Thanks to Berlin’s combination of a buoyant economy and continuing population growth, there is a strong case for the city as a top residential property investment location. What’s more, when compared to other global property hotspots (Prime central London or New York, for example), the German capital also has affordability firmly in its favor.
For investors expecting to fund their acquisition through mortgage finance, there is further good news: this is a foreigner-friendly market-making accessibility an important item to add to the list of factors in favor of Berlin.
So broadly, what can non-residents expect as they seek to obtain a German mortgage? As you would expect in any mature and well-regulated property market, there is a process of due diligence to go through. It is thorough (always a strong indicator of a stable market), yet also refreshingly logical and transparent. In short: in the right hands, expect a relatively straightforward process.
Here is our step-by-step guide to obtaining a German mortgage for foreigners, explaining the typical process towards securing property finance from a German lender:
The formal application for a German mortgage is made after you have agreed in principle on the purchase of a specific property. However, it is important to thoroughly explore the German mortgage market and rates at an early stage - i.e. when you first start to consider individual properties. This can benefit you in the following ways:
You could scour the market yourself, but with specialist mortgages available to foreign investors, there is a danger of missing out on the best deals. A broker can accelerate the process and make it easier while helping you identify the most appropriate mortgage arrangements for your needs. For this, we would recommend our preferred partner Liquid Expat, who specialize in providing help to overseas investors and have specific expertise in securing German mortgages for foreigners.
Your broker will steer you on what needs to be submitted and when according to the specific requirements of the proposed lender. Standard ID details usually consist of a passport and two-year address history.
On the personal financial side, this is likely to consist of a self-disclosure (Selbstauskunft) questionnaire, and proof of earnings. For self-employed individuals, typical requirements include two years of balance sheets in addition to the previous year’s tax return. You will also need to provide proof (in the form of bank statements) that you have equity to cover the loan deposit.
You will also be asked to provide details of the proposed property such as size, location, and estimated time to completion.
Schufa is Germany’s credit and loan data repository. A Schufa report (a score-based credit assessment) is required by lenders as part of the loan approval process. As an overseas buyer, however, you will almost certainly not have a German credit record. As such, your broker should be well versed in what specific lenders require sight of to show proof of your creditworthiness (usually a report from your home country’s credit reporting agency).
If you are based in a country such as the UAE where there are no credit reporting agencies, a loan statement and bank records may be filed in lieu of a report; again, your broker will point you in the right direction.
Having located your desired investment, you are almost ready to start the purchase process. However, all German property purchases must be handled by a notary, an unbiased individual who will oversee all legal formalities on your behalf.
IP Global’s client services team can introduce you to a recommended Berlin-based notary. German regulations require the buyer to be there in person to witness the exchange of contracts - and although coming to Berlin in person for this is an option, you can also delegate it to a third party through a Power of Attorney (POA). Again, IP Global can recommend a trusted legal representative to appear on your behalf.
Your notary will send you a POA document. You then take this document, along with your mortgage application and other supporting documentation to your local German consulate or embassy to have the signatures notarized (witnessed and verified). You send the original POA to your notary via recorded post.
This happens at the same time or shortly after you return your POA to your notary. Having received it, the broker will check the application and supporting documents and forward it to the lender.
Subsequently, the broker will check that the application has been received safely and that investigations (such as property surveys and credit checks) are progressing appropriately.
This process usually takes a week or two to complete and occurs at generally the same time that your notary conducts due diligence investigations on your behalf concerning the property contract.
Your broker will have already checked to ensure that the investment, the amount of capital required, and your personal financial situation (including the proof you need to back it up) all meet the criteria of the particular lender. If you are in the right hands, these investigations are usually a simple formality.
You now have a firm offer of funds in place from the lender. At about the same time, your notary should come back to you have completed all due diligence investigations. In other words, you have everything you need to reach a legally binding final agreement on the purchase of your desired German investment property.
In several key ways, the German mortgage market mirrors the German property market as a whole: robust, stable, and well-suited to overseas investors.
You can find out more about the process of obtaining a German mortgage, current German mortgage rates, as well as German mortgage interest rates by speaking to our preferred mortgage finance partner Liquid Expat.
For help with identifying prime Berlin property investment opportunities and an expert analyst’s view of the market, please contact us today:enquiry@ipglobal-ltd.com.
Einbecker 47 is a modern residence located in the growing Berlin neighbourhood of Lichtenberg. Positioned close to a number of educational institutions and one of the city’s largest technology hubs, Einbecker 47 sits in the centre of one of Berlin’s most exciting areas.
• 40 unit new-build residence in East Berlin
• Communal garden
• 6-minute walk to Lichtenberg U-Bahn / S-Bahn station
Berlin is a city of distinct neighbourhoods, each one looking vastly different from one another. This is largely due to the history of the city, which has allowed for its areas to grow and develop their own individual cultural identities. Two of these neighborhoods, Mitte and Charlottenburg, are similar in many ways with their long illustrious heritage and prolific tourist sites, but due to their histories have evolved into two distinct areas.
Mitte, meaning ‘the centre’, is just that - the geographic, political and economic centre of Berlin and is the site of the historic core of modern Berlin. Berlin has a long history of commerce and was founded with the union of two separate towns, Old Berlin and Old Cölln, which came together in order to form a trade union and were both located in what is now Mitte. Since this time, Mitte has served as the political and economic centre of the surrounding area. From 1945 to 1990 Mitte was the centre of East Berlin during separation, only to be solidified as the centre of Berlin once again when the city was reunified in 1990.
Due to this long history of politics and commerce, Mitte is filled with many notable areas, including the Brandenburg gate - the former site of the western entrance to pre-18th century Berlin, the Reichstag - the current meeting place of the Germany parliament, and Potsdamer Platz - the new economic centre of Berlin. The area draws many residents due to its proximity to key employment hubs, entertainment districts and services, the area has the largest saturation of professional and leisure businesses of any area of Berlin. As a result, Mitte attracts a diverse crowd of young professionals who take advantage of the areas many parks, athletics centres, bars, restaurants and shops.
Today, Mitte is a fast-paced business hub, where many large, international and German employers have their local centres of operations. The area is surrounded in daily reminders of its history, with significant buildings and monuments, while still continually pushing forward towards Berlin’s future successes.
Charlottenburg, on the other hand, feels like a chic reminder to enjoy the day-to-day and not just push towards the future. Originally a small, country town to the west of Berlin, the area rose to prominence as a luxury retreat from Berlin, where the wealthy built great palaces, hunting lodges and villas. In the early 20th century, the opulence of the Weimer era brought a wave of artists, philosophers and writers into the area who forged a bohemian society that was world-renowned for pushing boundaries. Although this bohemian period ended in the years leading up to the Second World War, the area experienced prominence again when it was established as the centre of West Berlin prior to German reunification in 1990.
Today, the remnants of Charlottenburg’s history remain in the monuments, architectural details, wide streets, and green parks that are still enjoyed by local residents. It has retained its image as the well-heeled area of Berlin, where affluent residents browse luxury shops and sample fine dining. This residential lifestyle, combined with its architectural beauty, makes Charlottenburg a local favorite for those residents looking for an area that combines amenities, a slower pace, and proximity to Mitte at the heart of the city. The area’s loyal residents flock to its leafy parks, sidewalk cafes, and busy luxury shopping districts, including Kurfürstendamm – Berlin’s most popular shopping boulevard and home to Louis Vuitton, Valentino, Chanel. Prada and Gucci among many others.
Mitte and Charlottenburg, one the center of the former East and one of the former West - these two neighborhoods have evolved along very different paths, which have affected the overall feel of the areas to this day. Although both areas draw residents with their many amenities and great transport links, Mitte appeals more to those who enjoy a faster-paced life in the center of things, while Charlottenburg draws those who are looking for a more relaxed surrounding. Regardless of which of these two people you are; you will be sure to find something in either Mitte or Charlottenburg for you.
Want to learn more about the trendy neighbourhood of Neukölln, serene Köpenick, or creative Friedrichshain? Read more in our previous blog posts about these areas.
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Set in a formerly disused corner of Mitte sits Berlin’s most anticipated central development – Europacity. This billion Euro regeneration will change the way Berliners work, live and play in their city.
From 1945 to 1989, when the city of Berlin was politically, economically, and physically separated, the area that Europacity currently occupies was no man’s land and considered a periphery area. Stuck between East and West Germany, the location was left unused far beyond the eventual fall of the Berlin Wall and the reunification of the German state. It wasn’t until 2008 that the potential of the area was realized and an EU-wide design competition was held to see what was possible with the site.
The winning urban and landscape design concept separates the space into six sections which will feature spaces with distinct purposes:
1. Main station: Berlin’s new central station, featuring high-rise offices and residences
2. Art campus: the cultural hub of the development with modern art galleries, studios, and trade fairs
3. South West Boulevard: Europacity’s main business area, with offices, residences, retail space, and restaurants
4. City Harbour: a primarily residential area with apartments, restaurants, and services
5. Boulevard West: an area focused on a live/work combination of office and residences
6. North Harbour: a secondary business area with offices and services.
These six areas will be interconnected via open spaces, a network of walkways and bicycle paths, and Heidestrasse, a wide boulevard covering 85,000 sqm along the length of the development. The 61-hectare site is designed to be a new, modern neighborhood between Berlin’s established neighborhoods of Mitte and Charlottenburg, encouraging residents to engage with their immediate surroundings.
In order to implement this idea, developers built Berlin’s new Central Station (Hauptbahnhof) on a section of the site, thus opening up the area to Berlin’s extensive transportation links and encouraging businesses and residents to move into the area. Central Station is now the main railway station in Berlin and the largest train station in Europe, with 1,800 trains and an estimated 350,000 passengers passing through the station every day. These trains provide connections to areas around Berlin and throughout all of Germany and mainland Europe. Central Station will also link the city center to Berlin Brandenburg Airport, which is currently set to be completed in 2020 and is expected to see 34 million passengers annually, making it one of the 15 busiest in Europe.
Since this transport link was completed in 2006, employers have flocked to the surrounding area, purchasing office space from developers on a huge scale. Some of Berlin’s largest employers, including TOTAL and ABDA Bundesvereiningung Deutscher Apothekerverbände, have already snapped up office space on the site. KPMG also have also chosen the site for their new Berlin headquarters, with developer CA Immo investing EUR57 million in the construction of their building.
When the development is completed, the new neighborhood of Europacity will provide office space for 10,000 jobs, apartments for 2,000 people, and countless bars, restaurants, and cultural spaces - or 58% offices, 34% residences, 5% retail/food, and beverage and 3% culture. It was integral to developers that the final site complemented Berlin as a whole, and great efforts have been made to ensure that modern art and design are featured heavily throughout the site.
The idea of Europacity has been ignited by many different people over the past 10 years and is projected to be finished by 2025. Developments in the project have been snapped up as soon as, or even before, they have been completed, and as the vision of Europacity comes together, Berlin’s inhabitants have been introduced to a state-of-the-art reimagining of the exciting city they already know and love. They have been shown what it really can be and have been taught new ways to interact with this living and breathing playground.
In the world’s leading global cities prime central value is hard to come by as high demand raises prices and condenses potential yields. However, it is still possible to find prime areas where value can be found. In Berlin, for example, the city’s growing population and strong economy mean that the property market is competitive, with new areas being rediscovered by locals and investors alike. One area of the city – Charlottenburg, the center of former West Berlin, is worth a closer look for its investment potential.
Berlin continues to be an attractive market for international investors as the cosmopolitan German capital boasts a strong economy, growing population, and chronically undersupplied residential market. These factors have helped the city to emerge as a legitimate alternative to the more traditional safe-haven property markets of London and New York, where prices have risen to astronomical levels in prime areas.
A founding member of the European Union and the Eurozone, Germany has the largest economy in Europe and the fourth-largest worldwide. The capital’s economy has been on a strong upward trend for over 10 years now, with GDP reaching EUR35,627 per capita and exports to the US market alone totaling over EUR1.7 billion as of 2015.
Berlin has become the most prominent hub for innovation and enterprise in Europe with almost 39,000 start-ups emerging in 2015. Investors have bolstered this trend, with start-up companies primarily in the e-commerce, health, FinTech, and software sectors attracting over EUR2 billion in venture capital investment in the first half of 2017 alone. Young professionals are moving to the city en masse, drawn by the lower living costs than other European capitals and the ever-expanding number of employment opportunities, including those in the thriving tech industry.
Historically the home to Berlin’s elite, Charlottenburg is a prestigious area of the city. Prior to the city’s reunification in 1990, Charlottenburg was the heart of West Berlin and remains one of the capital’s most historic neighborhoods. The area is relatively quieter and much sought-after, with high-end villas, fine examples of 19th-century architecture, and apartments along elegant tree-lined avenues. Due to the nature of the older, upscale buildings in the district, apartment sizes are generally larger, with an average 40.52 square meter living space per capita. Given its traditionally upscale status in residential as well as retail terms, it is consistently a popular choice with both renters and buyers.
Price performance reflects this, with average apartment prices across the district rising 20.5% in 2014.
This growth is being supported by the influx of residents to the area. In 2016 Charlottenburg’s population grew by 3,847 people to 189,011. This impressive growth is set to continue, with forecasts putting total population growth at 6.1% between 2011 and 2025.
Charlottenburg is also home to several well-known landmarks, including Schloss Charlottenburg and the Kaiser Wilhelm Memorial Church. The area is packed with cultural destinations including a number of theatres, arthouse cinemas and the Olympic stadium.
Kurfürstendamm, Berlin’s main retail destination, runs directly through the district. Found along the street are a wide selection of luxury flagship stores and boutiques, including designers such as Prada and Gucci, as well as KaDeWe, the largest department store on the continent. The boulevard is a large employer in the area as well as a number of offices of law firms, developers and finance professionals such as wealth managers and accountants. Due to the number of positions available both in the local area and in Berlin as a whole, the local unemployment rate is 6.4% with a large number of international professionals choosing to live in the area, resulting in 26.17% of residents originally hailing from outside of Germany.
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As Germany is one of the only countries in the world that offers international students free tuition, Berlin’s tertiary institutions attract some of the world’s brightest minds. The city is home to several universities, resulting in a youthful population and a rank of 2nd on the Millennial Cities Ranking in 2017. The Technical University of Berlin and the Berlin University of the Arts are both found in Charlottenburg and together cater to 31,500 students.
With a strong economy and housing market in Berlin as a whole and a continually growing population, the city continues to be a strong performer, with the luxurious district of Charlottenburg continually outperforming other districts in the city. The district of Charlottenburg is one of Berlin’s best-performing markets and opportunities to find value here are understandably rare, as people are drawn by the beautiful surroundings, employment opportunities, and easy connections throughout Berlin.
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