Berlin (Friedrichshain) apartment purchase

[rmacgp]

I paid an initial deposit this time last year for a studio apartment in Friedrichshain and I now have to decide on weather going through with it now or not. Does anyone know if there are signs of property slowdown there or not? Any relevent experiences?

 

[Galwayboy]

Property in Berlin and Germany as a whole is relatively cheap compared to other countries. It hasn't really fallen in the last couple of years because in the period of 1994 to 2004 when every other property market in the world seemed to be booming, Germany's was crashing, losing in some places up to 50% of its value. It will therefor not suffer to the same extent as other property markets which were hugely inflated. The German banks were badly burned in the 1994 to 2004 period because they were giving out 100% loans and sometimes 110% to people (does this sound familar). They seroiusly pulled in there horns and credit is now restricted to probadly around 60% LTV on individual apartments to 75% LTV on blocks. Dont expect massive capital appreciation though as the germanys are not known for there desire to own there only home. Increase's are driven there mainly by rich foreigne investors and they is not alot of them around at the moment. Having said that you should be able to get a secent rent yield of around 5.5 to 6% (for an individual apartment). This should insure that you are cash positive and not pumping money into it each month to pay the mortgage. Be careful with the purchase price you pay. It may seen cheap by our standards but could be very expensive by Berlin standards. Sellers will charge what they think someone will pay,even if its way over the odds compared to local prices. I have been involved in the Berlin market for over 3 years now and while I can say that it hasnt moved up much it certainly hasnt lost value or got cheaper. There are very few property markets where this would hold true currently.
Galwayboy

 

[Lollix]

Remember that while Berlin apartments may seem cheap by Irish standards, there is one fundamental difference that you need to take into consideration when deciding on an investment strategy in that city. Most residents rent, they don't buy. Therefore there is not a very strong local market, even in good times, for properties like this, so the best that can be hoped for is a price related to the rental return. There is no possibility of ever getting a windfall price for one of these when you sell it; there just isn't a big demand-driven market there, never will be. There will never be a boom such as we know of in markets where most people own their own home.