I spent a week in beautiful Berlin at the end of September to meet with developer partners and colleagues, a week which coincided with the Berlin marathon; a superbly organised event that was blessed with fine weather and outstanding support.
It made me think about the opportunity that the city offers for buyers that are keen to invest in this undervalued global destination and how real estate investment shouldn’t be about short-term gains, but a more considered long-term strategy.
To participate in a marathon takes time, dedication, training, commitment, strategy and sacrifice, but as anyone who has ever completed a marathon can tell you, it also delivers incredible rewards.
Real estate investment is just the same.
Speculative investors – the sprinters – are disruptive, short-termist, seeking immediate gains against a backdrop of rapid growth, fueling volatility. Whilst all investment is arguably speculative, the ‘flippers’, the off-the-plan early exit investors, fuel the wrong kind of growth. Berlin is not the market for them.
Yes, it has enjoyed average appreciation of over 10% p.a. for the last three years alongside average rental growth of over 6% p.a. in the same time period, but whether or not that level of growth will be sustained cannot be guaranteed.
What is guaranteed is that this stunning tier-one city, trading at tier-three prices (you could buy a new-build property here from as little as US$120,000) is ready to reveal its true potential to the world, in the same way it did to the global field of athletes that took part.
World-class architecture, beautiful parks, clean air (the city boasts the lowest number of cars per capita of any major European city) and open spaces greeted the runners and the supporters, taking in sights from the Tiergarten park to Brandenburg Gate, across the river Spree and through Mitte. It is one of the most popular courses on the marathon circuit.
Sprinters are a rarer breed. We watch in awe as Usain Bolt flashes across our screens and there is no denying his talent, but the sprinting game is for the minority. The thing with marathons is that with a little time, careful planning, dedication, and preparation, anyone can take part, and that is representative of the city of Berlin itself – it is a world city for everyone to enjoy.
I appreciate that investors don’t always want to wait years, let alone decades, for their investments to deliver, and in Berlin, on its current trajectory they won’t have to; for what final point completes the correlation between Berlin and the marathon? It is also the fastest marathon in the world.