· Euro currency weakness makes Berlin property attractive
· Booming economy, growing population adds to appeal
· Favourable demand picture spurs Middle East investor interest
DUBAI, 10 November, 2015 – Berlin is attracting interest from Middle East real estate investors looking to take advantage of a booming economy, strong population growth, and a comparatively weak euro, according to the latest quarterly Global Real Estate Outlook published by property investment firm IP Global.
The euro has lost about 12% in value against the US dollar over the past year on the likelihood that additional central bank measures will be needed to stimulate the Eurozone economy as well as the prospect of higher interest rates in the US. Most currencies in the Middle East are pegged to the US dollar. A weaker euro makes it cheaper to buy assets in the Eurozone.
Currency fluctuations aside, IP Global says the fundamentals of Berlin’s property market are the main factor driving increased demand.
Berlin is forecast to need 19,655 new apartments every year until 2020. In 2014, less than 9,000 were completed. This imbalance is driving price rises, says IP Global. Average apartment prices in Berlin rose 11.7% in 2014. In prime areas of the city like Mitte, the equivalent figure was an even higher 24.2%.
With increasing numbers of people moving to Berlin and the city’s economy continuing to expand, Berlin is fast becoming a key market for property investors. High profile infrastructure projects like the EUR5.3 billion Brandenburg Airport, situated to the south of the current Schoenefeld facility, is proving a boon for employment.
Another significant project that is helping fuel demand for jobs is Berlin TXL at the site of Tegel Airport. Tegel was the main airport for West Berlin, but will close once Berlin Brandenburg opens in 2018/2019. Berlin TXL - billed as the Urban Tech Republic – will deliver a modern research and industrial park just a short distance from the heart of the city.
Richard Bradstock, Director at IP Global in Abu Dhabi, said: “Take a close look at Berlin’s economic fundamentals and it is easy to see the city’s appeal for real estate investors. Not only is there a significant shortage in housing stock, but its economy continues to strengthen as well. Job opportunities are on the rise as big infrastructure projects are carried out. This all means the city’s population will continue to grow and the demand for housing along with it.
Berlin has always had a reputation as a cool city and is regarded as a thriving European centre for fashion, art, and culture. It is little surprise that Monocle Magazine ranked the city number 3 in its 2015 Quality of Life Survey. We expect Berlin’s appeal with property investors to only grow as well.”