Berlin: a city in a state of nervous flux

Some Berliners worry the city’s free spirit – and affordable rents – are being eroded by property speculation

Derek Scally in his neighbourhood in the Wilmersdorf area in western Berlin.

Derek Scally in his neighbourhood in the Wilmersdorf area in western Berlin.

Thu, Aug 14, 2014, 01:00

A quarter of a century after toppling its dividing wall, Berlin is growing together and growing up. Now on its sixth iteration in a century, the German capital remains in a state of nervous flux. After imperial, Weimar, Third Reich and two Cold War Berlins, today’s united city is a self-governing city-state in Germany’s 16-state federal structure and, since 1999, the seat of the federal government. At 892sq km it’s slightly smaller than the greater Dublin region, with a population of 3.4 million, growing to 4.5 million in the metropolitan area.

Decades off the grid made Berlin the capital that capitalism forgot. These days, however, it is so popular with tourists, hipsters and investors, that locals worry the city they loved is vanishing before their eyes.

I live in the western neighbourhood of Wilmersdorf, south of the leafy Kurfürstendamm that is western Berlin’s main thoroughfare. Like Charlottenburg to the north, Wilmersdorf was built later than the eastern city centre, mostly after German unification in 1871. The streets here were home – and playground – for the city’s new professional, creative class, including many secular Jews.

Albert Einstein lived here in the decades before E came to equal mc2. Around the corner from him lived Anita Berber, the Weimar-era performance artist notorious for her drug-induced naked dance routines.

The area’s buildings range from stuccoed Jugendstil apartments to bombastic Nazi-era blocks and, where I live, Bauhaus apartments built around green, block-sized courtyards.

Like most Berlin neighbourhoods, Wilmersdorf offers a self-contained residential-commercial mix. There is no shortage of money – or Russians – living here, judging by the proliferation of badly-parked Porsches and the fur-caviar concentration at the weekend markets. There are five train lines, half a dozen buses, and the Autobahn lies at the district’s outer perimeter for quick exits. There are good facilities for families, too: larger apartments, good schools, roomy playgrounds and parks, not to mention the Grunewald forest and lakes to the west.

While life in the German capital is far less stressful than London, Paris or even Dublin, there is definitely a charge in the air that wasn’t here before. But it’s hard to know when the switch was flicked.

Some say it was the 2006 World Cup that put Berlin back on the map it had slipped off decades earlier. Others say the adrenalin shot came during the euro crisis as investors – German and foreign – sought a safe haven for their capital. They moved in en masse and, from an admittedly low base, the Berlin residential property market has taken off. Irish investors were among those who moved in during the past decade. Some made a packet, others lost their shirt and departed with a bad reputation for flipping buildings for profit and to hell with the tenants.

If you eavesdrop on conversations in Berlin today, you hear worried talk of evictions, luxury renovations and displacement – reflecting a rapid change that has left many Berliners reeling.

Average prices for new rentals are rising steadily – up 9 per cent to about €8 per sq m in the past 12 months – meaning a 70sq m two-room apartment (excluding kitchen and bathroom) costs €560 excluding, and roughly €700 after utilities. Look in popular inner city areas – Mitte, Prenzlauer Berg and Kreuzberg – and you’ll probably pay a lot more than that. On the property sales front, volume rose 18 per cent between 2010 and 2013 with a 35 per cent rise in prices during the same period to €3.9 billion last year.

The drastic price rises have prompted warnings from the Bundesbank and federal finance minister Wolfgang Schäuble. But experts have yet to concede Berlin is experiencing a classic property bubble because the price hikes have not sparked a rise in bank borrowing. Instead Berliners are feeling a pressure similar to Dubliners: a squeeze caused by cash buyers and a huge demand not matched by supply.

Rising market
Berlin-based Irish developer Adrian O’Sullivan says the rising price of land – €346 per sq m in 2013, up 90 per cent in a year – means developers seeking a decent yield are charging prices far beyond what Berliners are used to paying – or can afford to pay – given traditionally low earnings and a decade of flatlining salaries.

“That means the market is rising with money from Russia, Tel Aviv or from wealthier Germans outside Berlin who, for whatever reason, don’t want to leave their money in the bank,” he says.

Berliners are trapped between two camps: one that says property prices are inflated by 25 per cent and an opposing camp insisting the German capital is merely undergoing a radical price correction after several undervalued decades. Either way, the squeeze is on and many Berliners are being pushed out of central neighbourhoods.

“There’s a new level of greed that wasn’t here before,” says Irish film-maker Martin Duffy, who moved to Berlin 12 years ago. For nine years his rent in the popular Schöneberg neighbourhood was stable until a Scots-German investor bought the building and drove up costs by 30 per cent.

After Duffy fell into arrears – due to a bereavement in his family and an emergency in his partner’s family – he received an eviction notice. Duffy paid the arrears but the landlord has pursued them through the courts for 18 months.

Duffy and his partner won in two instances but were in court again last week for the third, final instance. He had to present his sister’s death certificate while his partner’s 91-year-old mother was also asked to testify. She suffered a stroke the day before and was hospitalised.

In a surreal court case Stefan Guhde, lawyer for Duffy’s landlord, admitted he didn’t want to be there and didn’t expect to win, but that his client insisted on seeing the case through to the end.“This case is a mosaic stone in a larger picture in Berlin of a new landlord-driven market,” said Guhde.

A decade ago Martin Duffy wrote a love letter to Berlin’s tenancy culture in this newspaper, which today reads like an obituary for a vanished era.

‘Social contract’
“We have security of tenure here,” he wrote. “It’s a social contract: the buildings were funded or bought by people who make their money renting out the flats in a way that respects those who rent.”

Today Duffy sees parallels with Dublin’s Temple Bar when investors moved in to “improve” the district. “Berlin is becoming the capital of Europe and the days when you could live a low-key, affordable life are numbered. The place is one big investment property now. You still have rights and security as a tenant, but at a much higher price.”

A quarter century on, east and west Berlin have grown back together but new divisions have emerged: between those who see a property bubble and those who see a price correction; those worried Berlin’s free spirit is being smothered by property speculation and others who say the city is simply shedding another skin, as it has done with regularity over centuries of “always becoming, never being”.

Last week in an old neighbourhood, my eye was drawn to a slogan sprayed on a shop shutter: “Proletariat to the outskirts?” A fact of life in other capital cities is, in Berlin, still a hotly-disputed question – for now.

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