Don’t ignore the region around Berlin

Just enter “Oranienburg” into the search box on ImmobilienScout and see how many vacant apartments are listed. You won’t find more than 20 available apartments – and we are talking about a town of more than 42,000 inhabitants here! I bought my first apartment building in Oranienburg this year. Only one apartment was unlet at the time, but not for long. Just a few days after I placed an ad, I had a new tenant and a signed tenancy agreement at a net rent of eight euros per square metre (the previous rent was six euros).

I had never really considered the region around Berlin much beforehand. But the research I did before I bought my property in Oranienburg amazed me: According to a ranking compiled by “Focus Money”, the Oberhavel region is Eastern Germany’s economic powerhouse. The ranking compares the economic performance of regional and local authorities based on seven criteria. The criteria include unemployment figures, GVA (gross value added), per capita disposable incomes, population growth and GDP growth.

Oberhavel has been underestimated for far too long. It is home to worldwide market leaders, such as Orafol, which develops self-adhesive materials. Orafol operates all across the globe – alongside its home European market, the company is active in America, Asia, Australia, and even Africa. Orafol’s headquarters are in Oranienburg. The Japanese pharmaceutical company Takeda, a true global player, also chose to base its German operations in Oranienburg.

And Oranienburg is just one example. It is widely known that Potsdam has become one of Germany’s most attractive real estate markets. It’s been some time since the city’s vacancy rate effectively hit zero. On the subject of Potsdam: It has been pretty much 20 years since I bought my first apartment there – an apartment that has never stood empty for more than a couple of days at a time.

The number of commuters in the area around Berlin just keeps on growing. Fifteen years ago, 180,000 people were making the round trip between Brandenburg and Berlin each working day – now there are 300,000. One in five of Berlin’s employees live outside the city. And there’s no reason why this figure won’t carry on growing. As the supply of housing within Berlin’s city limits dries up, the number of people commuting from outside the city will increase further. As I write this, 22% of the city’s employees commute to jobs in Berlin. The figure for Hamburg is 37% and in Bremen it is even higher – at 42%.

Of course, property prices around Berlin have also gone up. The apartment building I referred to earlier cost me 16.6 times its annual net rental income. That’s not “cheap”. But everyone has their own philosophy: If I have to make a choice between paying 25 times annual net rental income for a well-situated property in Berlin, or getting a 6% yield from a well-maintained, 18-year-old residential complex, then I go for the second option. The bank that helped to finance the deal – admittedly helped by my sizeable cash deposit – obviously