Valuable Lessons On Berlin’s Real Estate Future

A little summary of 4 major lessons learned at the TOA satelite panel event on the topic “Why real estate is ripe for disruption.” The panel took place on July 17th at Karakulowa in Kreuzberg and was hosted by Go—PopUp and Setting. If you let, rent, buy or need real estate, you should read on.

It’s a hot and sweaty Friday afternoon, when a small crowd of twenty- to thirty-somethings enters the pleasantly cool rooms of an old butchery located on Graefestraße in the heart of Berlin Kreuzberg. The shop windows are flooded with warm sunlight, the historic walls are covered with antique floral tiles and beautiful crumbeling stucco decorates the high ceilings, giving an almost other-worldly feel to the location. Unique locations like this one are disappearing rapidly, affordable empty space is becoming a very scarce ressource in central Berlin, making it increasingly difficult for creatives and young entrepreneurs to find leases for their ateliers, creative projects or small retail businesses. Commercial as well as private sector property prices have been sky rocketing in the German capital for the past few years, obviously with no or little adjustments to resident’s shockingly low salaries.

Experts talk real estate turkey in the butchery

Everybody, who is taking a seat in the old butchery space, is somewhat aware of the problems that are shaping the dim reality of Berlin’s real estate market, everybody in the room at least once has been through the painful process of visiting an overpriced appartment who-knows-where, with 50 other people in line and hands full of documents for who-knows-what. But on this particular Friday afternoon, 6 of those people are speaking up, asking questions, discussing possible solutions and shedding light on a pressing social and commercial issue: Why Berlin’s real estate is ripe for disruption. While the answers given by the 5 panelist and one presenting hostess Caroline de Jager were long, complex and peppered with many more questions, we put our brains to it and identified the 4 most valuable lessons to be learned about Berlin’s present and future property market.

(Left: Caroline de Jager, right: Andreas Krüger)

Lesson 1: Going off the beaten track and creating value through sensible usage

If you were to take real estate advice from one person only, it should be Andreas Krüger. He really knows (t)his city. The CEO of belius (former Modulor Projekt) was the driving force behind exemplary urban development projects, like Moritzplatz, with the art supply shop Modulor, the urban gardening project Prinzessinnengärten and the co-working and creative space betahaus. His credo: “Don’t put profit but sense and usage first.” For about 70 years nobody was interested in the piece of land around Moritzplatz. From both, the eastern and the western side of the city, Berliner’s (including the senat) saw it as a no man’s land or “the end of the world” as Andreas puts it. After acquiring the land in 2009 and developing the area by finding suitable projects and businesses, the result is not only a socially, culturally and creatively successful “Berliner Mix”, but land value that has been quadrupled to  become a nearly 16 million’s worth filet piece of city. There are countless lesson’s to be learned from Andreas Krüger, one important one being, that we should all dare to think outside of the S-Bahnring, which is still drawing an invisible border between highly demanded property and property that is basically considered wasteland. “Just take a walk through areas like Oberschöneweide or Viktoriastadt and simply take over what’s there! There are millions of hectares of undeveloped land in Berlin, to realize projects of any scale.” In Andrea’s view and contrary to common believes, the location is not what is most important, rather finding the perfect match for projects and creating awareness. “If the music is loud enough, people will come to you.”

(Middle: Patrick Burkert, right: Johnathan Teh)

Lesson 2: Pop-Up Stores are a great tool to create awareness for a product, a business or an property

Patrick Burkert initially co-founded Go—PopUp (formerly known as PopUp Berlin) because he wanted to spread the word about pop-up shops and events. He then continued, after having been ever so frequently approached by people on the lookout for empty spaces, to open their pop-ups in. Ever since, finding these empty spaces and matching them to entrepreneurs and companies with pop-up concepts, has been one of the main areas of focus for Go—PopUp. “We take our role as matchmaker between spaces and ideas very seriously and are taking on the challange to educate the market about the value, a pop-up creates beyond any net rent profits.” The pop-up cannot only be a business model in itself, moreover, it provides a powerful marketing tool, like a 3D billboard, generating a huge buzz. “It can be that loud music, that Andreas Krüger is talking about”, says Patrick. Imagine an empty, old storage depot somewhere in a dead end of Berlin – it is part of our vision to bring in multiple complementary brands into such locations, who in turn bring along their social media crowds, as a result benefit each other’s success, bring a deserted area back to life and naturally give the landlord or owner some income, they would otherwise have forfeited.”

(Andre Torkler)

Lesson 3: The private property agent is a model to be discontinued