A great informative and thoughtful article, but almost two years out of date in relation to Germany, especially Berlin, which has grown 10% in the last 6 months, and the bottom of the market has passed

Hi Charles - thanks - ah - this is the first claim of growth I've heard for Berlin. I'd be interested in your source and also is it off plan or social housing? Cheers Neil

Berlin might have experienced a price increase due to all foreign investors but the rest of Germany hasnt picked up yet. On evrage, prices r still stable, they have even dipped in few places (Granted, they picked up in Frankfurt and Munich). Moreover, I still do not understand all the rage about Berlin. With all the best efforts of the federal and local governments, no businesses are willing to relocate to Berlin and no decent high earners are willing to go live there. The place only attracts marginals and those happy to live on the welfare roller coaster. Germany is still a long term hold in my view.. until perhaps all rent restrictions are lifted and eastern europeans are allowed to work freely. C.

I bought 2 apartments in Friedrichschein in November 2006 for 770euro per sq m. The next apartments (identical in the same block) were exchanging hands for880euro per sq m in May 2007 last month. Parts of Berlin, especially Friedrichschein and Prenzlauer Berg are very popular and values have risen considerably. This has been notably driven by outside investors. The sourcing agency I used said they wished Berlin would not pick up so fast but they are finding it difficult to access property yielding in excess of 5% in the desirable areas of Berlin, and many other agents are saying Berlin is very popular. Essentially properties are long term tenanted proeprties with mixed owner occupiers, some social subsidies with the housing companies etc

Hi Claude True - I still find it hard to see the long term opportunity in Berlin. The bet then (or gamble maybe) is that foreign investment will drive prices higher and that this will then draw in the local people. This argument is used in Bucharest, for instance, where we can now see local people taking a bigger part of the market (and also the same happened in London in 1994 - when German investors drove the market in the initial stages). But - and it is a big but - will the developing middle class be there in Berlin to follow through on the initial enthusism created by investors? In most cities it would be a clear yes - but Berlin still (because it doesn't draw the business) still has to be a hesitant no. This is why we still believe it is a wait and see. So, anyone got any evidence to the contrary that Berliners themselves are buying? Cheers Neil

You'd have to be a Berliner to buy in Berlin at the moment, if you know whay I mean.