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Blog | 22. Juni 2017

BERLIN IS THE SECOND HOME CAPITAL

 

The super-rich of the world have discovered Berlin for themselves. Owning a second home in Berlin is not only the height of chic. More importantly, it is also extremely lucrative. Every spring, the international brokers at Knight Frank report on how and where the world’s “Ultra High Net Worth Individuals” (UHNWIs) have been investing their money. And the super-rich are no longer restricting their investments to Paris, London, New York or Shanghai, they are also pouring their money into Berlin. For the first time ever, Berlin appears in Knight Frank’s ranking of the 100 most popular and profitable markets for second homes – and has come from nowhere to land in thirteenth spot. Munich has to settle for fifteenth; Frankfurt comes in nineteenth.

In comparison with its European peers, Berlin’s ranking as Germany’s capital of second homes is given added weight: Only Switzerland’s noble ski resort, Gstaad, and the capital of the Netherlands, Amsterdam, did better. Or, to put Berlin’s result in an even clearer perspective: In this year’s Knight Frank “Prime International Residential Index” (PIRI), London only made it to no. 92 in the ranking – joining Zürich (no. 93) in bringing up the rear in this highly regarded analysis of the world’s most attractive real estate investment destinations.

SECURE, STABLE, BOOMING

So why are a growing number of the world’s 200,000 richest individuals opting for Berlin? Worth at least USD 30 million, why are they choosing to invest in Berlin ahead of the Big Apple or London? The answer: The German capital is synonymous with security and stability, for market transparency and good governance – for Merkel’s “politics of responsibility.” Some 73 percent of the investors surveyed by Knight Frank admitted that they view the current global political situation as the greatest risk to their wealth. Almost 67 percent of these UHNWIs believe that there is a real chance that the value of their assets will decline. In response to these fears, they are reorienting their portfolios and turning to locations beyond their traditional favorites for their latest residential real estate investments.

Berlin also scores highly for having (luxury) real estate prices that, in international comparison, remain remarkably affordable, whilst also boasting enviable rates of economic growth. The researchers from Knight Frank posted a revealing calculation: For one million dollars, it is just about possible to buy a 30-sqm apartment in London’s premium property segment. In Berlin, however, the same money will buy almost three times as much space, namely an 87-sqm condominium. Then there is the cost of living, which is also substantially lower than in London. According to the analysts at Britain’s Economist Intelligence Unit (EIU), the UK capital is the sixth most expensive city in the world; Berlin ranks much lower, 48th out of the 133 analyzed cities.

INTERNATIONALLY NETWORKED START-UP MECCA

The evolution of Berlin into Europe’s undisputed start-up capital represents another major plus point. Every year, some 40,000 new companies are founded in the city – in all sectors and industries: FinTech, digital healthcare, artificial intelligence, mobility, food technology and cyber-security. Between 1,800 and 2,400 start-ups have already established themselves. They have become a strong magnet for young talent from all over the world. An ever growing number of people are being drawn to this vibrant epicenter of start-ups, research and development. The majority of new citizens who have arrived in Berlin over the past two years have come from another country. This has further strengthened Berlin’s image as a booming, global metropolis.

As the city prospers, sowing the seeds of an even more promising future, the number of second-home owners confident of even stronger property price growth increases in parallel. Berlin’s governing Senate hopes that it too can profit – and is already planning to raise the tax on second homes that is so typical of many German municipalities. To be exact, the Senate wants a threefold increase. From 2019, everyone with a second home in Berlin will have to pay 15 percent of the net cold rent in tax, rather than the current 5 percent. That would guarantee the German capital top position in a different ranking – no other German city has raised its tax on second homes to such an extent. Hamburg charges 8 percent, and even Munich only demands 9 percent.

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Blog | 22. Juni 2017

BERLIN IS THE SECOND HOME CAPITAL

 

The super-rich of the world have discovered Berlin for themselves. Owning a second home in Berlin is not only the height of chic. More importantly, it is also extremely lucrative. Every spring, the international brokers at Knight Frank report on how and where the world’s “Ultra High Net Worth Individuals” (UHNWIs) have been investing their money. And the super-rich are no longer restricting their investments to Paris, London, New York or Shanghai, they are also pouring their money into Berlin. For the first time ever, Berlin appears in Knight Frank’s ranking of the 100 most popular and profitable markets for second homes – and has come from nowhere to land in thirteenth spot. Munich has to settle for fifteenth; Frankfurt comes in nineteenth.

In comparison with its European peers, Berlin’s ranking as Germany’s capital of second homes is given added weight: Only Switzerland’s noble ski resort, Gstaad, and the capital of the Netherlands, Amsterdam, did better. Or, to put Berlin’s result in an even clearer perspective: In this year’s Knight Frank “Prime International Residential Index” (PIRI), London only made it to no. 92 in the ranking – joining Zürich (no. 93) in bringing up the rear in this highly regarded analysis of the world’s most attractive real estate investment destinations.

SECURE, STABLE, BOOMING

So why are a growing number of the world’s 200,000 richest individuals opting for Berlin? Worth at least USD 30 million, why are they choosing to invest in Berlin ahead of the Big Apple or London? The answer: The German capital is synonymous with security and stability, for market transparency and good governance – for Merkel’s “politics of responsibility.” Some 73 percent of the investors surveyed by Knight Frank admitted that they view the current global political situation as the greatest risk to their wealth. Almost 67 percent of these UHNWIs believe that there is a real chance that the value of their assets will decline. In response to these fears, they are reorienting their portfolios and turning to locations beyond their traditional favorites for their latest residential real estate investments.

Berlin also scores highly for having (luxury) real estate prices that, in international comparison, remain remarkably affordable, whilst also boasting enviable rates of economic growth. The researchers from Knight Frank posted a revealing calculation: For one million dollars, it is just about possible to buy a 30-sqm apartment in London’s premium property segment. In Berlin, however, the same money will buy almost three times as much space, namely an 87-sqm condominium. Then there is the cost of living, which is also substantially lower than in London. According to the analysts at Britain’s Economist Intelligence Unit (EIU), the UK capital is the sixth most expensive city in the world; Berlin ranks much lower, 48th out of the 133 analyzed cities.

INTERNATIONALLY NETWORKED START-UP MECCA

The evolution of Berlin into Europe’s undisputed start-up capital represents another major plus point. Every year, some 40,000 new companies are founded in the city – in all sectors and industries: FinTech, digital healthcare, artificial intelligence, mobility, food technology and cyber-security. Between 1,800 and 2,400 start-ups have already established themselves. They have become a strong magnet for young talent from all over the world. An ever growing number of people are being drawn to this vibrant epicenter of start-ups, research and development. The majority of new citizens who have arrived in Berlin over the past two years have come from another country. This has further strengthened Berlin’s image as a booming, global metropolis.

As the city prospers, sowing the seeds of an even more promising future, the number of second-home owners confident of even stronger property price growth increases in parallel. Berlin’s governing Senate hopes that it too can profit – and is already planning to raise the tax on second homes that is so typical of many German municipalities. To be exact, the Senate wants a threefold increase. From 2019, everyone with a second home in Berlin will have to pay 15 percent of the net cold rent in tax, rather than the current 5 percent. That would guarantee the German capital top position in a different ranking – no other German city has raised its tax on second homes to such an extent. Hamburg charges 8 percent, and even Munich only demands 9 percent.

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© 2015 Diamona & Harnisch Development GmbH
Leipziger Platz 14 | 10117 Berlin | T. 030 89 38 46 0 | info@diamona-harnisch.com

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