Everybody is moving to Berlin: This city will become more crowded and stretched
“We are developing real estate projects at locations whose potential other developers have either not realised or deemed possible.“
Dirk Moritz, Managing Director of Moritz Gruppe GmbH, Berlin (www.moritzgruppe.com)
Almost every day this city generates news – about dynamic growth, or the real estate boom – and it seems there is no end in sight.
Berlin is growing: This is no longer just reported news, but now also something one can see and experience first-hand on every corner of the city. In late 2014, Berlin had grown by 44.700 citizens in comparison with the year before; there are currently more than 3.5 Million people living in the city, and the influx is unrelenting.
According to a survey of the Urban Land Institute, among investors, the German capital is also one of Europe’s future-oriented locations, a „Standort“, promising interesting and sustained revenues – leading the way ahead of Dublin, Madrid, and Hamburg.
The city’s economy – tourism, the start-up scene etc. - is developing positively. The Berlin Senate can also make good use of the money, in investments, and reducing the existing public debt of €60 billion. We hope that it will also translate into benefits for individual citizens.
After years of refusing to develop an economic perspective, hopefully one can come to the conclusion that the Berlin Senate has realised that „poor but sexy,“ - a quip by former Mayor Klaus Wowereit - has long become outmoded – and that a visible economic strength is needed as a platform for growth.
A particular challenge, however, is to remain competitive among all the others international “hot spots“ on a long lasting basis.
But what do all of these developments really mean for citizens, policy-makers, investors, town planners and architects?
Well, for real estate investors, this means there is a need toremain alert to new opportunities and to accept higher risks – as today, any grandmother knows the value of her property.
For all of us this means we have to think faster and beyond the usual parameters of real estate, to develop new visions and concepts for the real estate project for tomorrow or the day after.
For Berlin policy-makers, however, this still seems to be a painful task: The unilateral focus and quite politically-driven view on housing construction does not do justice to the new urban thinking and is not benefitting the city’s development...
Among speculators, construction permits thus evolve into a popular game point for their own profits – a total of 22,000 permits in 2014 and the construction of only 9,000 housing units are sending out a clear signal.
If you want to buy or rent an apartment in one of the popular city districts, you now require 2 top earners or a large reserve of personal funds.
As wages here are still lower than in other big German cities, families with a moderate income face a real problem when looking for an apartment.
But this is also a great opportunity for other districts such as Berlin-Lichtenberg, Spandau and Neukölln to be able to shine.
On the other hand, the financing of housing property is yet another problem – with high prices and the attempt of cities and communities to participate in this boom by eagerly escalating property purchase taxes.
Political representatives have to be aware that private buyers cannot simply compensate these costs by means of their income.
Why don’t we have an honest discussion about a possible classification system based on who is an owner-occupier and who is an investor?
Similarly, I believe that, in the long run, a solution will not be found simply by following a strategy targeted at voters through political interventions such as decreed lease price limits and other measures.
If we are to develop a shared understanding about subjects such as the changing city, urbanism, “my city – your city“, we could enlighten people quite early, in school, for example, by educating pupils about urban development, accommodation for different life phases and about how space follows function so that we do not necessarily have to think purely in square metres when it comes to living and working.
Urban planning has to shape infrastructure in parallel. Therefore, it is necessary to recognise projections and developments early on. And finally, this also necessitates a new and internationally competitive airport.
Another delay is not only doing harm to this city, but also to Germany’s image as a place to do business: The world looks to this city – and internationally it used to be faced with a smile, now a lot of observes don’t understand the city anymore.
Architecture as such - to combine the past with the best of the present to create something unique and truly new, is a wonderful and desirable philosophy.
But to this end we have to find solutions for the city of tomorrow, encompassing living, working, leisure time, education and sports, in a society that jointly embraces this new thinking.
We have to engage and enthuse people about this approach of renewal and change. This, in turn, offers the opportunity for the successful and sustained development of this city; new means of communicating can foster cooperation – incalculable direct popular votes will not be a solution.
The city can only be successful if everybody accepts responsibility – for the real estate sector this clearly means to look beyond the limits of economic matters.
Quite often, one gets the impression that many investors are just capitalising on the city’s advantages, just like anybody passing through, but for their own gain.
When it comes to issues like “smart cites“ and “blue buildings“, our sector really has to face the challenges of our time.
A city like Berlin exists on to its ethos never be “complete“ – but that is precisely why it is in need of a new vision, a new urban identity for the future and definitely a set of binding rules.
The citizen, the planner, architects and the investor, too, have to know reliably what this city really wants – mono-functional apartment constructions, uniform eaves’ heights – or answers to the question “how do you want to live?“
It would be nice if each generation, but at least each century, would get the chance to present its vision of the city by developing an individual form of architectural expression.
Historic landmarks are a part of Berlin just as much as audacious new buildings, conversions of old buildings, or modern high-rise developments.
This will intensify the ambience of old and new city quarters alike, but the city has to grow in a comprehensive way transcending individual districts, which requires responsibility as well as breaking down perceived, or psychological barriers.
The “think small“ approach is passé. Instead of safeguarding old vested interests, we need vision and planning based on expertise and common sense: To think spontaneously and out of the box in order to break down traditional behavioural patterns. Urban planning should not be constrained by political wrangling or act within the limits of political election periods.
Our conclusion: For investments in infrastructure projects, commerce, modern office building concepts, boutique hotels and for tong-term real estate apartments we believe there will be a good to excellent increase in value. In terms of real estate, Berlin is absolutely and quite clearly “in“.
But as always, location, attractiveness and the quality of offers on a city’s market will determine whether people and investors are here to stay or if all of this has just been a bubble. This is a responsibility for all of us – ‘Awareness shapes our actions’ is a maxim that still holds true.
All of this, though, will remain utopia if we just continue in our old ways: With current regulations, outdated administrative structures and development processes, with a modern architecture literally poured into concrete and last century thinking we will not be able to create added value for society. The future is happening right now, in the next instant.
Berlin is competing with other big cities around the world, a fact we should not underestimate, as people have become much more flexible and mobile.
We should not take for granted what we have achieved. Instead, just like athletes, we should strive for more so that we can truly say: “Everybody wants to live in Berlin”.
It is in this spirit that I wish all REFIRE readers success in your projects!
Warm regards,
Dirk Moritz
MORITZ Gruppe
Berlin