After fifteen years of stagnation the Berlin property market is finally starting to stir as foreign investors snap up property in the city, reports Assetz...

After fifteen years of stagnation the Berlin property market is finally starting to stir as foreign investors snap up property in the city, attracted by low start up costs and commercial office space which is considerably cheaper than in Munich and Frankfurt, reports Assetz.

Berlin has seen huge multi-billion pound investments in property from UK and European investment banks such as Terra Firma, which are buying up vast blocks of apartments. In addition, leading multinationals such as Sony and DaimlerChrysler have set up headquarters in the city.

This considerable injection of investment has kick-started property market growth - 2006 saw a tentative 0.2% rise in prices after losses in the previous year. The German economy as a whole expanded by 2.5% in 2006, the fastest growth since 2000, and looks set to increase by a further 2.5% in 2007.

Unemployment in Berlin fell to its lowest in four years in November 2006, and this trend is set to continue. It will be the influx of foreign investors that will in time help to drive a growing preference for home ownership that has not been witnessed before in the city, where just 14% of people currently own their own properties.

Stuart Law, Chief Executive of Assetz commented: “Germany is a new market for most overseas investors and it will take time to develop, so I would advise taking a ten year view rather than expecting instant returns. However, the growth triggers investors have been waiting for are starting to occur, with prices in some residential areas such as Charlottenburg, Wilmersdorf and Shoneberg seeing small rises after years of declining or static prices.

Law continued: “It is a unique situation to have property prices in a capital, as they are in Berlin, which are half those of the surrounding cities of Munich and Frankfurt.  With economic conditions remaining favourable, it is inevitable that the Berlin market will catch up, as the UK-led phenomenon of buying your own home continues to spread rapidly across Europe.”