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Berlin market set for stardom

Berlin market set for stardom

Friday, 14 March 2008 9:11 AM

The property market in the German capital Berlin is set to boom, providing an enticing incentive for property investors to consider a venture in the city.

That is the view of Top-Immobilien, an estate agent in Berlin, which explains the rental culture may be coming to an end - making now the prime time to make a move.

Berlin's inhabitants have for a long time preferred to rent their property, rather than to purchase it outright, with cheap rents and high mortgage repayment costs encouraging residents to remain in temporary homes.

As such, demand for rented accommodation has been consistently high, the estate agent argues, and rental yields are arguably among the most attractive in Europe.

However, this could now be coming to an end.

"At the moment there is no reason for tenants to buy a flat, for example, because rents are cheap. When they buy the property, they have to pay the interest on repayments - and at the moment, rents are cheaper," explained Michael Schmidt, manager of Top-Immobilien.

"But from last year to this year, we saw increases to rents of ten per cent. Next year it will be ten per cent again, and again - and then they will decide to buy."

As such, investors should consider a purchase now, in order to secure a lower price for property, along with a rising rental yield.

"We have an increasing of values, especially in the apartment blocks market. We have had increases in the values of flats for the last three or four years, of between ten and 30 per cent," continued Mr Schmidt.

"At the moment the prices are at a stable value. But by the end of the year, prices will rise."

Besides the financial incentive Berlin also has a strong allure for British investors.

"Berlin is the capital of Germany, it is well known.it has a peculiar situation because Berlin is two cities - the east and the west," he explained.

"They have come together now. Berlin has a lot of potential for property value increases - you'll find if you buy a property and wait for ten years, the value will increase. But the purchase prices at the moment are cheap, when you compare with London or Munich."