According to showbiz celebrities, Berlin and London are very much on par. Pop icon David Bowie once called Berlin “the greatest cultural extravaganza that one could imagine.” For US actor Don Johnson, London is one of the most fascinating places in the world. It is undeniable that both cities exert their own particular charm. But how can they be assessed from an investor’s perspective? What yields can be expected from real estate in London or Berlin? We have made a comparison for you.
It is nothing new that real estate prices in London have been rising for years. Since 2010 alone, the average annual growth rate has been around ten percent, and even significantly higher in the city centre. Demand is particularly high in the luxury segment, i.e. properties in exclusive parts of the city, such as Chelsea, Kensington or Mayfair. Not only are well-heeled Londoners among themselves here, they also benefit from a wide range of shopping facilities, such as the world famous Harrods department store or the designer boutiques in Bond Street, which are all just a stone’s throw away. Added to this is the array of cultural and gastronomic offerings: London accommodates 241 theatres as well as 65 restaurants with at least one Michelin star. The fact that London is not only the world’s leading financial centre, but also home to many internationally renowned universities also drives prices up. In addition, London is perfectly connected to international transport routes through its five airports. These factors make the city highly attractive for many of the world’s wealthy. All these advantages stimulate the demand for real estate and have led to record price levels in recent years.
Berlin, a city with much potential
In 2016, Berlin is defending its title as the most attractive property market in Europe. This is according to a study by the consulting firm PricewaterhouseCoopers (PwC) and the Urban Land Institute (ULI). And it is due to the fact that Berlin’s price ratio still leaves plenty of headroom for growth, even though rent and price levels have increased by seven percent from 2014 to 2015. Other factors, too, are having a positive impact on Berlin’s housing market. In recent years, Berlin has developed into a popular technology hotspot and start-up location, attracting in particular young educated professionals. Added to this is the fact that, according to the calculations of the Institute of the German Economy in Cologne, an annual construction demand of over 15,000 residential units exists until 2030. In order to meet the demands of this growth and exploit the associated investment potential, prestigious luxury real estate developments are currently underway in central Berlin. A prime example of this trend is star architect Daniel Libeskind’s apartment complex “Sapphire”, whose silhouette and exterior façade are modelled after the gem of same name. The capital city’s profile is rounded off by a number of other exciting factors: these include the city’s eventful history, which attracts large numbers of tourists, the fact that Berlin is considered to be “cool” and plays a pioneering role in terms of creativity, as well as the colourful array of recreational opportunities. These include the sophisticated bars and restaurants around Gendarmenmarkt, the pulsating night-life, as well as the numerous parks and nearby lakes, which are a popular excursion destination for locals and visitors alike.
Both London and Berlin offer promising options for investors. Visit Engel & Völkers to learn more about the diverse portfolio of luxury investment properties. We are represented in both cities and, thanks to our many years of industry expertise, can offer you competent advice in all real estate matters.