Berlin prepares for 'property rebirth’

The cheapest prices in Europe are pushing Berlin towards a new property boom…

Some of the cheapest housing of any major European city is attracting a wave of foreign buyers to the German capital, promising a new property boom after a false start after the fall of the Berlin Wall nearly 20 years ago.

Buyers from Britain, Scandinavia, Ireland and the United States are leading the rush to snap up flats in the once-divided city, making the 12 months up to November last year the busiest on the property market since World War II, estate agents say.

Foreigners were responsible for 70 percent of the transactions, the German federation of estate agents said, with Danes spearheading the march. The interest is so high that Danish estate agents have opened offices here.

Andrea Magnoni, the Italian co-founder of the Valore fund, commented: "In Berlin, the price per square metre is one of the cheapest of any major city in Europe, including those in Eastern Europe. The return for investors is higher than anywhere else at between seven and eight percent compared to 3.5 percent in Milan because even if the rents are moderate the purchase prices are always low enough to guarantee a good rate.

Magnoni concluded: In the rest of Europe, 50 to 60 percent of people's salaries goes towards rent. In Germany, it is about 20 percent.