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Berlin rising: Europe’s next top destination for property investment

With rising interest in the capital of Europe’s strongest economy, property prices and rentals are on a strong upward trend

SINGAPORE, July 13, 2017 – JLL Berlin is fast emerging as Europe’s top destination for property investments, with the German capital city ticking all the right boxes for investors.

The vibrant city, steeped in history and legacy, houses some of the biggest companies in the world, including German giants such as Mercedes Benz, Deutsche Telekom and Siemens. 

The economy is performing strongly, with consumer spending, job creation and capital investment on a strong upward trajectory. 

Demand for residential property has, in turn, surged on the back of strong population growth and economic expansion, a new report on Berlin’s property market by Jones Lang LaSalle Incorporated (JLL) showed.

The pace of construction has also been accelerating, with supply barely keeping up with demand. Approximately 19,100 building permits were issued in the 11 months until November 2016, some 20 per cent higher compared to the same period in 2015. But the near record number of permits were still below the estimated demand of about 20,000 residential units per year.

As a result, condominium prices have risen by about 10 per cent for the whole of 2016, reflecting the growing gap between demand and supply. Rents also surged, growing 6.3 per cent in the second half of 2016, the second fastest pace since 2004. Rental vacancies are near record lows, at just 1.5 per cent, while yields remain strong at about 3 per cent. 

Berlin provides an attractive option for Singapore investors who are looking to diversify their options, given the strong economy, robust rental market and growing population.

At the same time, the city’s population is expected to continue growing, a trend which will sustain the  demand for property over the medium term. The city’s population, of about 3.4 million, is expected to grow at a rate of 3 per cent by 2030, outpacing many other international cities. In 2018, a new airport is expected to open, further cementing Berlin’s growing international profile.