You believe in Berlin’s growth potential and you want to buy a property in Berlin. But you are still hesitating because you do not speak German, or you do not know the real estate market. Berlin is an attractive city in which you will find the property of your dreams. Here are 5 guidelines to help you achieve your goal.
I. Defining your project
In matter of real estate investment, it is important to keep a clear plan in mind. Berlin is an affordable market with many possibilities: you are being spoilt for choice. In a first phase, we recommend to ask yourself following questions.
Are you looking for…
- a local investment in Berlin?
- a capital gain during resale?
- a place to call your own at an affordable price?
- an apartment for you child?
- a property to add to your portfolio?
Depending on your goals, you should focus on a special kind of property. If you wish to make a capital gain, we advise you to buy an apartment in a neighborhood with potential, even if the rental yield is moderate at acquisition.
Real estate is a long-term investment. Many factors should be taken into account to plan the duration of your investment, especially taxes. In Germany, you don’t have to pay capital gain tax if you sell your property 10 years after acquisition. Consequently, we recommend this investment horizon to our customers who wish to make a good capital gain.
Of course, you will have to determine your budget before starting looking for an apartment in Berlin. Also, keep in mind that when purchasing a property you might have to pay a provision or a deposit.*
II. Knowing Berlin’s real estate market
BERLIN’S REAL ESTATE MARKET: FACTS
- 3,000 €/m² on average
- « Kiez » : attractive neighborhood inside the bigger districts
- « Altbau » : historical buildings (<1920)
With an average price of 3,000€/m², Berlin is one of the cheapest metropolises in Europe in matter of real estate. Even if you invest in an apartment in Berlin without moving in, we recommend you to choose a good location to avoid losses or problems during resale. Give priority to Berlin’s central districts located inside the Ring to insure a good capital gain.
Kreuzberg, Friedrichshain, Prenzlauer Berg… these big districts are organized in smaller neighborhoods called “Kiez”. The most attractive “Kiez” are located indifferently in the Western and in the Eastern part of Berlin. The prices may vary a lot from one Kiez to the other, even if they are located in the same big district.
Berlin is not only a new city: about 50% of Berlin’s building are historical and date back to the end of the 19 th century or the beginning of the 20 th century. These buildings are called “Altbau”. Apartments located in an Altbau are a clever investment. Indeed, they are less expensive than newly built apartments and they won’t get out of style.
Come see for yourself. Travel to Berlin to visit the properties you have spotted online. You will be able to discover the neighborhood and more generally what Berlin has to offer. Do not hesitate to get in touch with one of our agents to organize a tailor-made property tour during your next travel. You will be able to see all the properties you are interested in within a few hours.
III. Funding your property
You have defined your goals? Let’s get concrete. If you need some help to fund your property purchase in Berlin, there are different options depending on your country of residence.*
If you wish to take a loan from a German bank, they can fund up to 50% of the property’s value. The loan will be secured by mortgaging the property.
In Germany, there is no obligation to take out an insurance for loans.
Be sure to find a way to fund your property before signing the notarial act: in Germany, there is no suspensive clause in case you fail in getting a loan.
IV. Knowing about German law
Now that you have found your dream property and a funding solution, it is time to learn about German law. Here is what you need to know.*
Buying process in Germany
BUYING A PROPERTY IN GERMANY
- Only one contract signing
- Ownership transfer at Land Registry office
- Closing costs: around 8 %
In Germany, there is only one contract signing in front of an attorney, which makes the process slightly quicker than in other countries. Also, there is no suspensive clause in case the buyer does not have sufficient funds. The transfer of ownership will be executed during registration of the property at the Land Registry office, after the seller has received the payment. The closing costs to buy a property in Berlin amount to about 8% of the price.
Renting your flat
PROPERTY MANAGEMENT FEES IN BERLIN
- Regular monthly cost
- about 30 €/month
If you just made a rental investment and you don’t live in
Berlin, you probably want a property management company to take care of it. This is how it works: monthly fees are fixed in the contract, and they amount to about 30€ per month*. You will also have to open a bank account in Germany to receive the rent payments.
V. Get support from experts
To buy a property in Berlin, you do not only need to speak German. You also have to know the local trends and German law. Cultural codes are also important during a negotiation.
ADEN Immo is at your side to assist you. We have a unique insight into Berlin’s real estate market thanks to many years of experience. Our bilingual brokers support you all along the buying process in your preferred language – French, English, German or Spanish. We are at your disposal if you need any advice or wish to organize a property tour in Berlin.