HousingMarketReport. Berlin: Living Space Becoming Scarcer

Transcription

1 HousingMarketReport Berin s housing market is experiencing a turnaround but the prospects for individua city districts differ greaty. That s the concusion of the first Berin housing market anaysis compied by the city s eading private housing company, GSW, together with the consuting firm Jones Lang LaSae. In future, the GSW WohnmarktReport wi be pubished twice a year. Good prospects for the market in the German capita: The period of ow prices is over. Berin: Living Space Becoming Scarcer Where are prices and rents for residentia property in Berin headed? This question doesn t ust affect renters and property owners in the German capita, but aso investors from a over the word who have bought into the Berin market. In their first oint market report, GSW and Jones Lang LaSae have an optimistic prognosis: For most housing, returns and vaues are increasing. Berin s housing market has reached a turning point, said Thomas Zinnöcker, chairman of the GSW board of managers. Prices and rents are rising again in some ocations and in certain types of buidings after years of decine. In other sectors, they are maintaining their eve. That s the core message of the first GSW housing market report with information on prices and trends for a 12 Berin districts, compied with the consuting firm Jones Lang LaSae. The reasons for this reversa on the housing market are the economic recovery, and structura changes in the housing sector. In 2006, after five years stagnation and decine, Berin s economy grew by 1.5 per cent; simiar growth is expected for This wi aso ead to improvements on the abour market. The number of empoyed peope rose by 1.3 per cent in 2006; a bigger increase than in any other state except Hamburg. In tota in Germany, it rose by 0.7 per cent. Unempoyment dropped from 18.6 per cent at the end of 2005 to 16.0 per cent at the end of By the end of 2007, the Investitionsbank Berin is expecting a fa to 15 per cent, or 30,000 more peope empoyed. More househods more demand Higher incomes and more obs are stimuating the housing market though in some parts with an initia deay. Demand for housing in Berin is growing due to the rise in the number of inhabitants and househods. Berin has seen positive popuation deveopment since The food of peope eaving the city for outying parts of Brandenburg after German reunification in the 90s has stopped. The popuation rose from miion in 2000 to miion at the end of More peope are moving to Berin than eaving it. For the coming year, the German Institute for Popuation Research predicts the popuation wi continue to rise sighty (in tota +34,000 from 2003 to 2015). But what is even more important for the demand for housing is the constant increase in the number of househods, said Zinnöcker. The main cause for this is the rising number of oder peope iving aone. But among under- 65s, there s aso a continuing trend towards one- and two-person househods. The average househod size is shrinking, from ust under 1.8 peope today to around 1.6 peope in In numerica terms, this aone means additiona demand of around 235,000 fats. The BBU (Association of Housing Companies in Berin and Brandenburg) expects a simiar figure: From 2003 to 2015, they expect an additiona The vacancy gap is cosing 222,000 househods, or an average of 18,500 a year. Whie the demand for housing is rising, suppy is faing. No statistics are kept on how many fats are knocked down, converted or combined and thus disappear from the market. A rue of thumb for the housing business is that the existing stock is reduced in this way by about 1 per cent a year. This percentage rate has not been proven empiricay, but can be used for a mode cacuation that, for Berin, equas ust under 18,800 fats a year. Of this number, it s cacuated that more than 15,000 fats are not repaced, as ony 3,367 fats were buit in new deveopments in _WohnmarktReport_Berin_March 2007

2 GSW: Foremost in Berin Owning and managing around 70,000 homes, GSW is the foremost private housing company in Berin. It was founded in 1924 and, in a privatisation move, transferred by the state of Berin to an internationa consortium in Since then, the company has been meeting the chaenges of the dynamicay changing rea estate sector. The GSW provides tenants and buyers with attractive housing in carefuy deveoped surroundings under good conditions. News from GSW 1,300 Fats Purchased Over the ast 12 months, the GSW has bought more than 1,300 fats in numerous ocations in Berin. The transactions took pace in severa package deas and From January to October 2006, buiding permits were granted for ust 2,464 fats. No sharp rise in new deveopments is expected in the coming years: The government has axed neary a subsidies and tax concessions, and rents and prices are sti so ow that privatey financed investment in new deveopments is ony rarey worthwhie. encompass a tota of 89,000 square metres of renta space. The investment voume of the transactions came to over 50 miion euros. The most recent purchase in December 2006 was a portfoio of 333 fats and 21,000 square metres of renta space in Friedenau, Stegitz, Mariendorf, Tempehof, Kreuzberg,, Tiergarten and Wedding. The net rent excuding service costs from the fats, which mainy date from the 1950s, is 4.42 euros per square metre per month, whie the occupancy rate is around 88 per cent. A the property purchases from the ast 12 months show potentia for a growth in vaue, said Thomas Zinnöcker, chairman of the managing board at GSW. We wi make use of this potentia in the coming months by investing in these assets and improving the occupancy situation. During the current business year, he is aso panning to make additiona purchases for GSW s own portfoio. Drop in vacancies Based on the net decrease in housing and the simutaneous growth in the number of househods, the head of GSW, Thomas Zinnöcker, concudes that the gap between suppy and demand is cosing. Taking into account the assumptions in the mode cacuation, then the yeary reduction in housing stock of around 15,000 fats pus the simutaneous average increase of 18,500 demand reevant househods a year means that, each year, an additiona 33,500 fats are required. Even though this figure has not been verified empiricay, a marked decrease in the currenty high eve of housing vacancies in Berin can sti be expected. According to an anaysis by the Berin Senate for Urban Deveopment, in 2005, around 152,000 fats stood empty. The mode cacuation assumes that more than one fifth of these wi be absorbed every year. In practice, however, these vacancies are unikey to be absorbed within this time period. Fats are aways vacant due to renovations, or because the prices and rents demanded are too high. Due to the scarcity and expense of iving space, it can be that more than one househod ive together in one fat. And ast but not east, it s expected that the buiding of new fats wi pick up in the ong term. However, price increases are to be expected in many segments of the Berin housing market in the years to come. Up unti now, rent eves for housing and purchase prices for owner-occupied fats in Berin have been we beow those of other big metropoises. This is particuary true of mid-range and basic quaity housing. According to the 2007 Pötz German property guide, out of the 10 Berin Barometer Buit-up space 9 Water Forest/park Charottenburg-Wimersdorf Marzahn-Heersdorf Neukön Stegitz-Zehendorf Tempehof-Schöneberg Berin tota Residents 315, , , , , , , , , , , , Number of fats 190, , , , , , , , , , , , Vacancy rate in % Charottenburg-Wimersdorf Marzahn-Heersdorf Neukön Stegitz-Zehendorf Tempehof-Schöneberg Berin average 1) Arrivas minus departures 2001 to 2004, 2) average income Migration baance 1) Income 2) in euros/month Unempoyment rate in % 3,057 4,700 2,900 12,271 1, ,742 3,561 5,091 5, ,739 21,315 1,575 1,175 1,475 1,550 1,350 1,325 1,450 1,725 1,550 1,775 1,550 1,625 1, Source: Statistisches Landesamt Berin May 2006, Senat für Stadtentwickung, Bundesagentur für Arbeit, as of: 2005 and 2007 _WohnmarktReport_Berin_March 2007

3 argest cities, Berin comes seventh in terms of prices for mid-range and basic owner-occupied fats; ony Bremen and the Ruhr centres of Dortmund and Essen rank ower. In terms of mid-quaity rented housing, Berin is in the same position. In the owest segment, the city comes ast among Germany s 10 argest cities due to its arge number of unrenovated oder buidings. On the foowing pages, the differentiated anaysis compied by GSW and Jones Lang LaSae, which is based on a wide range of data sources, shows how rents and prices in Berin s 12 districts are deveoping today, and how they are ikey to deveop in the years to come. Jones Lang LaSae: Wordwide Consutant Jones Lang LaSae (JLL) is one of the word eaders among rea estate agents and consutants, offering strategic, mutidiscipinary services and probem-soving for those who own, use and invest in commercia property. The company operates in more than 450 cities in over 50 countries. It provides owners and users of property, as we as investors, with comprehensive, integrated expertise in property and investment management. More than 440 empoyees work at JLL s German offices in Berin, Düssedorf, Frankfurt, Hamburg, Munich and Wiesbaden. One of the fundamenta aspects of JLL s business and services is a detaied knowedge of the market. The company works in co-operation with more than 150 researchers a over the word, who keep track of nationa and regiona deveopments and property markets in 36 countries. With the hep of extensive databases, JLL provides detaied market anayses and forecasts, as we as personaised consuting for investors, owners and users. Rents: Partia Rise At first sight, the Berin property market for rented housing appears pessimistic, GSW head Thomas Zinnöcker admits. In most districts, and for the whoe city on average, rents are sti faing. But the situation merits a coser ook, says Zinnöcker. Some districts are moving towards a rise in rents; the first ones have aready got that far, he said. According to the anaysis by GSW and Jones Lang LaSae, this deveopment on the housing market has advanced furthest on the outskirts of the city and in midde-cass districts. and Charottenburg are out in front, foowed by and Stegitz- Zehendorf. At the other end of the spectrum are centra and eastern districts with a high proportion of basic oder buidings:,, and Neukön. Mixed-structure districts on the city outskirts such as, and Marzahn-Heersdorf (ots of prefabricated concrete buidings, but aso newer city vias and detached houses) come somewhere in between. One main reason for and Treptow- Köpenick s position at the top is the constant popuation infux over the past few years (see tabe). These infuxes were even higher in Stegitz-Zehendorf and, but in these districts, they affected the home ownership market more and had ess of an effect on rented housing. In districts where rents are faing, there is not such a cear-cut reationship with popuation changes; here, activity on the market was (and sti is) mainy formed by socia deveopments. Nonetheess, a Berin districts are near six o cock on the property cock the point where years of rent decreases swing round Oder buidings on the up traders woud speak of a bu market. News from Jones Lang LaSae New Investment Record With a tota transaction voume of some 242 biion euros, direct investment in European rea estate reached a record eve in Jones Lang LaSae reported on this deveopment in its atest issue of the European Capita Markets Buetin. The investment figure equas an increase of 39 per cent or 68 biion euros compared with 2005 investment eves. In particuar, cross-border transactions rose sharpy. With a voume of around 150 biion euros, they accounted for about two thirds of the tota investment voume in Mixed Picture Renta price range 2006 in euros/m 2 /month Charottenburg-Wimersdorf Marzahn-Heersdorf Neukön Stegitz-Zehendorf Tempehof-Schöneberg Berin Average Source: GSW, Jones Lang LaSae Average rent Trend 2007 k 3_WohnmarktReport_Berin_March 2007

4 Property Cock: Fats for Rent 1. Quarter 2007 This diagram shows where, according to Jones Lang LaSae s assessment, the housing markets are positioned within their rent price cyce at the beginning of January The oca markets can move around the cock in different directions and at different speeds. The cock is a convenient method of comparing the reative positions of individua city districts in their renta cyces. Charottenburg- Wimersdorf Renta growth sowing Renta growth acceerating Tempehof-Schöneberg Rents faing Rents bottoming out Friedrichshain- Kreuzberg Neukön Marzahn-Heersdorf Berin tota Stegitz-Zehendorf Source: Jones Lang LaSae A Cock for the Housing Property Market The position of a property market in its deveopment cyce can be represented on the property cock. This symboic cock was first used by Jones Lang LaSae to provide an overview of various markets around the word. The cock is based on the fact that property markets deveop in a cycica manner. On the hees of very high property prices foows an acceerated decine in vaues (oversuppy, on the cock between 12:00 and 3:00) that eventuay sows down as it approaches the owest point (market correction, 3:00-6:00). After bottoming out, prices begin to cimb again with increasing speed (market stabiisation, 6:00-9:00), sowing down as they approach the highest price eve (expansion, 9:00-12:00). and become rent increases. In the most critica districts, this coud take some time, but in top districts, a momentum has set in which shoud bring about an upswing in rents, says Andrew Groom, head of Vauation Advisory for Jones Lang LaSae Germany. Rents are gaining momentum This coincides with the atest anaysis from the BBU (Association of Housing Companies in Berin and Brandenburg) for the years 2003 to It doesn t differentiate trends according to ocation, rather buiding age. In the case of oder buidings, it aready detected a rise in rents for the years 2003 to This first affected arge homes in good ocations near the centre; now, rent eves in oder buidings are rising because of continued modernisation. Today there are sti about 150,000 homes without centra heating, a bathroom and/or indoor toiet. On the other hand, the BBU diagnosed rent stagnation in the case of post-war homes, many of which are sma in size and ony moderatey comfortabe. For this segment, the German Property Association (Immobiienverband Deutschand, IVD) even detected a further drop in prices in its 2006 market anaysis. As ong as these homes have not been recenty renovated, the renta turnaround is ikey to set in ater here than in other segments. Reports on housing from the interwar years are currenty a ambiguous. On the one hand, it s often vaued for its good city ocations, the functiona ayouts, and the frequenty high amount of green spaces in the immediate vicinity. On the other hand, such fats sti need to be modernised, and often have either sma rooms or a sma number of rooms (bedsits and one-bedroom fats). The renta trend depends on the conditions in each neighbourhood. There is a recognisabe connection between the current renta trend and the vacancy rate. The atter is owest in midde-cass western Oder buidings situated near green space can be attractive if the infrastructure is favourabe The cycica deveopment of property markets is argey expained by the sow reaction times to changes in demand. For this reason, increases in the suppy of new space typicay are strongest during the oversuppy phase. Construction of additiona space is weaker in the phase of market correction, and can in extreme cases even be negative in phases when rent prices are rising. Buidings that were panned in reaction to higher prices in the expansion phase are ony finished once the market has areadey moved on to the next phase. Rea estate that is panned, or, as the case may be, deiberatey not panned, during a phase of ow property prices, are finished during a phase of higher demand and are not aways abe to meet that demand. This situation in turn eads to price increases and, as a consequence of this, renewed construction of a surpus of suppy. Movements on the property cock can go forwards, but aso backwards. districts and highest in centra neighbourhoods with a ot of unrenovated oder buidings and those with prefabricated concrete buidings. The reduction in vacancies aso eads indirecty to rent rises. Landords in the neighbourhoods which are aready in high demand today shoud profit from this the most in the years to come. But there is aso vaue increase potentia in average and basic ocations, especiay for buyers who are abe to purchase residentia property at a cear price advantage due to partia vacancy, and who are then prepared to activey work on improving the tenancy situation something that promises to be successfu. 4_WohnmarktReport_Berin_March 2007

5 Purchase Prices: Optimism Among Buyers The average purchase prices for housing in different districts of Berin are poes apart. They are highest in the midde-cass districts in the west and southwest, and owest in neighbourhoods around the city centre with a high share of ow-end oder buidings and sometimes difficut socia structures. s on the outskirts of the city, which often have a very heterogeneous range of housing, are in the midde. The upswing has aready ceary made more progress in the prices of property for sae than in rents. According to Jones Lang LaSae s Berin property cock, in eight of the 12 districts, as we as the Berin average, prices are Upwards Trend Saes price range 2006 in euros/m 2 /month Charottenburg-Wimersdorf Marzahn-Heersdorf Neukön Stegitz-Zehendorf Tempehof-Schöneberg Berin average Source: GSW, Jones Lang LaSae 500 Property Cock: Fats for Sae 1. Quarter 2007 aready rising again; ony in four districts are they sti faing. One of the main reasons for the ead hed by the property-buyers market is that expectations of future deveopments are aready having an effect on the prices and these expectations are generay positive. The rents which can currenty be fetched, on the other hand, are not affected as heaviy by future prospects, but more by the current state of the market. Anyone who wants to purchase housing in mid-range and better ocations shoud do so soon, said GSW Director Thomas Zinnöcker. They wi probaby never again get it at today s prices. That appies to private investors as we as owner-occupiers. Prises are aready rising 1,000 1,500 2,000 1,500 2, , , , ,200 1,500 1,300 1,800 1,500 1,900 1,100 1, ,000 1,000 1,400 Average saes price 1, , , ,350 1,550 1,700 1, ,200 Trend 2007 The positive expectations on the Berin property-owning market can be expained by the foowing factors: a ow price eve compared with other German cities, and even more so with maor European cities attractive economic deveopment rising demand accompanied by faing suppy (see p.1) very ow rate of ownership (see p. 6). The extent to which purchase prices are connected to future expectations is aso shown by an anaysis of returns on rent. These are the owest in the midde-cass city quarters in the west and southwest, as we as in Berin-. Here, buyers often accept a reativey ow rate of return of beow 6 per cent, as they definitey expect to be abe to rent space out and anticipate an especiay high potentia rise in rents. The individua districts wi probaby ony change their positions on the Jones Lang LaSae market cock sowy. The four western districts of the city, where prices are currenty rising the fastest, shoud remain the favourite purchase regions in future, too for users, due to their iving quaity, and for investors, due to their potentia growth in vaue. The districts of, Tempehof-Schöneberg, and, with some attractive neighbourhoods, may catch up. They are to some extent more attractive for owners and andords than Friedrichshain- Kreuzberg and, which for that reason coud fa back on the cock in terms of price deveopment. Neukön, with its socia issues and probems with its buiding structure and image, is ikey to retain its position at the bottom of the tabe and at first experience further fas in rents. The diagram shows where, according to Jones Lang LaSae s assessment, the housing markets are positioned within their purchase price cyce at the beginning of January The cock aows for comparison of the positions of individua districts in their own cyce. The positions are not necessariy representative for the investment market as they reate excusivey to the average purchase price. Stegitz- Zehendorf Charottenburg- Wimersdorf Berin tota Saes price growth sowing Saes price growth acceerating Saes price faing Saes price bottoming out Marzahn-Heersdorf Friedrichshain- Kreuzberg Neukön Tempehof-Schöneberg Source: Jones Lang LaSae MASTHEAD GSW Berin mbh Kochstr Berin Germany Te. +49 (0) 30/ Fax +49 (0) 30/ Thomas Rücker, Head of Corporate Deveopment and Communications thomas.ruecker@gsw.de (aso for downoad of housing market report) 5_WohnmarktReport_Berin_March 2007

6 Forever a City of Tenants? Generous, styish fats in oder buidings are an aternative to a suburban house of one s own Berin doesn t have that many residentia property owners but that is changing due to privatisations. At ony around 13 per cent, Berin has the owest rate of owner-occupiers in a of Germany s federa states. For the country as a whoe, the rate is 40 per cent; in the cities of former West Germany it is aso higher than in Berin (see tabe 1). Berin s ow rate of property ownership has both historica and structura reasons: since the mid-19th century, homes in the city have been buit cose together and in Berin Lagging Behind Freehod quotas in German cities in % Bremen Stuttgart Coogne Hanover Hamburg Essen Düssedorf Frankfurt Berin Source: GSW, Jones Lang LaSae arge units. Around 90 per cent of a fats are in muti-storey buidings. From 1939 to 1990 hardy any fats for private ownership were buit or purchased; in West Berin the housing market was dominated by subsidised muti-storey buidings (socia housing, depreciation modes). In the city as a whoe, unti 1998 buiding renta housing was favoured over property ownership, due to high tax rebates. Since 1990, economic conditions have been probematic. The unempoyment rate is far above the nationa average. The range of potentia buyers is smaer, for exampe middecass entrepreneurs and higher-eve empoyees in private companies. A mentaity of dependence was and sti is widespread; it is ony recenty that individua housing, insurance and savings pans have started to become more commonpace. Deveopments since the fa of the Wa show that many peope are interested in acquiring private property. In 1990, the ownership rate was ony around 10 per cent; since then the number of househods in their own four was has risen by about 40,000. At the same time, more than 100,000 househods moved out of the city into the surrounding area of Brandenburg. A arge proportion of them acquired their own housing in green, inexpensive areas. But there s aso suitabe property for private ownership in the city. For midde-cass famiies, an attractive aternative to owning a house is buying a styish fat in an oder buiding situated in an attractive neighbourhood and thus we serviced with infrastructure, meaning that even high-income househods often do not own a car. Other attractive housing is in the form of smaer units from the pre- and post-war period. Such housing is, however, often a high in need of modernisation and conversion. The sizes of the fats are aso often we suited to privatisation not ony in oder buidings. As many muti-storey bocks of fats were buit to suit the needs of famiies in the past, today there is a ot of accommodation with higher numbers of rooms. The average iving space per inhabitant in Berin, at about 39 square metres, is above that in the cities of Hamburg, Frankfurt, Stuttgart and Coogne, but sighty beow that of Munich and Düssedorf. The privatisation of fats that were formery for rent ony began in West Berin when the city was sti divided. In those days, however, the business was dominated by soe proprietors who did not aways act in a sociay conscious manner. Tenants often fet under pressure and Urban iving for middecass famiies those who bought fats frequenty fet cheated afterwards, for exampe because of unfavourabe partition deeds. But for a ong time now, privatisation has been conducted in a more professiona and reputabe way, in part thanks to protective reguations for tenants in cases of conversion. At companies such as the GSW, housing stocks schedued for privatisation are carefuy seected according to their suitabiity in terms of structure, space and socia aspects. The residents are thoroughy informed about aternatives to buying and the company s privatisation code. This systematic approach requires a high eve of staffing but it not ony enabes privatisation processes to take pace consideraby faster, it aso raises returns. As a rue, the individua privatisation of housing is not ony attractive for the property company seing it, but aso for the buyer. Peope who had previousy been tenants get a discount price, gain more security and freedom of choice, and make asting savings on rent. Other buyers accumuate assets and provide for their retirement. More and more peope are recognising these advantages, which is why privatisation is ikey to remain a ivey market segment, with the effect that the ownership rate in Berin wi continue to rise. Eventuay, even centra districts paces where the rate has so far been the owest due to the ack of houses designed for one famiy wi catch up with ocations further outside the city centre, giving Berin a more urban property ownership andscape. Saes on the City s Edge Proportion of freehod fats in % Stegitz-Zehendorf Marzahn-Heersdorf Tempehof-Schöneberg Neukön Charottenburg-Wimersdorf Berin average Source: GSW, Jones Lang LaSae _WohnmarktReport_Berin_March 2007

7 Quaity of ife: A bar on the banks of the Spree near the trendy media district of Osthafen Underrated Cinderea On one hand, is right at the bottom in Berin in terms of income, the socia structure and the property market. On the other hand, it has great potentia for deveopment and high returns. Opinions are spit among investors and homebuyers about Berin s smaest district in terms of area. Some avoid this neighbourhood, where the average income is the owest and the unempoyment rate the highest. Others make a point of coming here because of its vicinity to the city centre, the ivey way of ife, the exciting deveopment proects underway, and the ow prices for first-time buyers. has, on average, the youngest, most mobie inhabitants in Berin. The district itsef is aso young; it has ony existed in this undivided form since 2001, but its two haves share a common history. Most of its buidings and neighbourhoods were buit in the period of rapid expansion and industriaisation from 1840 to Then, the city was bursting out of its od borders and creating mass accommodation for workers, ow-eve empoyees and civi servants. Kreuzberg to the south and Friedrichshain to the east of the centre, were characterised by tenement housing and narrow courtyards. Athough it s been thinned out a ot, the buiding and popuation density is sti the highest in Berin. During the war, some streets and bocks of houses were competey destroyed, but some arge neighbourhoods remained amost unchanged. The Spree, which fows between the two neighbourhoods, became the border here after At that time, the most striking buiding proect in Friedrichshain was the 2.2-kiometre ong Kar-Marx-Aee in the Stainist wedding-cake stye. Nearby, arge prefabricated concrete buidings sprang up, eading towards Aexanderpatz. Graduay Sma and Livey Size in km 2 Residents 1) Popuation density/km 2 Average rent Average saes price Average return Fuctuation 2) Average age Share of singe househods Foreigners in Friedrh. Foreigners in Kreuzbg. Friedrichsh.- Kreuzberg ,000 13,065 1) Rounded 2) Number of househods that move yeary % 13.4 % 37 years 65.2 % ca. 9.0 % ca. 33 % Berin tota ,340,000 3,745 Source: Statist. Landesamt, Senat für Stadtentwickung, Jones Lang LaSae , % 9.5 % 42 years 51.0 % 12.3 % 12.3 % the historica neighbourhoods in the east of Friedrichshain fe into disrepair; in 1989, some buidings remained unchanged from when they were buit. Kreuzberg, which had previousy been centra, was now in a periphera ocation in West Berin due to the city s division and the buiding of the Wa. The north-western area around the Anhater Bahnhof station, Haesches Tor and Ritterstraße was especiay bady damaged and ony rebuit sowy and irreguary. First, areas were buit with bocks of rented fats in a suburban stye and penty of green spaces; ater, high-rises appeared, and then post-modern buidings. Among the prominent office buidings in the north of the district are the headquarters of the Axe Springer pubishing house and of the GSW. Of the arge, estabished areas eft untouched by the war, the southwest area near Viktoriapark and Chamissopatz remained reativey respectabe. The ocation and surroundings were very attractive; when they were restored, the quaity of the pre-war buidings was preserved. On the other hand, in the eastern part of Kreuzberg, around Kottbusser Tor and the od Göritzer Bahnhof, whoe bocks of streets were torn down; others were eft to deteriorate in anticipation of a city motorway which was never buit. It was not unti 1980 that there 7_WohnmarktReport_Berin_March 2007

8 was a swing towards carefu urban renewa. After the fa of the Wa and German reunification, city renovation continued in Kreuzberg; in Friedrichshain it began in earnest. Today, ony three redeveopment areas sti remain: Warschauer Straße, in the Samariter district and at Travepatz/Ostkreuz. The ovingy restored Oberbaumbrücke has become a oca andmark The northern bank of the Spree is gaining a momentum of its own. Here, media and trendsetting companies such as Universa Music and MTV are setting in, and they re bringing smaer creative companies aong with them. At the moment, O2 Word, Berin s argest events arena is being buit, reinforcing the neighbourhood s character as a site for entertainment. There have aso been big changes in other parts of Friedrichshain: Kar-Marx-Aee, which had faen into disrepair unti 1990, has been turned into a carefuy renovated bouevard marked for historica preservation. Not far away, one of the iveiest bar scenes in Berin has deveoped on Simon-Dach-Straße. In the south-eastern corner of the district, attractive residentia buidings have been buit by the water on the Straau peninsua, athough this area suffers from a ack of vitaity on the market and its isoated ocation. Whereas Friedrichshain was a typica workers district unti the poitica reunification of Germany in 1989/90, today it is characterised in paces by an aternative, modern way of ife. Its proximity to the city centre, cheap housing, creative companies and cose-knit infrastructure make the district attractive for younger peope. A ot of students are moving into the district. Famiies, however, often eave it because of its cramped space, and its often probematic socia structure. Unempoyment is high, and in Kreuzberg with its arge Turkish popuation, there is a ow proportion of German-speaking schoochidren. Kreuzberg has aso changed in many paces since the fa of the Wa. The region around Anhater Bahnhof and Kochstraße in the northwest is now part of the city centre once more, athough for the most part, it is not an attractive residentia neighbourhood. Other former border regions have risen in quaity as residentia districts, such as the historicay restored Bethaniendamm. Foowing on from the banks of the Spree in Friedrichshain, the other side of the river in Kreuzberg has now aso been discovered as a deveopment area with strong potentia. The owest prices the highest returns For investors in the housing market, the opportunities in the area mainy invove purchasing housing stocks which are sti inexpensive and have high potentia for deveopment. Important for investment is that the buiding has been kept in good condition and the surroundings are reativey attractive, with good infrastructure. The district has by far the highest proportion of singe-person househods in Berin, at over 65 per cent. For this reason, as we as the ow average income, sma fats can be marketed here more easiy than esewhere. Due to the high proportion of sma fats, the average rents are aso ony sighty beow the eve for the city as a whoe. However, as the purchase rate is ow and the district s image sometimes puts potentia buyers off, the district has by far the owest purchase prices. In combination with the ow rents, this means exceptionay high returns this is the ony one of Berin s districts at a two-figure eve. Vokspark Friedrichshain Kar-Marx-Aee Berin- Checkpoint Charie Ostbahnhof Spree Warschauer Str. Friedrichshain Oranienstr. Anhater Bahnhof Kottbusser Tor Skaitzer Str. Universa Music MTV Kreuzberg Straau Viktoriapark Chamissopatz Hasenheide Tempehof Airport 8_WohnmarktReport_Berin_March 2007