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Janet Berlin

Companies Selling Property In Berlin, Germany

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We have just realized once again how important it is that foreign investors check out who they are dealing with when wanting to purchase property here in Berlin.

We found an interesting ad in the Irish Independent in the property section on Friday, July 21, 2006 and were very surprised to see property being offered in ex East Berlin where according to the ad, 60 % of the "individual spectacular apartments in mid-town Berlin" were already sold! Now we do know our way around here in Berlin and we thought to ourselves, how unusual. It was even more surprising that they were offering 5,3 % yields and that guaranteed for 10 years. Now this is totally surprising considering the location in Berlin. So we decided to look into this a little closer ourselves and personally went down to their headquarters located here in Berlin and were even more surprised to find that the manager/owner is an Irish fellow himself. After enquiring and asking all sorts of questions we were even more surprised when we were told that 60 % of the apartments were sold - EVEN so they don't exist!!! Yes, you read right. When we asked to have a look at the building papers, guaranteed rental contracts, etc. we were given the answer "oh you'll have to understand it's Friday afternoon and that's impossible to do. Also, you didn't give us any advance notice you were coming, so we are not prepared". The thing is, the Irish guarantor claims that the rent in that area would be Euros 7,- per sqm (he would have to have that to get the 5,3 % yield that he is guaranteeing). Apparently the building was purchased seemingly awfully cheap by them themselves and they want to divide the building up and offer the apartments to Irish (or other foreign) investors and sell with a high profit. The building is in ex East Berlin and is made of pre-cast or pre-fabricated building made with concrete slabs (Plattenbau for those of you who speak a little German - typical cheap material used in the good ol' days of the East!) which has the lousiest reputation of low quality and certainly not long lasting. That is why all those types of buildings are being knocked down in the East! Not only that, the street and location (Lichtenberg) has practically no employment in the area, hardly any shopping facilities, no culture whatsoever. I really don't know! We can only say that every guarantee is only worth what the guarantor is. Whoever choses to believe that the guarantor is willing to pay every purchaser the difference between actual rent and what he is guaranteeing the rent to be - I don't know.

We certainly weren't impressed! Maybe they consider that by paying the booking fee of Euros 5000,- which they request upfront that the apartments are considered sold? I hope the purchasers or potential purchasers do know that they are of course not considered the owners until the full amount is paid and are registered in the land registry. Somehow we cannot see anyone wanting to invest there. As already mentioned, we do know our way around in the Berlin market!!!! Just thought that some of you may be interested.

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