In Berlin's booming property market, this real estate firm sees room to grow

Berlin, Germany -- Visitors to Berlin these days won’t have to look far for signs of its soaring real estate market.

Nearly every corner of the German capital is awash in new real estate developments, ranging from soaring luxury condominiums towers to fully renovated pre-war buildings. Many of the new properties boast prices and upscale amenities virtually unthinkable in Berlin just a decade ago.

The construction boom is being fueled, in part, by international buyers who have flooded the city in recent years as property prices rise along with Berlin’s profile as a place to invest.

But the rise is also being aided by Berlin's swelling population and a growing economy, says Rabin Savion, Chief Executive Officer and Director of ADO Properties, the Berlin-based residential real estate company that manages around 21,000 apartments in the city. Launched in 2006, today the company has a portfolio that exceeds $ 3.3 billion in value and ranks as one of the largest real estate owners in the German capital.

“When we started, virtually no one was optimistic about Berlin’s prospects for growth,” Savion says from his sprawling, sun-filled offices in Berlin. The company is a full-service property developer and manager with projects in virtually every district of the city. “We saw real potential almost instantly and that confidence is now paying off for us and for the city.”

Savion has reason to be bullish on Berlin.

Rents per square meter in Berlin continues to show growth, rising 9 percent in 2017 after a 13 percent jimp in 2016, according to property advisory firm JLL. Those numbers best far more expensive German cities such as Munich, which saw rental prices rise 5 percent, and Frankfurt where rents climbed 3.6 percent.

Meantime, average property sales prices in the city have jumped 120 percent since 2004, and have risen by more than a third in just three years, while respected real estate analysts continue to cite Berlin as one of Europe's top real estate hotspots.

Long-neglected areas of the city are seeing the largest appreciation rates, say estate agents. Formerly rundown locations from Mitte and Prenzlauer Berg to Kreuzberg and Neukölln are seeing increased investment bringing newly built condominiums sparkling with fitness centers, spas, and penthouse apartments.

“That’s the real story here,” adds Savion, an Israeli native who studied in the U.S. “We recognized very early on that areas of the city beyond just Mitte was ripe for investment because Berlin is growing and demand for housing is growing.”

Despite the rosy housing figures, some analysts warn that the Berlin real estate market is overheated and could be inching toward a painful correction. Years of runaway demand for residential property in the city is inflating a market that still pales in comparison to larger more expensive financial capitals such as London or Paris, some experts warn.

But Savion dismisses those concerns, pointing instead to Berlin’s stagnant shortage of housing.

The city currently has an existing annual shortfall of around 100,000 homes, and construction of new houses slumped 8 percent in the first eleven months of 2017, compared with the same period in 2016. Declining supply and rising demand mean further price rises are inevitable, says Savion.

"The city's economy is strong and its population is growing yet the rate of building of new homes is lower than it should be," he says. "That means despite rapid appreciate across the city, Berlin still has a lot of room for growth."