EverEstate GmbH founder Kyrill Radev comments on the developments of the Berlin real estate market and the reactions of the industry to the Corona crisis.
The corona crisis has shaken the German economy in the market. How badly is the Berlin real estate sector affected?
Kyrill Radev: In general, the German residential real estate market is proving to be resistant to the crisis, especially in popular conurbations like Berlin. Even now, there is still a large surplus of demand in the capital and supply is still far too scarce, partly because there is too little construction. Due to the nationwide lockdown, demand fell in March and April as many customers were unsettled. In the meantime, however, demand has almost returned to a normal level.
We as a real estate company were directly affected primarily by the strict restrictions on contact. At the Ziegert Group we reacted quickly to the situation and adapted our processes to the new conditions. At EverEstate, the digital housing platform of the Ziegert Group, we have always offered virtual live apartment viewings and 3D viewings anyway. Additionally, we have introduced the possibility of contactless apartment viewing through Smart Locks, so that our customers can now view their desired property themselves at any time, conveniently and flexibly. Prices on the Berlin real estate market have been rising continuously for years.
Will the corona crisis stop this trend or even lead to falling prices?
Kyrill Radev: Since demand continues to outstrip supply and there are further delays in building completions and building permit procedures due to corona, we do not expect prices to fall.
The Berlin rental cap has led to massive protests in the real estate industry. How strong were the effects for real estate owners really?
Kyrill Radev: We believe that the rental cap mainly affects small landlords - i.e. those people who have saved for a property for a long time in order to be able to live on rental income. Moreover, the rent cap does not solve the problem of housing shortage, as it does not create a single new apartment. We are eagerly awaiting a corresponding decision as to whether the rent cap is unconstitutional.
Are investments in existing Berlin real estate worthwhile at all?
Kyrill Radev: Of course - especially in good locations, existing real estate represents a stable investment. Especially properties from the Wilhelminian period are among the most profitable investments on the market, as they simply cannot be reproduced. This is precisely why the demand for apartments in older buildings is growing steadily - both among buyers and tenants. Here, good returns can be expected in the long term - despite rent caps and milieu protection.
And what is the situation with classic owner-occupied homes?
Kyrill Radev: Home ownership is and remains the most stable form of investment of all. Moreover, home ownership - whether an apartment or a single-family home - is the best form of retirement provision. We are currently experiencing a growing demand for owner-occupied homes, especially in the Berlin area. It is precisely because of Corona that more and more people are looking for their own garden and space to develop. A home of one's own offers the best opportunity for this.
Which districts of Berlin do you currently consider particularly attractive?
Kyrill Radev: Due to the Corona effect we see that more and more people are looking for properties near parks, water, and woods. Having your own garden and being close to nature have become particularly desirable. We can therefore see that districts like Spandau as well as Köpenick are becoming more attractive. But the outer edges of Berlin are also gaining in popularity. At the same time, the urban districts of Neukölln and Mitte remain attractive for international newcomers and investors due to their great cultural diversity. Classic Ku'damm locations, as well as Zehlendorf and Grunewald, also remain sought-after and are proving to be very stable in value.
What role do international investors play in the Berlin real estate market?
Kyrill Radev: Just like international artists or professionals, international investors enrich our capital and are therefore an important part of the Berlin real estate market. Foreign investors value Germany as a "safe haven" because our stable market economy and currently also our good health care system have proven themselves in crises.
The Berlin Senate, which is not in a position to create sufficient living space, should therefore be happy for anyone who does. Even if some of the large housing projects have an upscale target group, seepage effects ensure that all those looking for housing benefit from this and the market relaxes.
The German government's economic stimulus programme is flushing new liquidity into the markets. Will this be reflected in rising property prices in the medium term?
Kyrill Radev: As Ziegert Group, we demand from politicians to create framework conditions so that more people can afford property. It would be desirable if the German government would finally abolish or at least reduce the property tax for private first-time buyers. We do not expect that the economic stimulus package will affect the prices for residential property. After all, the main factor will continue to be the continued scarcity of supply combined with very high demand.
Translated by Catherine Norris