Sterndamm, Treptow-Köpenick

Berlin

Treptow-Köpenick, Berlin’s largest borough, is traditionally a blue-collar worker district that could be on the verge of a transformation. 

The area itself is best known for Treptower Park, the partly forested green space that’s home to both the imposing Soviet War Memorial and a now abandoned amusement park. A more recent development, though, is Brandenburg Airport, which – despite still being under construction after a number of delays – looks set to bring new transport links and opportunities to the borough once completed.

It’s just a short distance away that you’ll find Sterndamm, a mid-size 1920s apartment block managed by Phillips and Southern.  

Executive Summary

What is it: An apartment block containing 25 x residential units and 16 x garages and car spaces.
What it cost: We bought the building in 2007 for €920,000.
What we spent on it: The property was generally in disrepair and some of the apartments were derelict, so it needed a lot of work. Rebuilding the apartments and renovating the common areas cost just over €100,000 over a four year period.
What it's worth: In 2016 an independent third party revalued the property at €2,600,000.
Rental income: The net income in 2007 was just under Euros €65,000 per annum. Phillips and Southern have steadily increased the rent until it is currently €110,000 per annum.
Profit: €1,616,000 (projected)

What we did

We handled every stage of this project for our client; from spotting the opportunity to overseeing it’s potential resale.

A feature of the Berlin property market is that once tenants have moved in, they’re likely to stay on for a considerable length of time. However rent arrears are also very low. The appeal of Sterndamm, then, was that several of the flats were empty – and even, in some cases, derelict – and the owners appeared to be either unable or unwilling to make the necessary repairs. Added to this, the roof offered space for a further three units to be built at a future date.

We arranged for the purchase of the building and oversaw its renovation. We also managed the rental of the apartments and increased rental income substantially over a nine-year period.

We are currently supporting our client in the potential resale of the building.

treptow kopenick

How we did it

2007

We were looking for investment and renovation opportunities in Berlin and spotted a partially empty 1920s apartment building in Treptow-Köpenick in need of substantial repair.

2008

Strong yields from Sterndamm’s existing rental incomes meant that we were able to arrange a loan on 65 per cent of the purchase price for our client – an unusually high percentage. This enabled us to set about improving the building immediately.

2011

Over a period of four years we finished rebuilding three of the flats and improved the garage spaces, common areas and facade. In addition, a dramatic fall in interest rates since we bought the building meant refinancing was an option, and we were able to release a considerable amount of equity for the client while keeping expenses at a level that could be covered by the rental income.

2016

The property now has a rental income of €110,000 per annum and was recently revalued by an independent third party at €2,600,000. Our client is currently considering an offer on the property, while there is still the option of creating a further three properties on the roof of the building.

Results

Our knowledge of Berlin’s property and rental markets ensured we were able to spot a fantastic development opportunity in an area ripe for investment. It also meant we were able to see the benefit – and potential – of a building that was half empty and in disrepair.

The result was that we were been able to redevelop and retenant the building at a time when Berlin’s rental market was becoming increasingly lucrative, providing both a good investment for our client and a significant – and steadily increasing – rental income.

2007
Investment: (€920,000 + €100,000 in renovations)
€1.02m
Total Investment
2016
Apartment Worth: €2,600,000
€1.6m
Profit: (projected)
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