Early 1990’s
In the early nineties the wall had come down and there was a very big expectation of what was going to happen in Berlin, as it was to become the capital of Germany with the Government moving to the city.

1. The government provided many tax breaks for people to invest in Berlin.

2. The German economy was doing very well.

3. The Banks were giving as much as 110% loans to people to buy property in Berlin.

All of this led to a lot of new building developments especially commercial property.

By the year 2000 all had changed.

1. Germany was in recession.

2. Berlin gained many administrative jobs linked to the Government but it lost 300,000 manufacturing jobs.

3. The banks now had a lot of non-performing mortgages on their hands.

4. The Government brought in new lending rules to insure that people could not get 100% loans again for property. Sixty % was the suggested guideline.

5. Property prices had fallen dramatically.

6. When prices are falling people keep waiting for the bottom, which causes property to fall further as there are no buyers.

Now in 2005 the situation appears to be as follows.

1. Most banks are finishing up clearing out their non-performing loans.

2. Very little new houses have been built during the last 5 years. In fact the housing stock is falling, as there are some Ballymun style buildings, which are being demolished.

3. There is still a considerable surplus of commercial property overhanging the market.

4. Banks are now starting to loosen the purse strings and are giving better borrowing terms to people with a track record in the property business.

5. Foreigners especially American Funds, Jewish people and some from Italy, Denmark and Austria are starting to actively seek property in Berlin.

6. German Economy is showing the first signs of growth after the recession. Growth in 2004 was approx 1.5% compared to a negative growth of -.5% in 2003.