And Berlin is also a combination of ancient monuments and cutting-edge modern architectural thought: in the time since the reunification of East and West Berlin, the city has become a place for the embodiment of the most advanced urban planning ideas – Norman Foster's Reichstag, Peter Eisenman's Holocaust Memorial, Daniel Libeskind's museum, Marlene Dietrich Square, the new Berlin Central Station... At the same time, Berlin is very green – almost a third of its total area is occupied by parks, lakes, and canals. Add to this a well-functioning public transport system, which operates flawlessly throughout Germany, and in Berlin itself has perhaps reached perfection, and you get the picture of a comfortable metropolis, well adapted to the diverse needs of its residents.
Therefore, it is not surprising that along with American and European investors, more and more of our compatriots are considering the possibility of purchasing housing in Berlin. Moreover, real estate prices in the capital of reunified Germany are still low compared to other European capitals (if on average a square meter of residential property in a prestigious area of London costs €15,000, Paris – up to €12,000, then in Berlin – only €1,200). However, one should not think that by buying the first Berlin property you come across, you automatically invest profitably. One of the features of the local market is its heterogeneity: in this extraordinary city there are both luxurious multi-million villas and desolate 'dead' neighborhoods.
Another difference between Berlin and most European capitals is that it does not have a single center. After World War II, Berlin was divided into East and West, so that even in the unified city of 1991, two centers remain. The old administrative, business, commercial, and cultural center – the Berlin-Mitte district with Unter den Linden and Friedrichstraße – is the center of East Berlin. The former suburb of Charlottenburg in the area of Kurfürstendamm and the nearby railway station and S-Bahn station Zoologischer Garten is the center of West Berlin. To the south of the Brandenburg Gate, around Potsdamer Platz, a new center of Berlin is forming. In addition, each large district of the German capital also tries to 'appoint' its own center as the 'main' one for the residents of its district. Accordingly, prices rise from each outskirts to each center.
As in any country, Germany has its own special, established classification of residential real estate. First of all, there is a single-family house with a plot, or in German Einfamilienhaus (EFH). This is the most convenient option, since there is an opportunity to add something or change the layout. In such a house, if desired, you can allocate a small separate apartment, but it is also the most expensive of all types of housing, with the price greatly influenced by the amount of operating costs. Maintaining a two-family house with separate entrances, or Doppelhaus (DH), is cheaper, since the costs are essentially 'shared' with neighbors. Also very popular are Reihenhäuser (RH) – 'houses in a row,' or what we commonly call 'townhouses.' A private apartment – Eigentumswohnung (EW) – is the most common type of dwelling. The apartment is private property, but the stairwell and utilities are common property of the residents. Surprisingly, in Germany you can easily purchase an architectural monument, but in this case the buyer must forget about renovations and must preserve the building's facade. Naturally, such restrictions significantly reduce the price.
Real estate prices in Germany depend on three main factors. First of all, on location, more precisely – on the district. Housing in the former East Germany is significantly cheaper, since it mostly does not meet modern standards. Therefore, it is difficult to profitably sell or rent out such apartments and houses. The exceptions are a few cities and their surroundings, for example, the fashionable Potsdam in the suburbs of Berlin.
For thrifty Germans, an important factor affecting the cost of housing is the amount of future maintenance costs. Everything that can help save on water, heating, electricity is welcome – modern equipment, thermal insulation, and so on. More economical housing will cost more to purchase, but it will save a lot of money during operation. Finally, the third factor is the presence of developed infrastructure.
Analysts view the current Berlin real estate market as undervalued as a result of the economic reorganization after the country's reunification. Indeed, prices here, as already noted, are lower than in other European capitals. Currently, the main price range in Berlin is from €1,000 to €3,000 per sq. m, and moreover, supply still significantly exceeds demand.
For example, in the Berlin-Friedrichshain district, a two-room apartment of 77 sq. m, located on the second floor of an old building built in 1898 and needing major renovation, is offered for €25,000. At the same time, a two-room apartment with two bathrooms of 63 sq. m in the center of Berlin on the fifth floor of a building near the popular Alexanderplatz will cost €206,000. You can also find a middle option – a three-room apartment with a living area of 71.21 sq. m on the first floor of a five-story brick building built in 1960 in the Wilmersdorf district for €85,000.
In Berlin you can also buy a standalone house. The average price per square meter is €1,500–3,500, and for luxury mansions – from €5,000. The most expensive are turnkey new builds. In the green zone (within reach of the S-Bahn), an average house will cost €200,000, and in eastern Berlin – €180,000. For example, a villa with an area of 1,500 sq m in the quiet green suburb of Köpenick is offered at €520,000, and a two-story house in a prestigious district of Berlin with a living area of 417.78 sq m and a plot of 1,566 sq m, with a large swimming pool, for €1,020,000.
Within the city limits there are two groups of lakes (Tegeler See, Wannsee, Schlachtensee, Grunewaldsee, Großer Müggelsee, etc.), where elite, very expensive houses costing up to several million euros are located. Luxury lovers will be interested in a palace-like villa in neoclassical style, a 20-minute drive from central Berlin, on Lake Zeddinsee, with an area of 717 sq m and a plot of 5,000 sq m, built in 2000. The villa is equipped with a modern security system, interior features marble and granite floors, panels of valuable wood species, ceiling height of 6.5 m. An additional bonus is a garage for four cars. Such a villa is offered for €3,200,000.
There are not many buyers from former Soviet countries in the German capital, although according to recent statistics, over 200,000 Russian speakers live in Berlin. The most favored districts among Russian-speaking residents are Charlottenburg, Wilmersdorf, Zehlendorf, Pankow, and Köpenick.
Germany's laws regarding the purchase of housing by foreigners (including those from non-EU countries) are quite liberal. Foreigners can buy any property, including architectural monuments. The purchase process is broken down into standard stages: property search, purchase negotiations, notarized signing of a land or property purchase contract, registration of ownership transfer in the Land Register. Practically, the investor only needs to come to Berlin a couple of times: for the final selection and inspection of the property and for signing the notarial deeds; other processes can be done remotely. The entire procedure, including entering data into the state property register, takes two to three months.
After final selection of the property and deciding to purchase it, a purchase agreement is drawn up, which specifies, among other things, the terms and form of payment. Its preparation and signing take place at a German notary, who handles the entire transaction from start to finish: verifies the seller's ownership rights, prepares all necessary documents, including financial settlements, obtains all necessary certificates and permits, and enters the buyer's ownership right in the Land Register.
After the purchase agreement is signed by both parties, the notary opens a special notarial account for this transaction. Upon signing the agreement, the buyer pays a deposit (on average 10% of the property price). If the buyer changes their mind, the deposit is not refunded. The remaining amount must be transferred to the account within 28 days. After the full amount is deposited, the notary sends the documents to the land registry office. Only after the buyer's ownership right is entered in the Land Register is the notary entitled to transfer the money from the said special account to the seller. Because the financial transactions go through an account controlled by the notary, and the seller receives their money only after the buyer has acquired ownership, fraud in real estate transactions is practically eliminated (or, so to speak, minimized).
As for the seller's liability for the absence of any defects in the sold property, under the German Civil Code (BGB), the sale of old houses or apartments fundamentally differs from the sale of new builds. The seller of such property gives no guarantee regarding its 'flawlessness'. This means that the buyer must themselves carefully inspect and examine the property they intend to purchase. In particular, those intending to buy an apartment are advised, among other things, to read the minutes of annual meetings of the building's owners to be informed about its condition. In the inspection and handover protocol (Übergabeprotokoll), signed by both parties, the presence or absence of defects is recorded. For buyers of new builds, the situation in this regard is more favorable: under current legal norms, the seller of a new build or a house still under construction is obliged to provide a five-year warranty on the building.
What are the costs when buying? Total transaction costs are approximately 10% of the property value. Brokerage fees (commission of the agency or broker) usually amount to 3–7%; notary and registration costs – 1–2% of the property value; a one-time purchase tax – 3.5% of the property's cadastral value (the amount fixed in the notarized sales contract). The difference between market and cadastral value is usually 20–40%. That is, the tax can be paid on a smaller amount. However, experts advise: if the property is acquired for investment purposes, it is better to state the market price in the contract and pay tax on that.
Housing maintenance costs depend primarily on how modern the engineering systems are. Germans are known for their thrift, so many in-house engineering systems are designed with this in mind. If a property is more economical to operate, it is necessarily more expensive. Particularly thrifty owners even receive state benefits for utility payments and taxes.
Do you want to earn income from your property? Then you should consider renting it out. Since in Germany most of the population does not own their own housing but rents it, the rental market in the country is very well developed. Every owner has the right to rent out their property, and foreign owners do so as well. The real estate firm or broker through whom the property was purchased will facilitate its rental. The yield averages between 8% and 15% per annum. The average rental rate in Berlin is €4.50 per sq m, in new buildings – €8 per sq m (for comparison: in London – about €20 per sq m). Renting two- or three-room apartments in old buildings in prestigious areas of Berlin will cost €300-700 per month. In non-prestigious areas, you can rent an apartment for almost half as much. By the way, in rental contracts, some utility costs are often listed as a separate line item and are paid separately by the tenant.
Owning property in Germany, unfortunately, does not grant the right to obtain permanent residency. Compatriots who have bought housing in Germany can apply for a standard tourist visa. Those who have business ties with the country can apply for a business visa (in this case, the permitted period of stay in Germany is six months a year, and sometimes more). However, property ownership is still a strong argument for the authorities when considering an application for a residence permit, as it proves the applicant's financial solvency. And if their activity also benefits Germany (for example, creates jobs), that only helps the case.
The relative cheapness of housing in Berlin is clearly a temporary situation. Its value grows by an average of 3% per year, and the return on investments in this sector is estimated at 5-6% per annum. In 2006, such investments yielded 15% profit, while prices rose by 2-3%. However, according to forecasts by the Eduard-Pestel Institute, prices will quadruple by 2030.
And one more interesting fact. Last year, more than 32,000 transactions were concluded on the Berlin real estate market with a total value of €14.83 billion – an absolute city record. Moreover, every fourth investor was a foreigner.