Jitters over terrorist attacks, immigration strife, and economic instability due to Brexit seem to have put some European real estate investment property on shaky ground lately, but there are bright spots, too.
Kate Everett-Allen, head of international research at Knight Frank names Berlin and Munich on a short list of standout European performers with price growth rates of 9 percent and 12 percent, respectively, in 2015. You can find those figures and a lot more in the real estate investment advisory firm’s 2016 Wealth Report.
Germany’s capital, Berlin, where real estate values have doubled since 2007, is a case in point: The growing city is an important center for high-tech, creative, and media industries. Rubina Real Estate experts note that Berlin is a gateway to Central and Eastern Europe, has a well-developed telecommunications infrastructure, and a well-educated population of 3.5 million that skews young. The city continues to draw new businesses eager to appeal to young professional talent attracted to its progressive vibe and amenities. The demographic between the age of 25 and 30 is growing at the fastest rate.
“Berlin was a very prosperous city with lots of cultural happenings and great architecture until the downfall of Hitler,” said German-born Bernadette Schaeffler, owner of the Bernadette Schaeffler Collection luxury home furnishings showroom in the Dallas Design District. “During the Cold War, it somehow slept like Sleeping Beauty. Since the reunification, people built on top of it. Parts of Berlin are historical, other parts extremely modern. Berlin is cosmopolitan, multicultural, and American friendly. There’s a big expat population — they all feel at home. In general, the cost of living is lower, and rents affordable; that said, real estate prices are going up.”
Along with growth, reasons that analysts say Berlin and other major German cities stand out as investment opportunities are undervalued property values relative to cities such as London and Paris, the strength of the German economy, a housing shortage, and the trajectory of rising prices tipping a purchasing trend, especially in light of low interest returns as an alternative investment.