London’s rivals: the case for Berlin as alternative financial hub Germany’s capital offers a growing tech sector and lower property prices for those looking to move on in the wake of Brexit Read next Brussels hustles for business from London.
Berlin is already showing a strong appeal to Londoners deserting the UK, although few of them are bankers. Its booming tech and start-up sectors are luring British twenty-something coders, designers and software professionals to the city. In Berlin, jobs in the information and communication sectors grew by more than a fifth in the decade to 2015, according to Oxford Economics. Between 2013 and 2020, McKinsey estimates that Berlin’s start-up sector could create 100,000 new jobs.
Karl Zeller of local agent Bewocon, estimates that 15,000 former Londoners now live in Berlin — 50 per cent more than in 2013. Hipsters who have escaped bankers’ bars in Shoreditch for trendy Kreuzberg will be dismayed to learn that Berlin also has a sizeable financial sector. Bundled up with the broader “business” category, it comprised 30 per cent of the city’s economy in 2015, a total of $55bn a year, according to Oxford Economics. This is not far off the $63bn generated by financial and business services in Frankfurt, Germany’s financial capital. Berlin’s growing tech scene is only one reason for the city’s appeal to émigré Londoners. The other is property prices that are a fraction of those in the UK capital. According to Savills, average prices for prime Berlin homes are €5,480 per sq metre; in London it is €14,100 per sq metre, rising to €23,400 in central London. Berlin property may not remain a bargain for long, however. Knight Frank estimates prime prices gained 9 per cent in the year to December 2016 and 31 per cent in the three years to then.
Three-bedroom loft conversion apartment in Charlottenburg, €3.75m Recent price inflation is partly due to a shortage of supply. Until 2008 Berlin was characterised by empty apartments, says Zeller. The city authorities responded by cutting back on their building projects; there was a virtual standstill in publicly funded buildings until 2012, he says. Today, this approach looks short-sighted. By September 2015, roughly 40,000 people were arriving in Berlin every year, according to Ziegert, a Berlin estate agent. Professor Michael Voigtländer, of the Cologne Institute for Economic Research, estimates demand for living space will grow a further 15 per cent between 2012 and 2030.
Today, besides Kreuzberg, south of Berlin’s historic centre, many hipsters look for a home in Tiergarten. To the west of Berlin’s centre, around the huge public park, the area boasts a wide ethnic mix and low rents, says Jörg Schmidt of Ziegert. Emigré bankers are more likely to opt for Mitte. The East Berlin heartland was heavily bombed during the war, with many areas left undeveloped in the years that followed. Now, a range of smart new building units are springing up between the area’s iconic landmarks, which include the Brandenburg Gate and Museum Island. A short walk from the Brandenburg Gate, in Potsdamer Platz, Sotheby’s is selling a two-bedroom apartment for €2.95m.
Charlottenburg, in the former West Berlin, which boasts some of the city’s finest shopping, is another prime location. On the square at Wittenbergplatz, in Charlottenburg, Bewocon is selling a one-bedroom penthouse for €4.78m. On the edge of Charlottenburg, off the Kurfürstendamm, one of Berlin’s most prestigious avenues, Sotheby’s is selling a three-bedroom apartment with a roof terrace and sauna for €3.75m. If the UK’s exit from the EU does culminate in London’s bankers fetching up in Berlin, they can expect a warm welcome from locals — if not London hipsters. In 2016, the Association of German Banks found that 89 per cent of Germans were satisfied with their bank, an even higher proportion than in 2008, before the financial crisis, when the figure was 82 per cent. What you can buy for . . . €500,000 A small two-bedroom apartment on Auguststrasse in Mitte €1m A three-bedroom house with a small garden, near Lake Havel in Wannsee €2m A three-bedroom penthouse in Prenzlauer Berg, north-east of the centre City assets
● Accessibility There are direct flights from Berlin to New York (nine hours) and to London (one hour, 50 minutes)
● Regulation Germany is the 17th easiest country in the world in which to do business, according to the World Bank’s latest index
● Existing infrastructure Brandenburg Gate is two minutes by subway from the financial district in Potsdamer Platz. Subway and suburban trains are supplemented by a large tram network
● Residential property Average prime prices are about a third of those in prime central London and less than half of prime Paris. The cost of living in Berlin is roughly 25 per cent cheaper than that of London