I had an inkling that Germany would take off again as a property market following the euphoria of the build up to the World Cup. The construction industry was, of course, booming in anticipation of a warm welcome to Jules Rimet and his entourage and around that time, the Dubai Investment Group had bought a 55,000 square metre shopping mall known as the MZ Centre in suburban Berlin for the princely sum of dhs380 million.
Now Germany is not the first destination that leaps to mind for second home seekers despite the accessibility and value for money. However, the intuitive investor shrewdly tends to shy away from the beaten track. Of course, if you are in search of a period piece, then you might be disappointed because the majority of German property was built post-1945, for obvious
reasons.
So then, why do new waves of investors think that Germany is the next big thing? As far as the European Housing Review 2006 is concerned, it is the only European country where residential property prices actually fell last year. We could also quote the wise owls at property analyst Merrill Lynch, who comment that the country, ‘has conspicuously failed to join in the global housing boom of the past ten years’.
Now the plus point of entering a market when it is at a trough means that you stand a very good chance of improving your yields even if the market turns remotely buoyant. And this market definitely looks set to rise; in some areas, it has already done so to the tune of 15 per cent in the past 18 months. Berlin, for a start, is well worthy of focus. The price of a central apartment in one of Europe’s most dynamic cities, which has become a magnet to artistic souls bailing out of London, Paris and Barcelona to avoid advancing penury, is 50 to 60 per cent cheaper than its London equivalent.
Now Friedenau is an affluent district in Berliner terms, but here a fully renovated, turn-of-the-century, six-room ground floor apartment with garden will reduce your bank account by no more than dhs1.4 million. Also, a fully refurbished city centre apartment block on Karl-Marx-Strasse with ten residential and three commercial units will set you back dhs4.3 million - roughly the cost of a five bedroom villa in Dubai. Further afield in Frankfurt a four-bedroom, two-bathroom top floor apartment in Bornheim, built in the early 1900s and fully renovated you back by dhs1.27 million.
With those kind of prices, Germany is definitely calling.
Andy McTiernan is editor-in-chief of Property World Middle East. Contact him at pworld@eim.ae
www.propertyworldme.com
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