Average costs leapt 20.5% last year, prompting warns of a property bubble might wish to burst
Berlin has emerged as the frothiest property market in the world, with the city engulfed by expensive highrise developments and speculative buying that threatens its traditionally low rents and hip arts scene.
Prices in Berlin jumped by 20.5% in 2017, according to the property consultancy Knight Frank, with other German cities also displacing cities in China in terms of rising prices.
Berlin, Hamburg, Munich and Frankfurt were ranked in the top 10 in the world for cost rises, with several Dutch cities not far behind.
London was ranked 101 st, with a 2% gain, while Auckland in New Zealand, once gripped by a property frenzy, dropped to 99 th with a 2.2% increase.
But endeavors by the authorities in Vancouver to appease its soaring costs- including a 15% foreign buyer tax- appear to have stalled, with costs in the Canadian city jumping by 16% in 2017, the fourth fastest in the world.
Berlin’s move to the top of risers adherents several years of soaring costs; the average property price has increase by more than 120% since 2004.
Foreign purchasers have flocked into Berlin’s residential and commercial property marketplace, with the US investor Warren Buffet agreeing a bargain last monthto acquire a top-end real estate agent in the city that sells apartments for as much as EUR3. 8m( PS3. 3m ).
The boom has been fuelled by cheap borrowing and a fast growing population. The city’s population has grown by about 50,000 a year over the past five years to 3.5 million. It is projected to reach 4 million by 2035.
The surge in prices has prompted warnings of a bubble waiting to burst. In February, Germany’s central bank, the Bundesbank, suggested that property in many German cities was at least 15% overpriced and could be as much as 35% overpriced in Berlin.
But to buyers from London or New York, Berlin remains cheap even after years of 10% annualised rises. Apartments in prime parts of the German capital fetch merely about a third of the price of equivalent-sized properties in London.
On immowelt.de, a popular German property website, apartments in NeuKolln, which is regarded as one of the hippest neighborhoods, can be found EUR1 75,000 and are marked by the agents as” Ihr cleveres investment “.
Commercial property is also boom. Berlin’s Sony centre complex, emblematic of the city’s regeneration after the fall of the Berlin Wall, was bought for EUR1. 1bn in October by the pension fund of Ontario’s municipal employees. Meanwhile Norway’s state pension fund has paid about EUR4 00 m for the Mitte headquarters of media group Axel Springer.
10 fastest rising property markets in the world in 2017
Berlin 20.5% Izmir 18.5%
Reykjavik 16.6% Vancouver 16.0% Hong Kong 14.8% Budapest 15.5% Hamburg 14.1% Munich 13.8% Rotterdam 13.4% Frankfurt 13.4%