FEBRUARY 2013 |www.opp-connect.com Letter from Germany


Berlin is a hot-spot for Europe’s Bohemians. With new influxes of tourists and investors arriving every day, it’s an exciting market to work in


B


erlin is surely the most exciting city in Europe at the moment. The recession in Europe is leading to young Southern Europeans moving here in large numbers, whilst also seeing young Londoners and Parisians moving here to escape from the high cost of living. Consequently Berlin has become the Bohemian capital of Europe, and Bohemians are known to be key drivers in economic regeneration and growth.


This Bohemian culture is the same


phenomena that kick-started East London, and is encouraged by the local government. Over recent years, Berlin has seen a growth in creative industry professionals, rather than just unemployed artists. Increasingly young people are coming here to work, to innovate, and to open businesses. This has led to a boom in cafes, art galleries, and fashion stores, as well as the emergence of a dynamic creative and technology start-up scene. Cafes and galleries gentrify neighbourhoods. This in turn attracts new people, which pushes up property prices. Rents rise, and people then


overfl ow into the next neighbourhood. Consequently, areas like southern Neukolln have seen rents and prices double in the last few years. Local knowledge is necessary to understand this market, as it tends towards micro-trends, focused on one specifi c Kietz after another. A Kietz is a local neighbourhood and can consist of as few as a dozen streets. The


“Over recent years, Berlin has seen a growth in creative industry professionals”


growth in the more dynamic areas of Berlin tends to be from Kietz to Kietz in rapid succession. A formerly quiet and un-noticed Kietz just needs a few new cafes or bars to open, and within six months it has ‘taken off’. Rents go up due to a shortage of supply, and the effect moves on to the next Kietz. Yet, on the other side of Berlin things are very different. It is far more like a normal European capital. There


is still plenty of activity at this higher end of the market, as people move to Berlin for business, or simply move up from a fl at they may have bought in Kreuzburg 5-10 years ago, and which has shot up in value. Berlin has also seen a boom in tourism, again underpinned by its status as a creative capital. With over 20m overnight stays last year, Berlin became the third most popular tourist destination in Europe, after Paris and London. This has pushed the hotel market, which in turn has spawned a very active short term letting market. Property prices rose by about 18%


last year (in some areas they doubled) yet Berlin is still very inexpensive for a European capital. The increase in property values has led to yield compression. Berlin still has a lot of value tied up in its property. Buying into an area which has not yet taken off, such as Wedding or Moabit, makes sense, and is likely to see the highest growth in value. Buying in existing good areas is good for rentals, and long term growth, as well as for the rapidly


LETTER FROM GERMANY & SINGAPORE | 49


Darrell Smith Managing Director of Buy Berlin Investments Ltd with Head Offi ce based in Berlin. Specialises in assisting international clients pur- chase real estate in Germany. info@buyberlin.co.uk +49(0)30 6483 8996 +44(0)20 8133 2632 www.buyberlin.co.uk


growing short let market. Berlin Fashion Week, the Berlinale


fi lm festival, and other large creative events in Berlin bring a constant fl ow of affl uent new people to the city each year, many of whom fall in love with Berlin and come back to buy, or move into a rented fl at. The City continues to grow and develop, and whilst it is dynamic and exciting, it clearly still has a long way to go.


Letter from Singapore


Everyone in Singapore has an opinion about the property market - and PropertyGuru editor Andrew Batt has heard more of them than most...


property – even before the driver knows that I spend my entire day writing about property. Nine times out of ten the conversation will include phrases like “cannot afford, lah” or “so expensive”, but you’d be amazed just how many cabbies that I’ve met own property outside of the city state. Prior to the Singapore


M


government’s announcement of additional cooling measures on January 11 there was a fair degree of uncertainty on where the market was heading. Now you’ll struggle to fi nd anyone who is predicting that prices will rise. Although further moves to dampen the market were widely expected and predicted, the sheer number and severity of measures took most by surprise, but one immediate benefi ciary was overseas property investments.


Property exhibitions in Singapore


that I attended on the weekend after the introduction of these latest round


y daily commute by taxi almost always involves a chat that ends up discussing


of measures were much busier than normal, with a number of attendees saying they were looking overseas for the fi rst time as the local market was no longer attractive. In the hours immediately after the December 2011 introduction of measures that were designed to curb speculation, Singaporean interest in Malaysian properties – especially


“The sheer number and severity of cooling measures took many by surprise”


those just across the causeway in Johor Bahru and Iskandar, increased signifi cantly. Over time that interest became global and now Singaporeans are an important buying demographic in many property markets around the world. The same thing will happen now.


The government keeps no records


about the number of Singaporeans who are buying overseas. Every


weekend you can normally fi nd up to a dozen property exhibitions featuring buying opportunities from around the world. I’ve been to many and talked to both exhibitors and buyers, and from what I’ve learned there could easily be up to 600 overseas property purchases happening at these events. On the reverse side Singapore


claimed top spot in last year’s HSBC Expat Explorer survey. It is home to the world’s wealthiest expatriates according to the fi ndings which ranks a multitude of factors including income levels, disposable income, education and property. It’s true that the number of people being posted here on expat salaries has declined during the economic slowdown, even though Southeast Asia has remained remarkably unaffected. As a result of the diminishing number of expats, rentals of high-end apartments in the popular city-centre districts have slowed. But even faced with a lack of rental income, local owners have opted not to decrease their asking prices. Several agents who specialise in


Andrew Batt is International Group Editor for PropertyGuru, Asia’s leading property website group. andrew@allproperty.com.sg


expat rentals have told me that some owners have even sought to raise their prices in an attempt to recover the lost income. You don’t need me to tell you they were unsuccessful. Having lived in Southeast Asia for


the last seven years and Singapore for the last 18 months, I have to say it’s a great place. And for a property journalist there’s always something to write about.


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