In Berlin, Alexanderplatz is Hot Again --- This Time for Architects

PHOTO: This rendering shows the Alexander A. Tower in Berlin.MonAch AG
This rendering shows the Alexander A. Tower in Berlin.

For nearly half a century the tallest building in Berlin has been a relic of its Soviet past. The Park Inn, a slender glass and concrete hotel in Alexanderplatz, was erected in the late 1960's to mark East Germany’s 20th anniversary.

The 410-foot tall edifice, called Hotel Stadt Berlin at the time of its construction, can still be seen across much of the low-slung German capital today, standing in the shadow of the city’s television tower, the iconic sphere that stands just over 1,200 feet.

Yet as Berlin’s property values continue to soar - rising faster than any German city over the past five years - residential developers are set to challenge the Park Inn’s elevation supremacy. Two international builders have unveiled plans to erect skyscrapers at Alexanderplatz that will stand nearly 500-feet high and house some of the most expensive property in the city.

Russian developer MonArch AG, one of Moscow's largest builders, plans to construct a sleek glass and steel tower that will measure at least 490 feet high and include 14,000 sq metres of residential apartments, the developer says.

A more ambitious project is being developed by the American firm Hines. The Houston based company is planning to build a boxy, twisting structure designed by Frank Gehry that will rise 490-feet and include three-hundred apartments and a hotel. Despite intense scrutiny from city officials, Berlin’s planning commission is set to approve the projects later this year, both developers say.

Though the new designs have triggered intense public reaction for their girth and ambition, they are being joined by more than 20 new residential properties in the planning or construction stages around Alexanderplatz, according to the Bauamt der Stadt Berlin, the city's building authority.

The surge of new development around a decades-old Soviet-style transportation hub underscores not only developers increasing confidence in the Berlin property market, but also the race to find buildable space in Mitte, a district with some of the most expensive property values in the city.

“Alexanderplatz has a very rich history and tradition for Berlin,” says Christoph Reschke, co-managing director of Hines Germany. He says the new project will include small apartments and penthouses but that prices haven’t yet been set. “We see growth for this area just as we see growth for the entire Berlin market.”

Alexanderplatz is an unlikely target for upmarket housing. A broad and bleak concrete square in the heart of old East Berlin, it has long stood as one of Germany's less-exalted instances of urban planning. Lined with aging, prefab high rises, it is the epitome of the former communist regime's preference for function over form, says Laura Fogarasi-Ludloff, a principal architect at Ludloff + Ludloff Architekten, a firm that has designed a string of residential properties in Berlin. She says many long-time east Berliners, stubbornly wary of gentrification symbols, view the new designs as another attempt to erase any trace of the former East Berlin, turning the iconic square into just another oversize strip mall bearing little resemblance to its historical form.

“It’s not that the projects themselves are terrible in any way,” Fogarasi-Ludloff says. “It’s just that the designs don’t fit to it’s location and seem completely out of place for Alexanderplatz.”

The building boom at Alexanderplatz comes amid soaring property prices in Berlin. Home values are up 54.5 per cent since 2009, the highest of any German city the past five years, according to Immobilien Scout GmbH, Germany's biggest online property agency. The rise is even more acute in Mitte, where prices are up 57.7 per cent since 2009, the realty group says.

A five room apartment in a new condominium building at Alexanderplatz is for sale for €1.25m. The top floor apartment measures 134 sq metres with four bedrooms and two bathrooms. The residence has two terraces with direct views of Alexanderplatz. The building includes a landscaped courtyard and underground parking. It’s being marketed by Project Immobilien.

Rising home values in Berlin come as an increasing population growth triggers a tightening housing market. An average of about 43,000 new residents have moved to the city annually since 2011, the highest influx of any German city, according to the Federal Institute for Population Research.

“A decade ago the city was losing residents and now we see a very sharp rise in people moving to Berlin” says Sebastian Fischer, managing director of the Berlin office of Engel & Völkers. “That’s creating a real surge in housing demand and developers are rushing to capitalize.”

Foreign investors, emboldened by a weaken euro and low interest rates are also fueling demand for upmarket housing in Berlin, says Liam Bailey, global head of residential research at estate agency Knight Frank. “It’s having a profound effect on the top end of the market,” he says. “Demand isn't likely to decrease in the short term.”

The property being developed by MonArch AG is to be called the Alexander A. Tower. In addition to apartments it will include 5,000 sq metres of retail space and 3,500 sq metres of offices, according to the design plan. For now, homes prices are only available upon request, says Ulrich Regener, a deputy general director for MonArch.

“We are focused on big investors,” Regener says. “This project will appeal to anyone who wants to be a part of a city that is only gaining strength.”