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Old 01.11.2011, 18:13
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Real estate...in Berlin

Dear all, I have seen various threads regarding real estate investments in locations other than Switzerland, so I thought I'd ask away...in off topic, of course, in the hope that some EFer might provide useful inputs. (Btw, I am also inquiring with real life and virtual German friends).

I have been thinking for quite some months now to purchase an apartment in Berlin, and recently I am giving it more serious consideration. I have been doing some research, and I think I found the ideal place. The apartment I have in mind is being built at the moment, will be available at the end of 2012, and is located in one of my favorite neighborhoods of the city. It would be an investment purchase for the time being - I would like to find a tenant once the apt is ready - but I want to keep the option of living there and thereby establish my "home" one day in the (unspecified) future.

If I go ahead with this, I will definitely be seeking a specialist's advice, especially regarding any laws/limitations/hoops/fiscal implications I should be aware of (especially related to having a real estate investment in Germany and being domiciled in Switzerland, at least for the time being) but at this point, I am really interested to hear your opinion.

I already know why I should go ahead and make this investment. Could you tell me why I shouldn't do it?

Danke

Last edited by BokerTov; 01.11.2011 at 18:26.
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Old 01.11.2011, 18:30
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Re: Real estate...in Berlin

Rule #1 for investment in real estate: if you don't know the market, stay the hell out.

This being said, Berlin properties are cheap because the market, by and large, does not support high rents, because
  • the only "growth" industry in Berlin is the federal government,
  • a very large number of Berlin residents are on income support,
  • there is no influx of wealthy expats into Berlin (unlike Zurich, Geneva and London),
  • there are plenty of properties on the market for the "2nd home at a place with a vibe" buyers (unlike Paris),
  • the market is relatively transparent and well regulated (unlike Rome or Istanbul), and
  • tenants enjoy considerable protection under German law.
Also, any predictions by an off-plan seller as to when a property is going to be finished are to be taken with a pinch of salt. In Berlin especially there is absolutely no reason to buy off-plan.
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Old 01.11.2011, 18:54
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Re: Real estate...in Berlin

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Rule #1 for investment in real estate: if you don't know the market, stay the hell out.

This being said, Berlin properties are cheap because the market, by and large, does not support high rents, because
  • the only "growth" industry in Berlin is the federal government,
  • a very large number of Berlin residents are on income support,
  • there is no influx of wealthy expats into Berlin (unlike Zurich, Geneva and London),
  • there are plenty of properties on the market for the "2nd home at a place with a vibe" buyers (unlike Paris),
  • the market is relatively transparent and well regulated (unlike Rome or Istanbul), and
  • tenants enjoy considerable protection under German law.
Also, any predictions by an off-plan seller as to when a property is going to be finished are to be taken with a pinch of salt. In Berlin especially there is absolutely no reason to buy off-plan.
Tom, thanks a lot for your input, especially regarding the last point. While I am in no rush for the place to be finished with the building/remodeling, I would like it to be at a reasonable time. Also, I am making an appointment with the people to go see the place live and talk to them in person before I enter any kind of commitment (obviously).

I have very "sentimental" reasons to make this investment - which is generally a bad idea when money is involved (being sentimental, I mean), so again thanks for the heads-up. In the last few months, I was reading up whatever I could find in English (and German with Google translate) regarding landlord/tenants regulations in Germany and realized they are really pro-tenant, which is not a bad thing, but that being said, my main concerns relate to what if something happens and I don't live there (exploring the possibility of a friend "managing" the property for me) and what if one day I need the property for myself, what kind of notice to give the tenants, etc. It seems that it's really hard to "get rid" of bad tenants, but at the same time it seems that if one needs the property for him/herself or family the notice periods are shorter, etc. I'll keep studying.
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Old 01.11.2011, 19:37
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Re: Real estate...in Berlin

i can't imagine you'd make any money of new build properties.

a friend of mine actually started a berlin property fund. i'm not sure if he made money or not, but he started back in 2006 or so.

he claimed that he could buy property at the price which was equivalent to the value of the land so 'got the land for free'. as you can probably tell, he talked a lot of BS so i'm not sure whether to believe most of what he says.

i guess the days of buying a property for 20kEUR are over, but it might be worth getting something small to dip your toes in. something that you can afford to lose.
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Old 03.11.2011, 13:50
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Re: Real estate...in Berlin

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i can't imagine you'd make any money of new build properties.

a friend of mine actually started a berlin property fund. i'm not sure if he made money or not, but he started back in 2006 or so.

he claimed that he could buy property at the price which was equivalent to the value of the land so 'got the land for free'. as you can probably tell, he talked a lot of BS so i'm not sure whether to believe most of what he says.

i guess the days of buying a property for 20kEUR are over, but it might be worth getting something small to dip your toes in. something that you can afford to lose.
Thanks Phil. No, my goal is not speculation or making lots of money with it (although that never hurts). It's just that I plan to live there at some point - depending on how fast I can learn German to be able to do my job, among other factors - and the features of this apartment (pending live visit and discussing with the people, etc.) are just calling out my name. Renting it out in the meantime would be a plus, I just feel bad in leaving an empty apartment unused for a few years, and as I said, any income, no matter how small, is always good.
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Old 03.11.2011, 16:32
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Re: Real estate...in Berlin

Personally I wouldn't buy anything anywhere until all this Euro stuff pans out a bit more. But then I am risk-averse.

Germany is one of the few places in the world where I'd consider buying property, as they haven't had a massive bubble in the last 20 years, unlike most other western (and even many other) countries. However, if I didn't speak German, that'd be a mark against doing it - navigating all the laws/taxes etc.

I've toyed in the past with the idea of a flat in Berlin. I'm glad I didn't go through with it now though - who knows if I would ever get to go there and hang out in it. I'll just buy one at that time - with demographics, general population decline in Berlin and Germany overall, the coming chance of economic turbulence etc, why not wait... most likely prices won't be much out of reach when you decide to go over.
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Old 22.10.2013, 11:13
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Re: Real estate...in Berlin

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Personally I wouldn't buy anything anywhere until all this Euro stuff pans out a bit more. But then I am risk-averse.

Germany is one of the few places in the world where I'd consider buying property, as they haven't had a massive bubble in the last 20 years, unlike most other western (and even many other) countries. However, if I didn't speak German, that'd be a mark against doing it - navigating all the laws/taxes etc.

I've toyed in the past with the idea of a flat in Berlin. I'm glad I didn't go through with it now though - who knows if I would ever get to go there and hang out in it. I'll just buy one at that time - with demographics, general population decline in Berlin and Germany overall, the coming chance of economic turbulence etc, why not wait... most likely prices won't be much out of reach when you decide to go over.
Prices in Berlin have grown a lot in the last 4 years and the rise seems likely to continue. However, apart from new government jobs there seem to be no real growth industries in Berlin and many of the foreigners moving there are young kids with little money. they increase the demand for accommodation in shared apartments but Berlin won't always be the cool hip place to move to. Apparently Leipzig is now the new trendy city of Germany.
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