One of the common dilemmas that arise when considering investing in Berlin is whether to invest in a large apartment or a small one.
The answer, of course, depends on the investor’s needs and goals.
A small apartment, roughly 30-40 m2 in size, demands a lower capital investment and therefore fits the wallet of a wider range of potential investors. Statistically, the rate at which tenants change in these flats is much higher, allowing the owner more freedom of rent adjustment making the process much easier. In addition, these flats can conveniently serve as vacation apartments. Short term rental is an accommodation-niche that has been growing rapidly in Berlin, which is in the top three tourist destinations in all of Europe.
Another interesting advantage in buying small apartments is the capacity of risk distribution the buyer can achieve by purchasing two or three studio apartments instead of one large apartment. This strategy allows for greater flexibility for the investor, who can make an exit from one of the flats at any time while holding on to the others.
The main disadvantage of small apartments is that they are less in-demand by local residents, like the young couples or families who wish to buy a flat in Berlin.
Such local purchasers prefer large flats for themselves and their current or future families. Berlin is currently undergoing a revolution in real estate field, showing a large trend of apartments purchased for personal use by residences. Families can get mortgages of up to 80-90% of the property value, and much like families in Israel, the purchase of an apartment is perceived as a one-time move. This means that the buyers are willing to pay a high price for the specific location and flat size they prefer. The highest demand is for apartments of 80 m2 larger—especially ones with balconies, an addition that translates to higher prices for the largest apartments on the market.
Inspiration Group’s projects have large apartments offered at extremely affordable prices. Why?
Since these are apartments with a greater square-footage, their absolute price is higher – between 150-200 thousand Euros for a spacious apartment compared to 65-80 thousand Euros for a small apartment.
In order to make large apartments more attractive to the Israeli investor, we offer a significant discount for the large apartments—a larger discount than that offered for the smaller apartments in our projects.
For example: apartment No. 30 in the Muggel 31 Project in Friedrichshain quarter is 38 m2 and sells for a rate of 2,100 Euro per square meter – a 10% discount compared to the market price of a similar sized apartment.
Apartment No. 3 in the same project (both have undergone significant renovations in the past few years) has a total area of 96 m2 and sells for 2,100 Euro per square meter—a 25% discount compared to the list price for an apartment of similar size!
The decision of whether to buy a large or small apartment depends, of course, on your investment profile and the resources available to you as the investor. Either way, we will be happy to consult you in order to help you reach the best decision for you.