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26.04.2019

Allgemein

Top prices for real estate: Good times for sellers – and buyers

For decades, the old merchant’s rule “profit lies in purchasing” applied unchallenged. Today, however, economists know better: only half the profit lies in purchasing. After all, the best purchase price is of no use if no buyers are found afterwards. Real estate owners don’t have to worry about this, at least not in Berlin and its environs: Demand is booming, there are buyers en masse. That this will remain the case was confirmed at the beginning of the year by the research institute Deutsche Bank Research in its analysis. High economic growth, numerous new jobs in exciting industries of the future and an uninterrupted influx of new Berliners, combined with continued moderate price levels, provide the best prospects for a “super cycle”. “Now it is starting to become apparent that Berlin is not only opening up to West German metropolises, but is well on the way to overtaking them”, writes analyst Jochen Möbert in his study for Deutsche Bank and dares to make a groundbreaking forecast for Berlin: “In the course of this development, Berlin apartments could contribute to Berlin becoming one of the most expensive German and European metropolises – and the city is also developing into one of the most innovative cities in Europe.”

Property owners at an advantage?

What appears to be a one-sided advantage for property owners now also turns out to be an advantage for potential property buyers: they can acquire property today and still have very good prospects of rising prices. The reason: according to the Deutsche Bank analysis, rents will also continue to rise. After all, more and more people are moving to Berlin, more and more people have jobs and they are also earning better salaries. Thus, the real estate sector benefits from the good economic performance – and the city, in turn, from numerous jobs in the construction and real estate sector.

Buy now or wait and see?

Anyone considering a later entry into the real estate market of Berlin and its suburbs in view of the peak prices – in the case of high-quality real estate, 40 times the annual net cold rent is paid, which corresponds to a gross yield of 2.5% – could be punished for hesitating if Deutsche Bank’s forecast comes true. After all, the real estate rally is set to continue. In addition, the purchase is also worthwhile with a gross yield of 2.5 %. After all, banks today charge only a little more than one percent interest, leaving 1.5 % for risk hedging and amortization.

What comes after selling?

The high prices also offer property owners an excellent opportunity to realize their profits – tax-free after 10 years! – and thus turn purely fictitious valuation gains into real money. The sales proceeds can then be used in whole or in part to re-enter the market, for example in locations that promise particularly high returns in the future, or in other market segments. Some can be put aside as collateral – although saving on a savings account will mean a real loss in value in view of inflation – while re-investing the rest in real estate. Those wishing to minimize their risk when re-entering the market can, for example, acquire newly renovated or newly built properties that, thanks to their condition and developer liability, promise years of peace from constructional problems. The strategic distribution of the sales proceeds allows risks to be hedged and opportunities to be optimized. For example, by acquiring a property in a prime downtown location as a safe investment, supplemented by purchasing property in an as yet undiscovered, up-and-coming location. Seen in this light, high selling prices and thus also high purchase prices mean opportunities for both sides. You only have to become aware of them.

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