Emerging Trends In Real Estate Report

Berlin Is The Number 1 On The List For Overseas Investment

Europe’s real estate market has got its mojo back, according to a new report from PwC and the Urban Land Institute.

Emerging Trends in Real Estate 2015 looks at the key markets to watch in terms of business, real estate capital markets, sustainable technology, the green agenda, and creating places to live. Berlin is Number 1 on the list of five leading cities for investment, followed by Dublin, Madrid, Hamburg and Athens. International and domestic investors are attracted to the German capital, lured by what they consider relatively inexpensive assets and development opportunities. The city is a technology, media and telecommunications hotspot. Adlershof – Berlin’s leading science and technology park close to Schoenefeld Airport is a key area for overseas investment and has a diverse, entrepreneurial community. 

“What I like about Berlin is that any new product launch must include Berlin – tech, fashion, cars,” says one interviewee. The residential sector is also popular, in light of the city’s young population and its growing reputation as a European media hub. One pan-European investor is targeting residential in Berlin and other cities in Eastern Germany. “The market has been static but the demographic trends are going in favour of those cities. People want to live there again, in a way they haven’t for the past 20 years.” 

Capital is driving Europe’s markets ahead of rental recovery, as global flows and heightened investor demand for real estate create a “perfect storm”. There has been a marked shift since last year, both in terms of how far up the risk curve investors are prepared to go and what banks will lend on. Taking on risk in search of higher returns is a smart move, according to many investors. Banks, for their part, are upping loan to value (LTVs) – to as much as 85 percent in some cases – and are starting gingerly to lend on development projects and less core properties. International and domestic investors are swarming to the German capital, lured by what they consider relatively inexpensive assets and development opportunities.”

The report concludes: “For the first time, international investors are driving the market in Hamburg; they accounted for half of the €2.4 billion of deals in the first three quarters of 2014 – a year-on-year rise of 38 percent. “We are mainly investing in big city centres like Munich, Hamburg and Berlin, which have the best prospects in Germany,” say investors.

Read the full report here.
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