Realtor Thursday

A Special Interview

Dale Robyn Siegel sits down with RE/Max Business Development Manager, Kathrin Wagner-Leuschner at the Berlin HQ of RE/Max – Germany

I recently had the pleasure of visiting Berlin for a working vacation this past September. Of course, I covered all the tourist highlights such as visiting the opera, going on a Fat Tire Bike Tour, and wandering the state museums rebuilt after the war. I also set up several city walks and interviews with professionals to get a flavor and understanding of the real estate market in this European metropolis. The city was fascinating on so many levels, and their take on the economy, the banking sector, and real estate are quite different from the United States.

Berlin, the capital of Germany, is a city that has been through many changes since its birth in the 12^th century. It is currently one of Europe’s most cosmopolitan and expensive cities to both live in and visit as a tourist. It is a sprawling city of approximately 892 kilometers broken down into 23 districts or neighborhoods. The old and new architecture mix surprisingly well among the expansive green areas on either side of the Spree River and beyond. With a population of well over three million, the city has easy access to most other European areas by air or train.

During my trip I was pleased to have an extensive interview with two top RE/Max representatives: Kathrin Wagner-Leuschner, Business Development Manager and head of Franchise Development and Marketing in Berlin, and her colleague Dr. Norbert Ritter, also a Regional Director of RE/Max Germany. They were both informative and quite patient while I drilled them on an assortment of subjects as only a New Yorker would. In an hour long interview recorded via my Blackberry on August 30, 2010, they had a plethora of important details to share. I preserved their voices because their ideas definitely rang clear.

This interview is posted in two parts as it exceeds recommended word counts for blogs and there are two distinct topics covered here. Part I will cover information about living in the coty and the city itself. Part II leans towards the process of buying a home and the participation of the real estate agent with this. Both very interesting!

The following is an uncut transcription of my interview:

What is the population mix of the City, and what districts have the most residential concentration?

There are approximate three million people living in Berlin proper with over 80 different tongues spoken here. It is an international city made up of many notably different areas. There are the older, more stately, areas of Western Berlin, and then the new districts in the east that have new neighborhoods with young families, small shops, and a lot of restaurants. They are very distinct.

Most cities rate their neighborhoods by school performance, among other things. How is the educational system set up here in Berlin, and how would you rate what the public schools have to offer?

We have recently changed, or upgraded, our school system here to compete with education levels of other countries of the world. The education is much better now to prepare the children for higher education and work. Each district will have one or more schools depending on how many children are there. Of course, certain districts are known to have better levels of teachers and school support, and of course there is always private school if one chooses to have their children attend.

The government pays for the public transportation for the students to get to and from school, but only if the students live too far from the school. This is only for secondary school; primary schools must be within their own neighborhood, and there will be a school in their own neighborhood.

How is the real estate tax structured in Berlin?

For the first year, it is 4% of purchase price or 3.5% if you are living there as your primary home. Investors continue to pay an annual real estate property tax, but if the home is where you live, then you pay no taxes. Real estate taxes on rental income are paid by the investor—properties that are rented out as a business are taxed. There is no real estate taxes paid if it is your primary residence.

Do people fake investor properties as their homes to avoid such taxes?

Yes, but the government checks and there is a penalty for that! It is always quite difficult to get away with this, although people do try.

How does the city transport system fare, and how does it affect choosing a neighborhood to live?

Most people take public transportation to work and to travel around. The bus and subway system is very good and cheap enough to use all the time. Cars are important, but not so much for Berliners that live and work in the city. Even further outside the city, it is easy to take public transportation in to work. Obviously, it is cheaper for housing further out from the center, but the transportation is still available to get to anywhere in the city. It would be a trade-off as anything.

I understand that bikes are a popular mode of transportation in the city. How prevalent are bike lanes?

They are all over the city-lanes for bikers and skaters. We have created hundreds of kilometers of special safe bike lanes; unfortunately, bikers still use the auto lanes. The bike lanes did not really stop people from using public transportation, but people still ride—in fact, we [Berliners] are the capital of bikers in Germany. There are even parking garages especially for bikes, and there are several days a year that are destined only biker days and car-free Sundays throughout the country. You do not want to be in a car on those days. You can in fact go from Berlin to Copenhagen on only a bike lane- it is 500 kilometers nonstop! They do have special races on this one.

Green spaces seem to be quite large in the inner city—how would you describe your parks and city forests?

The largest urban forest in Europe is here in Berlin. Tiergarten occupies over 490 square acres of the city and was once the hunting grounds for the royals [About half as big as Central Park in New York]. We keep our city very green; as you see, there are many parks large and small throughout the city. The government makes sure that the land will never be developed in those areas, so instead they keep building around the outskirts, making Berlin larger.

Coming from New York City, I always am curious about urban garbage. How does Berlin deal with removal, recycling, and the Green Movement in general?

We are a green-minded people, so we are always looking at this. We have been recycling for 20 years: 25 cents for a glass container and 5 cents for a can. To get the money back you have to pay for it when you purchase and bring the container back to a recycling location for a refund. Garbage has to be recycled; plastic, glass and paper garbage is separated and picked up by the city for free. All other garbage, people have to pay for pick up: it is one time a week. Tenants typically pay, or it is included in the rent. It is very clean in Berlin—not like Singapore -there are no lashings [laughing] but there are fines for littering to deter, and, yes, it is clean there! Everybody does it as normal living.

Special money is issued by the government to homeowners who choose to make renovations or improvements to help with utilities. In other words, the government rewards homeowners to reduce their carbon footprint by going green. Interestingly, renters are most concerned with their cost of light and heat and demand proof of utility bills when home searching. Builders and landlord are required to have an Energy Passport, which is a documentation of the recorded use of heat, gas, and electricity associated with that property. It proves the cost of heat and electric. If the cost it too high, the rents will be lower. All builders must work within the criteria and produce the Energy Passports.

What is the effect of the global economy on Berliners?

In the last 20 years, the economy of Berlin has changed. They went from producing goods to being more of the service industries. A huge campus of manufacturing have gone east and left large buildings vacant in the fringes of the city. As many countries, it is cheaper to produce things outside of the country and come back. Companies such as Nokia have gone outside for cheaper labor. Berlin is hoping to become a research-type city of inventors, designers, and creators. It is not so easy to sell a service, but it will be the future of Germany because this is what they feel they need to do. Of course, automobiles are still produced throughout the country. Germany is the mother country of cars—the south of Germany will be producing cars for the next 100 years—so, don’t worry; your Mercedes is still the real thing. “Made in Germany” is a very proud slogan around the country, and we will not lose it.

How’s the employment situation faring, and what did the government do to save jobs in the past two years?

The government spent 34 billion Euros through the global crash to save the economy: [on] the banking industry especially and automobile jobs. The government devised a plan to have the auto industry keep their employees working by supplementing reduced hours. So instead of people not working and staying home, they continued to get up in the morning and go to work. The idea was to keep the people working but more importantly to keep the qualified workers around. The economy is really based on cars, and they knew it would turn around. The government created an automobile return programsimilar to Cars for Clunkers), and it was a success. This kept the production rolling even though at a slower pace. The qualified workers are still here, so it was a success.

How safe is Berlin?

Berlin is a city that is still growing; it is growing outside. Small towns of the past are now part of the city limits. [I was at this point shown a large map and chart provided by the local police department.] It is now one of the safest cites to live: crimes against life in 2009 there were 269 cases71 murders a lot but a small percentage compared to the overall population. The city does not have security surveillance–perhaps a bit of Big Brother is watching scares them. Recently Google Streets has been approved to cover Berlin; it was fought tooth and nail, but the people lost against big Google. However, if you do not want your home address or car license plate on the Google Street maps, you need to contact the government and give them your name address, date of birth, and all other information in order to be released from it. Funny?

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Dale Robyn Siegel is a financial writer and author of the award winning book, The New Rules for Mortgages. She is an expert on residential real estate and writes about the changes in the industry. Dale is often quoted in national publications on residential finance. She is an avid traveler, and pens a series of on her city visits called Four Days in……. Places she has visited and written about in the past year are Dublin, London, Montreal and Berlin. Most recently, Dale has been to Cairo, Egypt to understand real estate and finance as it was during the Pyramid Age. She can be reached at dale (at) dalesiegel.com