Euro brings Middle East investment to Berlin

The weak euro is helping to bring Middle East investment to Berlin.

The latest quarterly report from IP Global highlights the currency’s 12 per cent decline against the dollar in the past year, which has made it more affordable for both US buyers and those from further afield to enter the Germany capital’s booming market.

The weakness in the single currency, though, is only adding to the fundamentals that have fuelled the city’s growth in recent years.

“Not only is there a significant shortage in housing stock, but its economy continues to strengthen as well,” explains Richard Bradstock, Director at IP Global in Abu Dhabi.

Indeed, according to JLL, residential properties in Berlin attracted more than €2.2 billion of investment during H1 2015, up more than four times on the same period in 2014. High-profile projects such as the Brandenburg Airport, are creating jobs, which, in turn, is fuelling demand for housing.

The Federal Institute for Research on Building, Urban Affairs and Spatial Development says that 20,000 new homes are needed this year in order to keep up with demand. Yet in Berlin, as in many other cities in Germany and across Europe, supply is struggling to keep up the pace. Fewer than 9,000 units were completed in 2014, helping to push apartment prices up 11.7 per cent, while prices in prime areas such as Mitte saw values climb by an even steeper 24.2 per cent.

The city was rated the top for investment prospects by PWC’s Emerging Trends in Real Estate Europe 2015 report, knocking Munich off the top spot. Berlin now stands as Europe’s third most active real estate market, according to the PWC data.

Ray Withers, CEO of Property Frontiers, which is offering investment at Stadtpark Steglitz (in one of south west Berlin’s affluent areas) from €153,670 with up to 5.6 per cent gross yields, comments: “Berlin is racing ahead of other European cities in terms of its ability to attract young, talented entrepreneurs and the impact of these bright young things on the city’s demographics is far from negligible. They’re breathing new life into Berlin and drawing in investment capital from around the globe.”