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Why Berlin Is Europe's Best Place To Live, Work And Buy Real Estate

October 9th 2019

By The Forbes

There is a new buzz in the Berlin air. The grim, wounded city once cast adrift in the ocean of Communist Germany has now turned into a thriving global capital that draws investors, companies and a talented workforce from across the world.

Economically, Berlin has finally started picking up, wages have increased significantly over the last year and unemployment is at a record low. Furthermore, the city’s growing—there’s a forecast regarding population growth made by the city to 2025 and we are already above the most bullish scenario.

A key reason the German capital is booming is that it offers great value to businesses. A study shows that the total cost of renting office and living space are significantly lower in Berlin than in nearly every other leading world city, clocking in at just $28,400 per employee per year against $111,900 in New York, $105,400 in Hong Kong and $88,800 in London. Only Johannesburg and Rio de Janeiro are more affordable.

This is partly a consequence of Berlin’s unique history: “The city was divided into a Western and Eastern part,” notes Fischer. “The Eastern part was Communist and there was no property ownership. West Berlin was a capitalist enclave in Communist land so, for many people, it made no sense to own property at all. When the wall came down, Berlin was quickly rebuilt—a lot of tax incentives were [there] to move the city forward and build new apartments and office buildings—but it took a very long time for the people that were expected to come at the end of 1990 to actually come here.”

 The city has invested heavily in infrastructure and, today, the general surroundings for a company wanting to settle somewhere in Europe are extremely good. You can drive from one side of the city to the other in 30 minutes, the public transport is excellent and the healthcare is very good.

But Berlin’s greatest advantage is perhaps its vibrant atmosphere. A study ranked the German capital first among the world’s tech hubs for buzz and wellness, a liveability measure that covers everything from nightlife and entertainment to pollution levels, quality of the local parks and commuting times. The city’s dynamic, entrepreneurial culture, its ten universities, the thriving tech, music and art industries, and a firm cosmopolitan feel are so appealing that the local population has continuously swelled for the past five years, with up to 40,000-50,000 people moving in every year.

Berlin is very diverse and very exciting. You can be whatever you want to be—it’s very easy to feel at home here. Young people love it and—if you are a company—being sited in a place where people want to work, where they feel welcome and productive, really is a differentiation factor.

Google is another big-name company that has latched onto the German capital’s potential. The Silicon Valley giant already funds Factory Berlin, a hub for growing tech start-ups and mature companies, and is planning to open its own campus in the fashionable Kreuzberg area later this year.

“In the last five years, the start-up scene in Berlin has grown rapidly, giving rise to many successful companies, such EyeEm and GoEuro, and thus becoming a leading European ecosystem,” the company stated in a blog post last November. “We are firmly convinced that the future will provide even more growth potential for entrepreneurs and we want to contribute our part.”

Google’s move is likely to accelerate the growth of the city’s already buoyant tech sector. “Last year, more money was pushed into start-ups in Berlin than anywhere else in Europe—more than in London, more than in Paris,” says Fischer. “Sometimes, the idea is born in, say, Switzerland, but the Swiss guy decides to move to Berlin because of the living costs or the infrastructure.”

Germany’s political stability and rock-solid economy have also played a part in drawing foreign businesses and supporting Berlin’s economy. “The biggest beneficiary from the Eurozone and its low interest rates is Germany,” says Blum. “It is a big export country and is happy when the euro is not too high. For companies, last year has been amazing. Germany is also extremely stable and we see a lot of people who want to invest here just for that—it’s not only the yield attraction, it’s the security of the country.”

The UK’s decision to leave the European Union, for example, has given Berlin a boost, according to Blum: “People in London were waiting to see what would happen but now that we are talking about a hard Brexit [where the UK is set to leave the single market as well as the EU] it looks like lots of companies may move to Berlin, unless Britain decides to put really low taxes.”

This combination of spectacular economic growth and political stability has also contributed to fuel the local real estate market, with the German capital acquiring a reputation as a safe haven. “Berlin has become the ‘go-to’ investment destination because, on the one hand, it is a very safe environment in Europe’s most economically successful country, and, on the other hand, you have very dynamic real-estate trends,” says Fischer. “Three years ago, five years ago, it would have been impossible to find buyers for Berlin property in New York or Hong Kong. However, the political events of the last 12 months, be it Brexit, be it the Trump vote, which nobody really anticipated, have really put the city on the map.”

An added incentive for many people is that Berlin currently has the lowest property ownership rate in Germany at just 14%. This makes rental investments particularly appealing: Investors are snapping up properties to rent out. At the same time, owner-occupiers are also fuelling demand because they want to take advantage of the low interest rates and buy a home to avoid rising rents. As a result, demand for residential property is now greater than ever.

The city’s inner circle, hemmed in by the main tram routes, has become particularly expensive, so people are moving further out—but now even some of the outer areas are starting to rise in value. Young families may have to move 30 minutes from Berlin to get something adequate for their needs. However, the city has plenty of scope for expansion.There are still a lot of areas where it is attractive to live.

The Berlin market having matured. It’s very liquid, very secure and transparent, with property prices that are very stable or increasing—it’s a very healthy environment to be in. Five years ago, Berlin was seen as an emerging city but now it really is a core market where people like to place their money, like to work, like to move their companies and like to be in.