Why Berlin in 2020 could feel like 1960s London

Phillips & Southern has seen London transform from a post-war shell to one of the world’s most expensive and desirable cities. There are plenty of parallels with a fast-evolving Berlin property market.

Here at Phillips and Southern we’ve been working in property for 40 years – starting out in London, before expanding to include Berlin.

On the surface, they are two completely different cities: London is traditionally the financial capital of Europe; Berlin, famed for its laid-back lifestyle, is arguably the British capital’s bohemian opposite.

And yet, if we look back a bit, the two have a great deal in common. Because Berlin today has many similarities with the London of the 1960s.

Volatile histories

The first, and most striking, parallel is the standard of accommodation. In the 1960s London was just beginning to emerge from the poverty of the post-war years, but the city itself was still very drab – unless you were very rich, it could be bleak. Berlin, similarly, is recovering from a turbulent and volatile past. The Wall may have come down 25 years ago, but the legacy of political insecurity (plus the knowledge you might have to leave at a moment’s notice) has meant that until now people have been unlikely to invest in their homes – financially and emotionally. This mentality takes time to shake off.

1960s-london-flatsLondon had very strict rent controls, as Berlin does now. It was also very difficult for landlords to gain possession of properties, again, as it is in Berlin now. The result in London was a large selection of very basic accommodation available at low rents. These rents went up when landlords were able to access the properties to make improvements: back in the ‘60s, renovations to flats in Lambeth, for example, took the rent from 19 shillings and 11 pence a week to £5 a week – a situation which was typical of the capital as a whole, irrespective of location. Similarly, recent improvements to apartments in Hohenfriedbergstrasse raised rents from €4 a metre to €11 – once again, this is a pattern that is being repeated across the city.

In both cities, property had traditionally been regarded as a resource. But in Berlin now as it was in London then, improvements in the economy have begun to attract aspirational buyers

Changing aspirations

It’s the kind of recovery that leads to a change in the type of landlords in the city. Generally, traditional landlords tend to sell individual flats because they are uneconomic, and their focus is on rental yield rather than capital growth. A more robust property market encourages landlords looking for broader investment opportunities, including foreign investors.

Equally Berlin’s property market is currently run by lots of small, generally inefficient agency outlets – as London’s was 60 years ago – which can lead to a frustrating experience for would-be buyers. As the market evolves it’s likely that Berlin will follow in the footsteps of London’s big chain estate agents.

There are differences, of course. It should be noted that in Berlin, not everybody is celebrating the march towards gentrification. And, while the squatters movement in London that evolved in the late ‘60s rarely turned violent, over the last five years Berlin’s anti-gentrification riots have become increasingly troubled, with a protest in July 2016 leading to 86 arrests and 123 police injured in skirmishes.

kreuzberg-berlin-gentrification-riot-2Others are taking a different approach, such as the Kreuzberg residents who managed to persuade the local council to help them buy their apartment block rather than the development company that was planning to take over and put their rents up. Elsewhere the city has also declared 33 “urban conservation areas”, where luxury redevelopments are banned – precisely to prevent Berlin following in London’s footsteps.

Even so, large pockets of Berlin remain an accessible and attractive proposition for investors – much more so than ‘60s London was.

The invention of the internet and improvements in communications have made it much easier for potential buyers to research and locate properties without having to even visit. Finally – and crucially – banks in Berlin are willing, and able, to lend – something which wasn’t the case in the British capital when Philips and Southern first started out all those years ago.

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