Since the removal last year of the rent caps in Berlin the cost of rented property, and hence the yields for landlords, have been climbing. This makes property in Berlin particularly attractive for investors - rising rent yields tend also to increase the demand for properties to buy as tenants start to look more favourably on owning rather than renting their property.
Rents rising 10% annually
Rents in Berlin last year increased by around 10% and most people expect similar rises this year. With consumer inflation running at around 3% such rises in rent costs will soon start to make a noticeable impact. This has two beneficial implications for the property investors out there:
- yields are healthy and expected to grow giving a nice return on any investment;
- tenants currently paying lower rents will soon begin to re-assess the benefits of ownership as against renting leading to increased demand for properties for sale.
As Berlin already lags a long way behind not only much of Europe but even other German cities in terms of the level of owner-occupation (it's down below 15% at present) this should lead to a marked improvement in property values as demand grows.
More inward investment helps too
As if the rapidly rising rental costs weren't enough to boost the Berlin property market the city is also receiving a significant amount of investment - €80bn already with more to come. Its property prices are lower than most other German cities and its economic position is improving all the time. As we head towards the 20th anniversary of the wall coming down (next autumn) Berlin looks to have benefited more than many of the former DDR cities and investors have not been slow to discover its investment attractions.
Berlin boasts a public transport network the envy of many within Germany and the money pumped into the communications infrastructure just after reunification has created a state-of-the-art totally digitised telephone exchange. Businesses have also been attracted to the city by the relocation of the German government from Bonn, the low office costs relative to many other cities and the abundant source of generally youthful labour.
Investors would be well advised to look in more detail at Berlin given the congruence of such favourable factors there. For more information on what's going on in Berlin have a look at the city's official website here and to see what properties are available have a look at some tenanted apartments in Berlin or even some complete apartment blocks!