By the way, Russians tend to settle in the western part of Berlin, in attractive area with nice houses.
- Is it difficult to get a residence permit in Germany?
- If you invest, if you buy an apartment and want to reside in Germany, to open a business or get a good job, you can obtain a residence permit. Of course, you will need to make efforts, but it is possible.
- In 2013, Paris has attracted a lot of rich people from Syria, Egypt and other countries in the Middle East and North Africa, suffered from military and political conflicts. Are there similar tendencies when we say about Berlin?
- A lot of immigrants are coming to Berlin. It was happening for decades, it is happening now, and it will be happening. Essentially nothing has changed in 2013. In the Berlin property market there are investors from many countries. I don't think there will be more of them due to conflicts in Syria and Egypt.
- What can you say about investors from Turkey?
- Berlin is a home to the largest Turkish ex-pat community. Turks do business, make a significant contribution to the economy of the city and the country. They also invest in real estate in Germany, but they have unique interests, their views differ. For example, it's okay for them to buy a house, which is situated very close to the commercial area. Ordinary investor wouldn't do that, but Turks have a lot of opportunities and enough money to implement their wishes and ideas. I don't see anything wrong here.
Residential and commercial buildings in Berlin will reach for the sky
- You've mentioned that Turks often buy houses next to commercial areas. Is there a clear distinction between buildings of residential and commercial use in Berlin?
- Yes, in Berlin there is a clear distinction between commercial buildings and buildings suitable for residential accommodation. But while Berlin lacks apartments, you can create a living space even in the area of predominant commercial development.
Normally, when you walk down the street, you see shops on ground floors. But if you go to the backyard, you find residential space there. Frequently such houses are of mixed ownership. In order to organize living spaces in a commercial building, it is necessary to get permits from authorities and the building owners.
- Who are the owners of buildings in Berlin? Individuals or companies?
- Both are. Houses often pass from hand to hand. There are some properties that had a hundred owners. But even in the most pricy places, you can find properties that have been privately owned for generations. Some buildings have been returned to their former owners after the reunification of Germany. In general, in the Berlin market you will find a full range of various investors and owners.
- Moscow builds skyscrapers, St. Petersburg apparently will remain "flat". What about Berlin's development?
- Berlin is becoming the city of highrises. For example, at one site we construct two buildings of 22 and 17 floors. People began to realize that high-rise buildings can also be beautiful and comfortable for life. I think over the next 20 years a lot of skyscrapers will be built in Berlin.
Interview: Pavel Kuznetsov, ee24.com