Berlin has always been an important location for the British and their companies in Germany – and therefore in the heart of Europe. The German capital has always been characterized by a relatively low cost of living, affordable office space and a professional workforce. But what is changing as a result of Brexit and what impact might this political decision have on the real estate market in Berlin?
How is Berlin generally positioning itself in the context of Brexit?
From a technological perspective, Berlin is turning into a true economic miracle. The German capital has made it onto Savill’s list of the top 12 tech lifestyle cities in the world. In Europe, only Stockholm, Barcelona, Copenhagen, Dublin and Amsterdam have achieved this. London is likely to lose a lot of popularity as a result of Brexit – and not just from the perspective of tech experts. Berlin could well develop into the new business center of Europe. This means that Berlin will not only become more interesting for technology centers that locate their office space here. The upswing is also attracting new investors to the German capital, who are buying real estate with an eye to the future.
Brexit and its impact on the real estate market
It is still unclear how exactly the UK will initiate Brexit and what consequences it will have for the rest of Europe. However, one thing is certain: the effects will be complex. A hard Brexit would turn the UK into a third country from the perspective of the European Union. Its status would be similar to that of the USA or China. However, the UK would not have a valid trade agreement.
It will take a great deal of political skill and numerous negotiations to halfway stabilize the resulting chaos. An unregulated exit from the European Union not only affects the country leaving, but also the entire Union. The effects are complex and also affect the real estate market, among other things. This is because the uncertainty of the current situation entails incalculable risks. The changes in the financing and investment environment are reshuffling the real estate industry throughout Europe and therefore also in Berlin.
Effects on the British real estate market
Brexit is having a negative impact on the UK economy. This is particularly evident in the real estate market. For many years, the British have been the absolute leaders in Europe’s housing markets. They are used to having a flourishing real estate industry, particularly in the major economic powerhouses. Even though it was already predicted that Brexit would cause a wave of chaos, the slump in the London real estate market has put a damper on the British capital’s economy. International investors in particular are reluctant to invest in London in this unstable situation.
Effects on the German real estate market
In Germany, you can literally watch the real estate market explode at the moment. Germany is particularly attractive for investors, as the German economy has proven to be extremely stable in recent years. The country is now the fourth strongest economy in the world. Within Europe, Germany is without doubt the strongest economic power. The low interest rate is also of great interest to investors. In view of the fluctuating stock market in other countries, such as China or the USA, Germany is a promising investment alternative. The German capital is attracting particular attention. Berlin is becoming an investor destination and recorded a 74% increase in investment in 2019. The real estate market is booming, with commercial properties in particular becoming investment properties for investors. With its enviable advantages, the German capital even made it onto the list of the 20 most popular cities in the world.
Berlin vs. London: How the Berlin real estate market can benefit from Brexit
Fewer and fewer Britons want to buy real estate in their home country. One of the reasons for this is the increasing uncertainty. The stability of the British pound or the UK economy cannot be relied upon. Many investors are therefore looking around for possible investment locations outside their home country.
The German capital is a particular focus here. Berlin stands for versatility and offers great investment security. Overall, Germany can score points with its excellent infrastructure and reliable political stability. In Berlin, first-class research and educational institutions meet a promising expansion of the technology sector. Other reasons that speak in favor of the German capital are the low unemployment rate and the legislation. The latter enables investors to operate within a protective legal framework.
Conclusion
Politicians, investors, the population and companies in the UK are currently facing an uncertainty whose development will be decided by time. During the turmoil that is sweeping across the UK, Berlin and its real estate market are proving to be an extremely interesting investment destination. The changes in the Berlin real estate sector are promising. Even though prices on the housing market are now quite respectable by German standards, Berlin is still in the catch-up lane compared to other European cities.
