• Property as Investment

Property as Investment

An important component for asset development and retirement planning.

You would like to invest your money in real estate because in the long term, property yields better returns? Then come talk to us! Our experts will advise you in all important matters relating to real estate as financial investment:

  • How much capital do you need?
  • What rental and price developments can you expect?
  • What monthly financial expenses and rental income can you expect?
  • What opportunities for direct real estate investment are currently available and suitable for you?

Investing in a flat is a comparatively simple and secure, but also long-term form of asset building and retirement planning.

That’s why we look into the future with you – consider your life plans, forecast your earnings and expenses, evaluate the long-term potential of a location. In short, we do everything we can to ensure that your investment is always a source of pleasure, not of sleepless nights. The personal consulting service provided by ZIEGERT Immobilien helps you make the right decisions.

Is Berlin a suitable investment location?

Fundamentally, the investment opportunities in Berlin are rated positively. Flats as investments are in high demand here because Berlin is growing sustainably – both economically and demographically. The number of households in Berlin has increased significantly in recent years due to the high influx of newcomers.

Nearly two million households were counted in the city in 2015 (up 1.79 percent compared to the previous year) – about 90,000 more than in 2012. This is partly due to the growing number of single-person households. The predominantly young and often well-educated new residents are drawn by Berlin’s high quality of life; they ensure strong and sustainable price increases on the housing market.

Asking rents in Berlin in 2016 rose by 5.6 percent compared to the previous year. At an average (median) of 9 euros per square metre (without utilities), the flats offered were thus around 50 cents above asking rents in 2015.

The dynamics are particularly strong in trendy neighbourhoods. Neukölln, for example, recorded a rent increase of 17.1 percent. At an average of 9.47 euros per square metre, rents in this formerly troubled area lay above the Berlin average for the first time.

Residential Property & Low Interest Rates

An alternative to a savings account – supplementing your retirement planning

 Additional reasons for these historic price increases are comparatively minimal construction activity, increased international interest, and low interest rates. In 2015, only 10,000 apartments were built in Berlin; the demand lies at around 23,000 apartments, and the difference accumulates over the years.

The potential lying in the supply gap that’s existed since the mid noughties was initially recognised by private equity companies from the United States and only later by private investors in the course of the financial crisis.

Since the early 2010s at the latest, flats in Berlin are increasingly being purchased as part of private retirement planning.

Buyers are benefitting from low interest rates, currently around 1.5 percent for ten-year loans; at the moment, we’re in a situation where monthly rental income covers the interest costs of a flat purchase, even one financed mainly through a loan. The possible additional repayment thus works like a savings agreement at the end of which a considerable asset and capital gain will have been achieved.

Property Owners have more assets

A study by the research institute empirica has shown that property owners build up six times as much wealth as renters. The researchers compared asset accumulation over time in renter and owner-occupied households with otherwise comparable financial situations. They found that the two groups present a completely different “asset accumulation biography.”

Renters and homeowners between the ages of 50 and 59 with a monthly household net income between 1,700 and 2,300 euros were assessed for the analysis. Property assets (owner-occupied flats and flats as investments) and financial assets (securities, capital insurance, building loan contracts, and savings deposits) were incorporated into the balance sheet, as were liabilities from outstanding loans. According to empirica, property owners on the eve of retirement not only had the value of their property – on average, 152,000 euros – but also net financial assets of 45,000 euros.

Renter households from the same income group, by contrast, only had net financial assets of 24,000 euros on average, along with 6,000 euros in real estate assets, representing the value of rented properties. This low average value is explained by the fact that only a small proportion of renter households own flats as investments. Overall, homeowners build almost six times as much wealth by age 60 as do comparable renters.

The researchers point to different consumption and savings behaviours to explain this large margin of difference. On the one hand, those who purchase flats are immune to the allure of major purchases or consumer expenditures; on the other, they’re also compelled by way of instalment payments on housing loans to engage in self-imposed “compulsory saving,” which pays off in the long run.

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