By Wiebke Hollersen and Guido Mingels
Carsten Koall/ DER SPIEGEL
Valeria Fiori, the potential buyer from Milan, has brought along her
husband, as she always does, as well as one of her grandchildren.
"They're at the Lego Museum right now," she says. She is wearing a pink
sweater, jeans and comfortable shoes, looking the part of a typical
tourist on a sightseeing trip. She's in Berlin to buy another apartment,
and this time she is looking at a two-room unit in Friedrichshain.
It'll be her fourth investment in the Berlin market. Fiori is retired
but says she doesn't receive a pension in Italy.
It's very quite in Taekker's office, even though a dozen people are working at long tables doubling as desks. Fiori wants to reserve the Friedrichshain apartment, but she still has a few questions. When will the contract be ready? How quickly can the brokers find her a tenant? She doesn't like the fact that a lot of people have now discovered that there's money to be made with Berlin real estate. "Prices have really gone up. It's terrible," she says, sounding almost like a native Berliner.
Three years ago, Fiori was online when she discovered an apartment on Leipziger Strasse in the Mitte neighborhood. It was a 100-square-meter (1,076-square-foot) unit on the 20th floor, and she snapped it up at once. The first thing she did was to have eucalyptus parquet flooring installed in the high-rise unit. It has a view of the Mauerpark, a park in the Prenzlauer Berg district that the Berlin Wall once ran through, she says. Fiori owns another small apartment not far from the Mauerpark, as well as a unit near Weinberg Park, in Mitte. Her husband owns an apartment building in the Moabit neighborhood, as well as three other individual apartments.
The real estate is, in a sense, the Fiori family's "Berlin fund," and expansions are always a possibility. Would they consider buying in another German city? "Oh no," she says, "it's much too expensive."
When a new Berliner runs into an old Berliner in this odd period of fear and euphoria, there's usually a moment when the conversation takes a turn for the worse. Is €500 rent for a heated, 60-square-meter apartment with plank flooring and a balcony with a view of the Spree River a ridiculously small amount? Or is it highway robbery?
Soon the old Berliner loses his temper because the new Berliner starts trying to explain the world -- and capitalism. Apartments are a commodity, the new Berliner says, and when demand increases, so do prices.
Cities that are considered cool are expensive. Prices in New York are outrageous, while costs are sky-high in London. Complaints about outrageous rents are part of the narrative of a successful city. But Berlin used to be an exception.
Pushed Out
The narrative of Berlin's transformation from an isolated Cold War island surrounded by a communist sea to a city famous for its artists and nightlife has always revolved around low rents. The eastern part of Berlin used to be a socialist city, while the western part was a frontier city kept alive by subsidies. Old buildings were crumbling in Prenzlauer Berg when it was part of East Berlin and in Kreuzberg in West Berlin. Even after reunification, rents remained low.
Now they are going up. According to GSW Immobilien AG, a major real estate firm in Berlin, rents increased by almost 8 percent in 2011. Some 85 percent of Berliners rent rather than own their homes, and their concerns over rising rents are also a symptom of the boom. The current conflict between renters and owners poses a threat to a way of life in Berlin. It threatens people with few material but high cultural standards, standards they associate with their Kiez, slang for their local living environment. For many Berliners, their Kiez represents a smaller, more manageable part of the big city they call home.
"It just makes you wonder where we're supposed to go," says Torsten, who works in the media industry. Taekker's three tenants, sitting on their roof deck in Kreuzberg, want to remain anonymous because they're afraid of being thrown out. But whether their fears are justified isn't quite clear. Taekker has owned their building since 2006. Last year, residents received a letter informing them that their rental apartments were going to be "converted" or, in other words, sold.
Jakob, who works in the music business, moved to the area 15 years ago "because everything was no nice and non-trendy." Now he's surrounded by hipsters, tourists and stroller-pushing mothers. "We have no problem with trendiness," says Jakob, "as long it doesn't drive us out." Henning, the third member of the trio, works in IT. He pays about €200 for his 35-square-meter apartment -- and that's all he can afford, he says.
When asked what exactly they have against Taekker, the men grow quiet. The Berlin press has recently described harassment of tenants by landlords, but no one in the building has heard anything about such behavior. "Their behavior is generally pretty decent," they say. The tenants in the building were able to prevent Taekker from raising rents by threatening a lawsuit. Some tenants accepted settlements and voluntarily left their apartments when they were sold. So what's so bad about Taekker? "They don't do anything for the building," says Torsten. "All they've done is install bike racks."
Born of Crisis
Meanwhile, Taekker is raving about the quality of old buildings and the beauty of the herringbone parquet flooring and plaster walls in his buildings. He feels that his way of doing things is more sustainable than the methods of many German investors. "They buy a building, strip it from the inside out and turn it into luxury apartments," he says. "It's the most profitable approach." For his part, Taekker leaves the renovation up to the buyers.
Taekker admits that he has done well in Berlin. "We showed up at the right time and bought in the right neighborhoods," he says, with satisfaction in his voice. One could also say that Berlin was Taekker's salvation. In 2008, his Danish parent company got caught up in the global financial crisis and was on the brink of bankruptcy. The company had taken out loans from Danish banks, such as Roskilde Bank and FIH Erhvervsbank. Roskilde declared bankruptcy, and FIH was acquired by the Icelandic bank Kaupthing Bank, which eventually had to be nationalized.
Taekker, as a customer of FIH, was on a list of Kaupthing borrowers published by Wikileaks. His German assets were used as collateral in the restructuring of the company. It was only thanks to his properties in Berlin that the company managed to get back on its feet, says Taekker. The company is now making a profit again.
The three tenants sitting on the roof deck have heard about these deals. The rumors revolve around an unusual geopolitical chain of events that ends in a Berlin apartment building. An investor from the north loses money in the global credit crisis in 2008, and his company only becomes profitable once again when the demand for his Berlin properties increases.
In a roundabout way, the bursting of the real estate bubble in the United States led to a real estate boom in Berlin years later. German investors who would normally put their money in the stock market started buying real estate in Berlin. Countries in southern Europe began to falter in the wake of the European debt crisis, and their citizens, seeking a safer place for their money, also came to Berlin. For Torsten, Jakob and Henning, the story boils down to a cash-strapped investor from the north selling apartments to people from the south trying to escape the crisis.
Getting in the Game
"Do you like the area?" Fiori asks her son, who has also come to Berlin from Italy for a few days. They are standing on a restaurant-lined section of Krossener Strasse in Friedrichshain. Fiori wants to show her son her latest purchase.
It's the first property she has bought in Friedrichshain, which strikes her as a nice neighborhood for young people. The 53-square-meter apartment has a large eat-in kitchen and a full bath. She had actually intended to pay no more than €2,000 per square meter, but she and Taekker eventually agreed on a price of €109,000, or €2,056 per square meter. Fiori is the first buyer in the building. Taekker has just started putting the apartments on the market, and the tenants have reportedly taken the news fairly well.
When Fiori started investing in Berlin five years ago, the average price per square meter for an unfurnished apartment in an older building was just €1,540. By the beginning of last year, it had gone up to €1,715. Fiori, like most buyers in Berlin, prefers older buildings. In Milan, where she lives, a nice apartment "still goes for about €4,000" per square meter, she says -- twice as much as in Friedrichshain.
Fiori is waiting for the sales contract, but the notary public is very busy at the moment and it'll take a few more days, says a Taekker employee. "But you'll receive two bottles of wine from us at the closing, organic wine," he adds. Both Taekker and his company value organic products, says the employee. "Aha," says Fiori. Then she asks when the next apartment will be available for purchase in the building.
The boom has turned many in Berlin into real estate experts and entrepreneurs, and there are many who want to play the game of Berlinopoly. The number of private buyers has gone up by 30 percent in the last five years. Whereas the last boom, between 2004 and 2007, was fueled by a handful of large institutional investors seeking short-term profits, today's investors include thousands of private individuals seeking long-term security in the German capital. Instead of the corporate raiders that were dubbed "locusts," many of today's real estate investors could more aptly be called "ants."
They include people like Micol Singarella. When the 30-year-old from Aprilia, near Rome, moved to Berlin a few years ago, she would never have dreamed that the euro crisis would turn her into a real estate broker. She studied literature and philosophy, and she now lives in a shared apartment in Friedrichshain that she describes as a sort of leftist residential project.
Singarella sells real estate from her room in the apartment or from a table at a local pub, mostly to relatives and acquaintances from her hometown in Italy. Half of Aprilia has already bought "Appartamenti a Berlino," the words she has printed on her business card. She recently sold three units in an apartment building in the Wedding district to the parents of a friend from Aprilia, a childhood friend and a teacher from her old school. "Some of my clients believe that if the euro collapses, they'll eventually get their money back in deutsche marks," Singarella says.
Her services also include finding tenants for the apartments once they've been purchased. It's the easiest part of her job. "Everyone seems to be moving to this city at the moment," she says. According to demographers, Berlin is experiencing a "positive net migration," which amounted to almost 40,000 new residents in 2011. At the same time, more and more people want to live alone, and the fact that one in three Berliners lives in a single household contributes to the boom.
Singarella's roommates sometimes ask her questions about her job. Is it okay to sell condominiums in Berlin, they ask? Or is she partly responsible for rising rents? And is she partly responsible for people losing their apartments? Singarella tells them that she doesn't sell to shady real estate funds, but to people who are worried about their savings. But sometimes she does ask herself whether she and all the others who are flocking to the city, bringing their money and their worries, aren't destroying a utopia.
Migrating Dreams
It's the dream of a big city where things don't work quite the way they do in other big cities, a European capital where retirees, students and families with little money can afford to live in good neighborhoods, where people like Jakob, the Taekker tenant, can make a living in the music business. This unique aspect of the city has been referred to as the "Berlin mix." Urban sociologists predict that this mix will not survive, at least not in downtown Berlin. They suspect that people with lower incomes will be forced out to the periphery, as they are in other cities. Berlin is merely catching up to a wider development, say real estate experts.
A cosmopolitan city with low rents? It would be a nice dream. But Jørn Taekker has a different dream. His latest project is the construction of a small, sustainable city north of Aarhus, his hometown in Denmark, and his company has already designed the master plan. An estimated 15,000 people will start moving to the 220-hectare (544-acre) city in 2015. It will be heated with solar and geothermal energy, there will be rainwater collection systems and there will be car-sharing for everyone. Taekker is investing his German profits in the Danish city. As an era comes to an end in Berlin, a new era is beginning near Aarhus. The new city will be called "Nye," the Danish word for "new."
Translated from the German by Christopher Sultan
It's very quite in Taekker's office, even though a dozen people are working at long tables doubling as desks. Fiori wants to reserve the Friedrichshain apartment, but she still has a few questions. When will the contract be ready? How quickly can the brokers find her a tenant? She doesn't like the fact that a lot of people have now discovered that there's money to be made with Berlin real estate. "Prices have really gone up. It's terrible," she says, sounding almost like a native Berliner.
Three years ago, Fiori was online when she discovered an apartment on Leipziger Strasse in the Mitte neighborhood. It was a 100-square-meter (1,076-square-foot) unit on the 20th floor, and she snapped it up at once. The first thing she did was to have eucalyptus parquet flooring installed in the high-rise unit. It has a view of the Mauerpark, a park in the Prenzlauer Berg district that the Berlin Wall once ran through, she says. Fiori owns another small apartment not far from the Mauerpark, as well as a unit near Weinberg Park, in Mitte. Her husband owns an apartment building in the Moabit neighborhood, as well as three other individual apartments.
The real estate is, in a sense, the Fiori family's "Berlin fund," and expansions are always a possibility. Would they consider buying in another German city? "Oh no," she says, "it's much too expensive."
When a new Berliner runs into an old Berliner in this odd period of fear and euphoria, there's usually a moment when the conversation takes a turn for the worse. Is €500 rent for a heated, 60-square-meter apartment with plank flooring and a balcony with a view of the Spree River a ridiculously small amount? Or is it highway robbery?
Soon the old Berliner loses his temper because the new Berliner starts trying to explain the world -- and capitalism. Apartments are a commodity, the new Berliner says, and when demand increases, so do prices.
Cities that are considered cool are expensive. Prices in New York are outrageous, while costs are sky-high in London. Complaints about outrageous rents are part of the narrative of a successful city. But Berlin used to be an exception.
Pushed Out
The narrative of Berlin's transformation from an isolated Cold War island surrounded by a communist sea to a city famous for its artists and nightlife has always revolved around low rents. The eastern part of Berlin used to be a socialist city, while the western part was a frontier city kept alive by subsidies. Old buildings were crumbling in Prenzlauer Berg when it was part of East Berlin and in Kreuzberg in West Berlin. Even after reunification, rents remained low.
Now they are going up. According to GSW Immobilien AG, a major real estate firm in Berlin, rents increased by almost 8 percent in 2011. Some 85 percent of Berliners rent rather than own their homes, and their concerns over rising rents are also a symptom of the boom. The current conflict between renters and owners poses a threat to a way of life in Berlin. It threatens people with few material but high cultural standards, standards they associate with their Kiez, slang for their local living environment. For many Berliners, their Kiez represents a smaller, more manageable part of the big city they call home.
"It just makes you wonder where we're supposed to go," says Torsten, who works in the media industry. Taekker's three tenants, sitting on their roof deck in Kreuzberg, want to remain anonymous because they're afraid of being thrown out. But whether their fears are justified isn't quite clear. Taekker has owned their building since 2006. Last year, residents received a letter informing them that their rental apartments were going to be "converted" or, in other words, sold.
Jakob, who works in the music business, moved to the area 15 years ago "because everything was no nice and non-trendy." Now he's surrounded by hipsters, tourists and stroller-pushing mothers. "We have no problem with trendiness," says Jakob, "as long it doesn't drive us out." Henning, the third member of the trio, works in IT. He pays about €200 for his 35-square-meter apartment -- and that's all he can afford, he says.
When asked what exactly they have against Taekker, the men grow quiet. The Berlin press has recently described harassment of tenants by landlords, but no one in the building has heard anything about such behavior. "Their behavior is generally pretty decent," they say. The tenants in the building were able to prevent Taekker from raising rents by threatening a lawsuit. Some tenants accepted settlements and voluntarily left their apartments when they were sold. So what's so bad about Taekker? "They don't do anything for the building," says Torsten. "All they've done is install bike racks."
Born of Crisis
Meanwhile, Taekker is raving about the quality of old buildings and the beauty of the herringbone parquet flooring and plaster walls in his buildings. He feels that his way of doing things is more sustainable than the methods of many German investors. "They buy a building, strip it from the inside out and turn it into luxury apartments," he says. "It's the most profitable approach." For his part, Taekker leaves the renovation up to the buyers.
Taekker admits that he has done well in Berlin. "We showed up at the right time and bought in the right neighborhoods," he says, with satisfaction in his voice. One could also say that Berlin was Taekker's salvation. In 2008, his Danish parent company got caught up in the global financial crisis and was on the brink of bankruptcy. The company had taken out loans from Danish banks, such as Roskilde Bank and FIH Erhvervsbank. Roskilde declared bankruptcy, and FIH was acquired by the Icelandic bank Kaupthing Bank, which eventually had to be nationalized.
Taekker, as a customer of FIH, was on a list of Kaupthing borrowers published by Wikileaks. His German assets were used as collateral in the restructuring of the company. It was only thanks to his properties in Berlin that the company managed to get back on its feet, says Taekker. The company is now making a profit again.
The three tenants sitting on the roof deck have heard about these deals. The rumors revolve around an unusual geopolitical chain of events that ends in a Berlin apartment building. An investor from the north loses money in the global credit crisis in 2008, and his company only becomes profitable once again when the demand for his Berlin properties increases.
In a roundabout way, the bursting of the real estate bubble in the United States led to a real estate boom in Berlin years later. German investors who would normally put their money in the stock market started buying real estate in Berlin. Countries in southern Europe began to falter in the wake of the European debt crisis, and their citizens, seeking a safer place for their money, also came to Berlin. For Torsten, Jakob and Henning, the story boils down to a cash-strapped investor from the north selling apartments to people from the south trying to escape the crisis.
Getting in the Game
"Do you like the area?" Fiori asks her son, who has also come to Berlin from Italy for a few days. They are standing on a restaurant-lined section of Krossener Strasse in Friedrichshain. Fiori wants to show her son her latest purchase.
It's the first property she has bought in Friedrichshain, which strikes her as a nice neighborhood for young people. The 53-square-meter apartment has a large eat-in kitchen and a full bath. She had actually intended to pay no more than €2,000 per square meter, but she and Taekker eventually agreed on a price of €109,000, or €2,056 per square meter. Fiori is the first buyer in the building. Taekker has just started putting the apartments on the market, and the tenants have reportedly taken the news fairly well.
When Fiori started investing in Berlin five years ago, the average price per square meter for an unfurnished apartment in an older building was just €1,540. By the beginning of last year, it had gone up to €1,715. Fiori, like most buyers in Berlin, prefers older buildings. In Milan, where she lives, a nice apartment "still goes for about €4,000" per square meter, she says -- twice as much as in Friedrichshain.
Fiori is waiting for the sales contract, but the notary public is very busy at the moment and it'll take a few more days, says a Taekker employee. "But you'll receive two bottles of wine from us at the closing, organic wine," he adds. Both Taekker and his company value organic products, says the employee. "Aha," says Fiori. Then she asks when the next apartment will be available for purchase in the building.
The boom has turned many in Berlin into real estate experts and entrepreneurs, and there are many who want to play the game of Berlinopoly. The number of private buyers has gone up by 30 percent in the last five years. Whereas the last boom, between 2004 and 2007, was fueled by a handful of large institutional investors seeking short-term profits, today's investors include thousands of private individuals seeking long-term security in the German capital. Instead of the corporate raiders that were dubbed "locusts," many of today's real estate investors could more aptly be called "ants."
They include people like Micol Singarella. When the 30-year-old from Aprilia, near Rome, moved to Berlin a few years ago, she would never have dreamed that the euro crisis would turn her into a real estate broker. She studied literature and philosophy, and she now lives in a shared apartment in Friedrichshain that she describes as a sort of leftist residential project.
Singarella sells real estate from her room in the apartment or from a table at a local pub, mostly to relatives and acquaintances from her hometown in Italy. Half of Aprilia has already bought "Appartamenti a Berlino," the words she has printed on her business card. She recently sold three units in an apartment building in the Wedding district to the parents of a friend from Aprilia, a childhood friend and a teacher from her old school. "Some of my clients believe that if the euro collapses, they'll eventually get their money back in deutsche marks," Singarella says.
Her services also include finding tenants for the apartments once they've been purchased. It's the easiest part of her job. "Everyone seems to be moving to this city at the moment," she says. According to demographers, Berlin is experiencing a "positive net migration," which amounted to almost 40,000 new residents in 2011. At the same time, more and more people want to live alone, and the fact that one in three Berliners lives in a single household contributes to the boom.
Singarella's roommates sometimes ask her questions about her job. Is it okay to sell condominiums in Berlin, they ask? Or is she partly responsible for rising rents? And is she partly responsible for people losing their apartments? Singarella tells them that she doesn't sell to shady real estate funds, but to people who are worried about their savings. But sometimes she does ask herself whether she and all the others who are flocking to the city, bringing their money and their worries, aren't destroying a utopia.
Migrating Dreams
It's the dream of a big city where things don't work quite the way they do in other big cities, a European capital where retirees, students and families with little money can afford to live in good neighborhoods, where people like Jakob, the Taekker tenant, can make a living in the music business. This unique aspect of the city has been referred to as the "Berlin mix." Urban sociologists predict that this mix will not survive, at least not in downtown Berlin. They suspect that people with lower incomes will be forced out to the periphery, as they are in other cities. Berlin is merely catching up to a wider development, say real estate experts.
A cosmopolitan city with low rents? It would be a nice dream. But Jørn Taekker has a different dream. His latest project is the construction of a small, sustainable city north of Aarhus, his hometown in Denmark, and his company has already designed the master plan. An estimated 15,000 people will start moving to the 220-hectare (544-acre) city in 2015. It will be heated with solar and geothermal energy, there will be rainwater collection systems and there will be car-sharing for everyone. Taekker is investing his German profits in the Danish city. As an era comes to an end in Berlin, a new era is beginning near Aarhus. The new city will be called "Nye," the Danish word for "new."
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