Once it was the Germans who snapped up property in Kerry, but, now the Irish can do the same in the old East German capital, writes Donal Buckley

Irish property investors are being enticed to play a new role in the unification of Germany. Despite the impression that unification took place overnight, with the collapse of the Berlin Wall, many Berliners in the former communist east have yet to readjust to the property owning culture of the west of their country.

Although in terms of politics, easterners may have switched to conservatives such as Chancellor Angel Merkel and the CDU, in terms of owning their own homes, former East Germans, including many with middle class jobs, have proven much slower to accept Western beliefs about the joys of owning their own homes, not to mention those of other people’s. Currently less than 20pc of Berliners own their own home, with the majority of accommodation stock still in state hands.

Which is where Irish people come in. They are being enticed to buy some of these homes from the Berlin local authorities. No doubt there are many Kerry people who will recognise the irony in this.

Back in the 1960s and 1970s numerous West Germans and their companies were snapping up sites and land in The Kingdom for their holiday homes and hotel developments.

Not that Berlin local authorities are relying on Irish investors alone to spark a property revolution in that city. Also being enticed are Germans, as well, of course, as the equally hungry UK buy-to-let investors. The prospect of prices from around €35,000 and yields of up to 5.8pc look extremely attractive.

However, there are risks to the market, as the company which is specialising in this privatisation process warns. Michael Hahn, joint managing director of Statdtkonzept, points out that because of Berlin’s urban sprawl, within the 12 main districts the property market experiences what are called microspots.

For Dubliners a microspot is almost like the difference between buying in Sherriff St or the IFSC, except in Berlin the difference may not always be as noticeable in terms of the age or the appearance of the buildings, especially when it comes to selecting the keenly priced apartments.

Silke Lorenz, joint managing director of Statdtkonzept, says that this is all the more reason why investors need to be careful to work through a recognised agent such as themselves who also provide a complete turnkey service to both German nationals as well as to overseas buyers.

They specialise in working with the local authorities to bring refurbished apartments which will appeal to family tenants who are likely to care for their homes. Silke Lorenz, points out that Berlin’s Marzahn Hellesrsdorf area is a very good place to invest in these types of apartments because of the area’s proximity to the new Berlin Brandenburg International airport which is expected to generate employment for up to 60,000 people.

Berlin property ireland

Currently apartments in the area are selling for between €980 and €1,030 per sq m or about €70,000 for a 70 sq m unit. Rents average €4.78 per sq m monthly. Buying costs, including stamp duty and legal fees, will add an extra 7pc to the price. In addition the company charges €42 per month to cover common property management as well as individual property management.

The net rent averages €4.80 per sq m. per month which works out at an annual yield of 5.4pc.

Hahn is also upfront about the rent and investment returns. “This is not a get-rich-quick type of investment,” he advises. “It may take up to 10 years for people to achieve a significant capital gain on their investment,” he adds.

To attract landlords Statdtkonzept is selling many of these apartments with sitting tenants with a proven reliable track record and some properties are offered with an optional ten-year rental income guarantee.

As tourism and other investments boost accommodation demand, Berlin rents are expected to rise. This together with the flow of overseas buy-to-let investment, is already encouraging greater interest in home ownership.

For Irish people who remember the red carpets which the IDA used to roll out for German industries here, it seems ironic that their capital is now seeking to attract investment from little old Ireland.

For more information go to: overseashomesearch.co.uk.
Need to know

LEGAL: Germany is the land of paperwork. There is no place in the world that is so complicated for financing and nowhere else is it harder to get financed.

FINANCE: Non-Germans may borrow a maximum of 60pc of the value of the property. Tenants have very secure leases.

PLACES TO AVOID: The East side of Berlin is not be the ideal district for someone seeking a long-term tenant because of its high unemployment and social deprivation. While some of these areas offer prospects of a high return there is also a higher risk involved.

Safer investment is more likely in the North and South of Berlin in districts not affected by the fall of the Wall.

Getting there: Flights to Berlin are available from Belfast, Cork, Dublin and Shannon Airports and the airlines include both Aer Lingus and Ryanair.