Why are the prices so cheap in Berlin?12th June -
Historical background that help us understand the real estate development and its current situation
- Between 1961 and 1989, the German capital city was a divided city and the Western part was an island in the Eastern side under the Soviet control. During this period the city did not make almost any progress in the properties’ maintenance and new building, especially in the Eastern side.
- 1989-THE BERLIN WALL FALL: After this event a ‘gold rush’ in the real estate market was expected; however, the truth was that the city’s growth and modernization had been paralyzed during the years of division, and this standstill was even worse in the Soviet part, which was devastated and neglected.
- Immediately after the wall fall, the economy did not help and no new jobs were created and many people left the city. Therefore, thousands of properties were left empty and their prices collapsed: between 1994 and 2004 the property prices fell down around 30% in Berlin.
- • At the same time, the old buildings were being refurbished and renewed and new buildings were built. Such reconstruction process goes so slowly that it continues nowadays. Indeed, it is still possible to find uninhabitable buildings and plots without buildings in the heart of Berlin. This would be unconceivable in other European capital cities.
- Berlin and the whole Germany have taken almost 15 years to recover, to generate new jobs and to stop the exodus in Berlin. While the real estate prices fell down sharply, other European cities were living the ‘real estate boom’.
- After that, the prices remained still and it was from 2006 onwards, when Berlin started growing. The reason was that the rent prices were very cheap and the city started creating new jobs. The people slowly realized about these two facts and decided gradually to move to Berlin, to the point that Berlin became little by little the type of city that currently is, that is the capital city and one of the most desired metropolises in Europe. Furthermore, bearing in mind the leadership taken by the Government in the Euro zone crisis, we cannot hesitate that Berlin will keep on playing a main role as European city within the next few years.
- In fact, Berlin is currently experiencing the opposite situation, because the prices are growing until being similar to the prices in other province capitals in Germany and the many capital cities in Europe.