Those pesky blue steel pipes seem to be snaking around everywhere in Berlin. Some of them in the way of rather charming views, for the moment. But they’re an essential part of Berlin’s development, and may help turn this apparently sparsely populated city into what most capitals are : crowded.
(Berlin has a population of less than 4 million people.
London has 8m, New York has 19m : CIA Handbook)
Cities like Berlin, London, Washington, Dublin and elsewhere are known for having been part-built on swampy land. Nice and flat to build on, you see.
The blue pipes are sucking the moisture out of the soil, ready for laying the foundations of some new buildings - like the complete re-creation of a massive 15th century palace on the site of the old “Palace of the Republic” - which entertained the lucky people and party members of East Berlin in communist days.
The past is literally being buried near the Schlossplatz.
Rich folks in the Southern Eurozone have been sending their cash North for just this reason - and to keep its value intact, of course.
The people of Berlin had to be encouraged to stay in the beleaguered city in divided times, so rents were held low by the authorities. That’s often still true, especially in the East - where I’m told that rent controls where first put in place in 1936 - under Adolf Hitler.
Landlords can charge more if they can show they’ve refurbished their buildings - so tenants are advised to “say no” to any improvements, unless they want to pay more!
All in all, though, the boundaries of Berlin are being pushed outwards - and more people are living here. There’s still the slow flow of civil servants from old West Germany to the nation’s capital. Room has to be found for the 4000-plus spies of Germany’s BND over the next while!
The inflow will change the nature and atmosphere of Berlin.
Right now, you don’t find yourself jostling along the broad boulevards with your elbows out, navigating yourself through crowds. It’s interesting, too, how distributed the public gathering areas seem to be. That’s partly due to the division caused by the old Wall, I suppose, and partly due to the many allotments and little summer cottages which connect German people to their ancient forest roots, and create green spaces within the city.
All of which had me looking for an old programme I made on the global property boom. Which makes entertaining listening now. It was transmitted just five months or so before the Global Financial Crisis in 2007. And when the property bubbles of the US, UK, Spain, Dubai and elsewhere burst. Don’t say I didn’t tell you so!...
After the Boom - and Bust...
His apartment went up in value from $50k to $250k in five years, back then - it’s worth around $375,000 now! Chile hadn’t made the gambles the North did back in 2007, and (until very recently) kept selling staggering volumes of raw materials to China.
So big construction projects continue to this day : hotels, shopping centres and houses and apartments... All available with 100% home loans available, on easy terms. All of which sounds familiar, doesn’t it?
Judy Williams has moved on from the Property Frontiers agency - but, there, the Chief Executive Ray Withers reminds me that you should take a 10-15 year view on investment in property. If you can. And he sees most of the ‘bust’ markets recovering eventually. Even in Dubai, where prices plunged 40% from their peak. But it’ll take a long time to soak up the losses made in Spain. Instead, he’s excited about the US market...
...Which puts him in good company with Howard Davidowitz, who says that in the end the record low interest rates in the ‘States helped prevent a worse disaster there. The economy’s improving now, and with it the market - although mostly in A-grade properties in the major cities, he says.
I saw the headline “property price rises unsustainable” and attributed to the National Association of Realtors in the US, so I checked with their spokesman Walter Molony, who in the event backed-up Howard. There’s pent up demand from people wanting to move, he suggests - and nobody’s been building the numbers of new homes needed for about five years.
Perhaps it’s China where we’ll see a big property market tested next...
The central bank wants to reverse the generosity it’d previously shown to keep China moving forward while the rest of the world stalled. It’s turning off the flow of easy money to Chinese lenders, and they are having to review the cheap and ill-advised loans they’ve made in the past. Even if they’re not called in, market bubbles depend on forward momentum - and optimism. Bargain house prices in Beijing sometime soon? Hmmm...
And thanks to the following for contributing to this update...
...and you can actually rent out Janak's goldmine!