One statistic you never find about the Berlin wall in the 20 years or so since it's fall were the amount of people killed or injured trying to escape West Berlin to live in East Berlin, history shows 192 people were killed and 200 shot and injured trying to escape the East into the West by getting over the 'cold wall' as locals renamed it, but given the increasing gentrification of East Berlin, culminating with the eviction of the squatters on 2nd February in one of the last remaining squatted tenement buildings in Berlin, with 21 protester arrests, and 61 of the 2,500 police officers in attendance injured according to Dieter Glietsch, president of Berlin's police force, many East Berliners would happily have the wall put back up, not just to stop West Berliners invading but also the rest of the world, their eviction after so long in residence just highlights how valuable East Berlin's property is becoming.
When the Berlin wall fell in November 1989 there was much celebration, mainly by East Berliners, things were going to change for them, many of them had never even seen a banana let alone eat one, but something that went largely unnoticed by the world was the condition of the buildings the wall was hiding, apart from some large sprawling tenements built by the Russians on the fringes of the city the 100 year old buildings in the central areas were pretty much left as they were when the wall went up in 1961, just unpainted and pretty unkept, inside the buildings were huge wooden floored apartments, but with no money for maintenance and upkeep many tenants just painted over original wooden floors with layer upon layer of cheap gloss White or Red paint.
Lots of squats started to pop up in the early 90's as the Berlin authorities struggled to find buildings original owners, even then the condition of many of these buildings with no heating systems apart from coal heating in apartments, and many in need of re wiring and repair, meant it was utopia for squatters, with owners not really wanting to get involved, even for tenants who were paying rent it was almost a peppercorn rent as many owners felt lucky to have a rental income at all, but slowly that all changed, tenants were renting huge apartments for less than you could rent a parking space for in Central London, that started to attract artists and musicians into Boroughs like Friedrichshain and Neuklln and so the snowball effect started, it's taken 20 plus years to get to where the East Berlin property market is today.
The FIFA World cup in 1996 held in Germany with it's final being played at Berlin's Olympiastadion had a dramatic effect on the popularity of Berlin, with many journalist camping in the City for 3 or 4 weeks and apart from going to the football matches they had not much to do but explore and report back on Berlin, with it's cheap bars and restaurants where even today in many local kneipe or ecke bars you can get a beer for about 1, that opened the floodgates for tourists and perhaps that's why in December 2010 Berlin"s Governing Mayor Klaus Wowereit confirmed for the first time that Berlin had exceeded the historic 20 million hotel room nights in a single year, and Berlin with a population of just 3.4 million people, that's a staggering 55,000 hotel rooms occupied every day of the year on average.
That's all had a dramatic effect on rents in some of the more trendy parts of East Berlin with many tenants renting out fully furnished apartments for short and long lets in places like Neuklln, where Reuterkiez in Kreuzklln (where Kreuzberg meets Neuklln) is considered the most trendy place to live or stay, if you want a long term apartment there expect to see at least 40 other people turn up at the open viewing with all their documents in place and a fist full of euros to pay the deposit when an apartment becomes free and pay a rent is excess of what most of the best locations in West Berlin can command, 5 years ago you could rent there for about "' 2 - "'3 per meter a month, and be the only person viewing, but you now look at having to spend up to "'10 m2 and it's still rising, this area has been so cheap in the past many people rented huge apartments to live in and were able to rent big commercial space to run bars or clubs, uber trendy social gathering places are packed most nights of the week with a large majority of them still allowing smoking, which is quite strange to see given how London and New York have enforced their smoking bans, yet these places are very difficult to find, many with no external signage and very basic or no web site at all, that just would not be cool in Berlin, if you need to advertise your bar or club it's not worth going to, and if your building is not covered in graffiti it's the same, just not cool enough, it's only newcomers like Soho House in Mitte that have gone down the traditional full blown web site and marketing route.
So what attracts expats to Berlin with these rising Berlin rents, even at the dizzy heights you find rents at in Neuklln they are still only about 25% of London and an even lower percentage of New York rents for a comparable location, when viewing apartments in Berlin one of the comments frequently made by people from London and New York is they think the rent quoted is per week, and how 'shocked' they are when they discover the quoted rent is per month, although weekly rents are starting to appear in adverts now for the first time in Berlin, the quality of life annual publication by Mercer is now showing Berlin with a higher quality of life ranking in the index than London, as well as being significantly cheaper and safer, people have a real respect for each other on the streets and you are always welcome in bars and restaurant, and of course the Germans speak English with embarrassing precision, it all adds to the attraction of Berlin.
Cameron Rudd a well know English artist went to Berlin to visit an artist friend 11 years ago he explains 'I was living, or rather surviving in London at the time, a pretty hard thing for a young artist to do, I went to Berlin to experience the culture for 3 months, it was such a creative breath of fresh air, I never left, being in Berlin I have been able to buy my own apartment in a great part of the city and rent my own studio space, something that would have been totally impossible in London, it's a city where everyone is some sort of artist, so creating and very safe, I bike it everywhere, it's the done thing in the East, the cost of living is so much cheaper compared to the UK, it means I can concentrate on my art rather than how I'm going to pay the next bill like I was in London"
All of this has had a knock on effect on the Berlin property market, not that we will see a huge influx of investors buying apartments in Berlin as there are much better property investment opportunities in the city, prices to buy a single apartment range from about 150 per square foot to about 500 per square foot in the ultra trendy areas, if you compare that to prices published this week in the Savills 'Heat Map' of London, with Camden being Neuklln's equivalent at 744 per square foot, or five times more expensive, Candy & Candy take the London top spot, where in Knightsbridge they have property for 6,000 per square foot, twelve times more expensive than Berlin's high end apartments in Mitte, but in Berlin if you buy the whole building not single apartment the prices tumble, you can pick up whole fully rented building for around 60 per square foot.
Rental yields in the city are net to owners as Berlin tenants pay all service charges etc that means for single apartment net yields are about 4% - 5% with banks willing to lend about 50% of the purchase price as they see single apartments with a single rent as high risk, but think back to those old buildings in East Berlin, fast forward 20 years to today, many are fully renovated, fully occupied with net yields of around 8%+ and banks are willing to lend up to 85% to overseas investors as buildings have secure incomes of their own from the many tenants in the apartments compared to a single apartment, so it's possible with the same cash you would use to buy a good sized single apartment to actually buy a whole building of apartments, and with much greater potential.
John Aitken of
nilreB's web site (Berlin spelt backwards) an agent with offices in London and Neuklln Berlin specialists in working with UK buyers of Berlin buildings said, "a typical example of a building with potential in Berlin that we currently have on our books is a refurbished property on the market for "'1,065,000 with a net yield of 8.5% fully occupied and very close to a very trendy area in Neuklln, several banks are willing to fund up to 80% of the purchase price, the buildings average rents are just "'5.17m2 per month, paid by the current tenants who pay low rents due to the length of time they have been renting in the building"
Aitken continued "a quick look for comparable apartments to rent locally on the open market, ie vacant and to let show rents of between "'7m2 - "'10m2 with the average being over "'8m2 as tenants move out of this property there is the potential to refresh apartments and achieve significantly better rents on the open market, as the original tenants moved in many years ago when the area was not as trendy or attractive, and there is also an increasing demand for 'furnished all in' rentals with even higher rents, with prices in the range of "'10m2 - "'15m2 locally"
With 88% of Berliners renting and spending on average just 12.3% of their income on rent, it's easy to see the potential, the whole city is geared up to service the rental sector with armies of professional property managers, several larger agents have now set up English staffed service providers in Berlin with increasing numbers of British property investors looking seriously at bank loans with standard 10 year fixed interest rates, in the UK interest rates are bound to rise at some point, making many investors in the UK buy to let market extremely nervous compared to the UK investors who like the squatters have discovered the value of East Berlin property.
