Growth in Berlin During Brexit

Introduction

German properties continue to grow during Brexit. Even the rentals are constantly increasing in the city, making property rather unaffordable for local buyers. Germany offered easy citizenships to Britons during Brexit, although the country does not allow dual citizenships. It is treating Britons as citizens during the transaction phase, and there are provisions where people who have lived for more than 5 years in the country will be given settled status and citizenship benefits such as pensions and healthcare. During Brexit, Berlin is offering opportunities in commercial investment where rents are growing for small and midsize tenants. The markets of Germany are more transparent compared to China. China's growth declined from 7 to 4.5 percent in 2017, and in the US, home prices rose 6.3 percent in 2017, with Seattle showing the highest growth of 12.7 percent, according to Knight Frank reports (Knight Frank, 2017).

Investment Trends in Berlin During Brexit

BR-NAS bought office space for 30 million euros in Düsseldorf and Essen, Germany. Finnish fund Ilmarinen invested in Berlin, Amsterdam, and the US. Deutsche Industries acquired three industrial properties in Berlin—Schleiz on Munich motorway, Bremen, and Lower Saxony, Shortens for 8.05 billion euros. Dentan entered a partnership with real estate company René Dubois to enhance business in Germany's real estate. Swiss company Swiss Life will buy Berlin-based BEOS to expand its branches in mixed real estate business—office space, manufacturing, and logistics. Singapore wealth fund purchased properties in GIC Pte and partnered with a local company for a project that transforms aging buildings into office spaces in TechnoCampus Berlin. Germany's property fund investment increased by 50 percent in 2017, with at least 13 German open-ended funds targeting institutional and private investors to capitalize on Brexit volatility, as evaluated by Scope (Scope, 2017). In 2017, the total investment in Germany was 2.3 billion euros.

Inflation and Property Growth

Inflation rose by at least 80 percent in Germany's leading cities over the past decade, according to statistics released by Deutsche Bank (Deutsche Bank, 2017). Apartment rates in Munich doubled, while in Hamburg, they are growing at a rate of 70 percent. Germany is experiencing some of the highest growth rates, whereas UK properties are slowing in some regions. Other growing cities include Hong Kong and Vancouver. Low interest rates, more jobs, and population growth in top cities are key reasons for the rise in property prices, leading to shortages. For example, Munich's population grew by several thousands compared to the available housing units in Germany. In Berlin, prices grew 20 percent year-on-year, and on average, property rates in Frankfurt, Munich, and Hamburg grew 13 percent last year.

Commercial Real Estate Market

Germany's office space prices are increasing, and the price of commercial real estate in German submarkets also rose. The growing demand from investors has led to the tripling of office space prices in five years. Welcoming visa and settlement options have increased the inflow of young tech workers into the country. As a result, there is a dynamic shift in the workforce, contributing to the economic and cultural diversity within Germany's urban centers.

Conclusion

Overall, the German property market shows robust growth despite the uncertainties brought about by Brexit. Investors are seizing opportunities in both residential and commercial sectors, encouraged by transparent market conditions and favorable economic policies. As Germany continues to attract international investment, its real estate market is poised for sustained growth.

References

Deutsche Bank. (2017). Real Estate Market Statistics.

Knight Frank. (2017). Global House Price Index.

Scope. (2017). Investment Trends in Germany.