Friedrichshain beyond

the Simon-Dach-Kiez Friedrichshain has been in the real es-

tate investment and development spot-

light for some years now- and with a

good reason. The percentage of pre-

served historical buildings is rather high.

A big part of it stretches along the river

and includes the major project Medi-

aspree. Moreover it offers some of the

most exclusive event locations (O2

arena), cult clubs (Berghain, Watergate

and Spindler & Klatt) and the popular

going-out area – the Simon-Dach-Kiez.

The population of the neighbourhood is

among the youngest and includes

mostly the higher educated profession-

als.

However there are still some neglected

corners which remained in the shadow

of the Simon-Dach-Strasse. Now these

corners are coming into light thanks to

the great amount of investments into

their infrastructural improvement which

turned them into hidden residential tips.

Therefore we would like to investigate

one of those places the area tucked

between the Petersburger Straße on the

east, the Landsberger Allee on the

north, the Karl-Marx-Allee on the south

and the Saint George Cemetery on the

west. Not much popular among the tour-

ists due to the fact that it has much

lower number of cafes, restaurants and

clubs, it is turning into a residential para-

dise with the Richard-Sorge-Straße as

its main axis. The public transport con-

nections are very good with the tram line

M10, the urban train and subway sta-

tions Storkower Straße, Frankfurter Tor,

Landsberger Allee and Weberwiese.

Stretching from the Lansberger Allee up

to almost Karl-Marx-Allee (Weidenweg)

this street is containing many listed

buildings. The most symbolical of them

are the former brewery Friedrichshöhe

on the corner of Richard-Sorge-Straße

and Landsberger Allee currently used as

an event and exhibition location; and the

listed former chocolate factory situated

at Nr. 21A/22, also known as the Ernst-

Lemmer-Haus, redeveloped as an ex-

clusive residential multi-family house.

Worth mentioning is as well the small

wooden Christuskirch (Christi Church) at

Richard-Sorge-Straße 14/15. It was

completely destroyed during the Second

World War and then resurrected of

wood as temporary church in 1948 with

donations from American Methodists

and built by the Swedish construction

company WST Blockhus. This strikingly

small church among the residential multi

-family houses was supposed to be re-

placed by a new one in the 90s instead

it received a status as a listed building

and today it welcomes visitors not only

for worships but for various concerts as

well.

(continues on page 2)

04 October 2012

Volume 3, Issue 10

Highlights

Friedrichshain beyond the

Simon-Dach-Kiez

To be or not to be...afraid of

housing bubble in Berlin

Another symbolical place in the Richard-

Sorge-Straße is the cinema Tilsiter

Lichtspiele. The small location on the

ground floor of number 25A first opened

in 1908 only to be closed in 1961 and

then reopened after the Fall of the Berlin

Wall. It offers a cosy theatre hall with ca.

60 places including comfy sofas and a

pub which can be used also for different

events. What is particular for this place is

that they offer very independent film pro-

gramme including many documentaries

and European films mostly shown in

original language.

Needless to say that the calm residential

character of this perfectly located street

attracted new construction projects in-

cluding also exclusive apartment- and

town houses. Situated next to the old

brewery and next to the Saint George

Cemetery they were immediately sold

and let after their completion in 2010.

Current vacancies are offered at ca. 9 €/

m².

Back in the 2007-2010 investors and

residents were able to purchase such

exclusive residential units in the area for

price of 2.600 €/m²; now prices vary be-

tween 2.700 €/m² and 3.700 €/m². They

are relevant for new construction pro-

jects such as the luxury penthouses at

the corner of Mühsamstraße and Eckert-

straße and the apartments in the Mat-

ternstraße 19.

Apart of the new constructions most of

the old buildings in the area were refur-

bished, or are currently being refur-

bished; thus contributing to the overall

improvement of the neighbourhood.

Even the former rather neglected Peters-

burger Platz has turned into a nice small

landscaped park with its symbolical mar-

ble fountain in the form of a globe and a

big children playing field.

To sum up this area is to be rapidly re-

considered in order not to miss the good

investment opportunities that can be

undertaken right now. Given the sharply

rising residential prices in 2 years it may

not be as affordable as now

For more information do not hesitate to

contact us: info@batogroup.com

Sources:

1) FRIEDRICHsHAIN, Zeitschrift für

Stadternerung, 18.Jahrgang, September

Heft 3/2012

2) Wikipedia

ht tp : / /de .wik ipedia .org/w ik i /

Richard-Sorge-Stra%C3%9Fe

(24.09.2012)

ht tp : / /de .wik ipedia .org/w ik i /

L i s t e _ d e r _ S t r a % C 3 %

9 F e n _ u n d _ P l % C 3 %

A4tze_in_Berlin-Friedrichshain

(24.09.2012)

3) Tilsiter Lichspiele Homepage, http://

www.ti lsiter-lichtspiele.de/kino.html

(25.09.2012)

Friedrichshain beyond the Simon-Dach-Kiez

Page 2

To be or not to be…afraid of a housing bubble in Berlin?

Currently billionaire George Soros

created a lot of concern about a real

estate bubble which in his opinion is

about to burst in Berlin. As reported by

many business magazines such as

Bloomberg he claimed that Berlin homes

are becoming overvalued because

demand is being pushed by buyers

seeking a safe investment to put their

money in.

However should we really take these

negative predictions seriously?

Everybody has been aware of the

clear price increase, but is that a real

threat to the German market?

Already in August 2012 the Cologne

Institute for Economic Research (IW)

published a research regarding the price

development in the German housing

market. What they did was to examine

the market for any signs of bubble

formation such as excessive credits

lending, frequent sales and high prices

compared to rents and income. The

conclusion was that people should not

fear a bubble (2*).

As already mentioned the great increase

in prices in the housing market in the five

major cities in Germany could not be

denied. From 2003 to 2011 apartments’

prices in Berlin rose with 39%, in

Hamburg with 31%, in Munich with 23%,

in Frankfurt am Main with 14% and in

Cologne with 10,5%. (2*) However those

price developments were following

fundamental factors such as rents and

income, which excludes a downward

price correction for the time being,

comments the director of the Cologne

Institute for Economic Research (IW)

cited by “Die Welt”. The high demand for

housing in the metropolises is supported

by the trend of settling back in the city

thus increasing prices that were lower

than the normal for a long time and cre-

ating a “catch-up effect”. Despite that

living costs in Germany remain rather

low compared to those in other Euro-

pean capitals. In Berlin an average of

21% of the income goes for covering

those expenses while in London the av-

erage is ca. 40%.

The German financing practice is a

further stabilizing factor for the property

market claims the report. An expansive

lending as the one that preceded the

housing bubble in the U.S., Spain and

Ireland, does not exist in Germany. The

holdings of real estate loans in Germany

increased by seven percent from

January 2003 to April 2012; however in

Spain and Ireland, the stocks were

expanded by more than 150 percent

before the housing bubbles exploded.

Moreover currently there is a noticeable

increase in the private equity by real

estate purchase and a faster credit

repayment in Germany.

Even though the greatest price increase

is observed in Berlin, the most expensive

residential real estate is still in Munich

where the sqm costs almost the double

than in the German capital: 4.200€

compared to 2.200€. In Hamburg the

number is ca. 3.100€. And with this price

Berlin’s average is still less than one-

third of the one in Paris and less than a

quarter of the one in London. Two years

ago it beat Rome as the third-most

visited destination in Europe after

London and Paris and unlike the rest of

the country, Berlin has been growing by

population, becoming more and more

popula r wi th young creat i ve

p ro fess iona ls and techno logy

entrepreneurs. The city even arrived at

the point to be called the new Silicon

Valley.

Needless to say that these reasons have

been attracting investors and pushing up

the housing prices thus arriving at the

current levels. Despite that there is no

need to be afraid of a housing bubble

due to the stable German financing

practice and the positive development in

the overall population income which

results into more private equity and

faster loan repayment during house

purchase. A real estate bubble may

happen only when the purchase prices

increase faster than the rents on the long

term. But this is definitely not happening

now.

BATO Group experienced that the high

number of young professionals moving

to Berlin changed the real estate market

in a positive way. Not only foreigners but

also Germans started buying their own

homes in the capital due to their higher

income. The city has been offering much

more work, the living standards have

been improving and the new Berliners

have much more financial opportunities

than those before. Therefore they have

been investing actively in „bricks“ and

the increased demand ended logically in

higher prices. However as previously

mentioned this is not a reason to beware

a housing bubble. Not yet and hopefully

not in the future.

* Sources:

1) Czuczka, T. and Fahmy, D., 2012.: Soros Sees Threat of Bub-ble in Berlin’s Housing Market. Bloomberg, [online] 11.09.2012. A v a i l a b l e a t : < h t t p : / /www.bloomberg.com/news/2012-09-11/soros-says-berlin-housing-market-in-danger-of-becoming-a-b u b b l e . h t m l > [ A c c e s s e d 12.09.2012]

2) Pomogajko, K. and Voigtländer, M.,2012: Von einer Blase keinen Spur. Institut der deutschen Wir tschaf t Köln , [onl ine] 2.08.2012. Available at: <http://www.iwkoeln.de/de/infodienste/i w d / a r c h i v / b e i t r a g / 8 8 4 3 0 >[Accessed 10.09.2012]

3) Voges, J., 2012.: Deutsche Städte von Immobilienblase weit entfernt. Die Welt, [online] 02.08.2012. Avalable at: <http://www.welt.de/finanzen/immobilien/ar t ic le108459221/Deutsche -Staedte-von-Immobilienblase-weit-ent fe rnt .h tml> [Accessed 10.09.2012]