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Berlin Property - Yielding 10%

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I might be looking at investing in Berlin or some other German cities. A quick look at the market reveals:

* Prices per sqm are €1000-€1300 compare this to London where it is €5000 or even eastern european cities like prague €1800-€2000 per sqm

* Rental yields are between 9%-12%

* Huge amount of people to rent - 86% in Berlin rents.

* A turn arround in economic performance in Germany.

Has anyone got experience in the German property market and like to share some thoughts?

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German housing prices have been stable to minus for the last 6-7 years. Berlin has been a better bet than most for capital gains but only because it came from behind the other German cities, cost wise.

Rental market is big in Germany but upfront costs for mortagges and other fees are much higher than in the UK. The banks also penalise early repayment of loans.

When we were there we were told that unless you are looking to hold onto a property for 5 years or more do not buy as the fees will kill off any potential capital gain. This has proved to be exactly correct and in fact in the Rhein-Main area house prices have dropped. High unemployment and a huge reduction in expats in major cities has reduced rents in the last 6 years as well.

I would not bet on any quick recovery in the economy until there were more signs, at the moment most people I know are hunkering down and holding onto their jobs if they can.

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And why do you think that is?

This is a combination of facts:

* Generaly germans rent more then us UK people

* East Berlin property was provided by state - this is now rented accomodation largerly bought up by housing corporations / property specalutors / managers

* Bad state of German economie.

But 10% yield is good. House prices are as low as 1975. This might be the bottom of the market here.

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