Berlin is considered the city with the lowest real estate prices in Europe. Even in Moscow or Prague the prices of land and houses are considerably higher than in the German capital.

Despite Germany's low economic growth and high unemployment, foreign investors, above all Americans, Britons, and the Irish have discovered Berlin.

The returns are considerably higher than anywhere else in Europe, and buyers are speculating that an economic upswing will finally hit Berlin.

"Berlin is in demand like never before," real estate sources say.


Changing hands

According to the latest market report, almost 25,000 purchases were registered in Berlin with more than 9 billion euros (11.5 billion dollars) changing hands in 2005.

That's a huge jump from previous years where properties sold amounted to around 18,000 annually. An even greater number is expected in 2007.

A square metre of a redeveloped building in a top location costs around 1,500 euros in Berlin, while in London for example the price would be around 15,000 euros.

"The situation here is like London about 17 years ago, when for example no one would touch the Docklands with a barge pole," said Philipp Tabert from the real estate agency Winters & Hirsch.

Today the Docklands is very popular with office renters, and London the strongest real estate location in Europe.

American interest

In Berlin the boom set in about two years ago when the city's largest residential property firm GSW sold around 65,000 units for 405 million euros to a US investor and its partner.

"Thus it was shown that real estate can be had reasonably here," says Tabert.

As a result, many Austrian investors came. Today the Americans and the British dominate the market, but investment funds also come from Ireland, Italy, France, Spain and Japan. "Investors from Israel have discovered Germany too," Tabert comments.

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