Germany Trade and Invest is the foreign trade and inward investment agency of the Federal Republic of Germany. Formed following the merger of the German Office for Foreign Trade and the Invest in...
Berlin, the capital city of Germany is one of the 16 states of the country. The city is one of the most important cities not only in European Union but also in the world. The city is known to be one of the most technologically advanced cities in the European Union with positive business outlook and vibrant culture.
The German capital city is also the largest city of the country. It is home to about 3.5 million inhabitants and consequently the second most populated city and the eight most populated urban areas in the European Union (EU). The city is located right in the centre of Berlin – Brandenburg Metropolitan Area. The city has a very strategic geographic positioning in the European plains. The city is located on the Eastern Germany and it shares its border with Poland. Almost one third of the city’s territory comprises of parks, beautiful gardens, lakes, rivers and forests.
Since the fall of the historically significant Berlin Wall and the declaration of its designation as the capital of Germany, Berlin has undergone a drastic change as a location for international business.
Business experts in the city suggest that the city of Berlin will continue to attract foreign investors in to the German market. The capital city is one of the most attractive investing destinations in its different sectors. New business entities investing in different sectors of Berlin can get valuable returns by investing in the manufacture of innovative products with modern styles, especially in the consumer good sector. Generally, German locals have a talent for advanced technology and innovation.
During the past 15 years, the economy of Berlin has undergone a radical structural change. Today, Berlin is seeing a tremendous growth in the service sector, construction and manufacturing sector. One of the major reasons for the rapid business development is the financial funding the city received from the European structural funds that was used for the development of the infrastructure of the city. The city received about €1.3 billion from the EU for the development of the city, which will be allocated over a period of six years until 2013.
The government of Germany has been proactive and has laid out ambitious plans to attract maximum foreign investment in the country, especially in major cities like Berlin. To encourage FDI in the city, the Federal government of Germany provides several financial grants to foreign investors. The grants are mainly in terms of tax exemptions on the capital gains and business loans at discounted rate of interest. The government doesn’t discriminate between the local and foreign investors in terms of providing them a reduced marginal taxation rate. Besides, to help foreign companies, the German government has laid out very flexible labor laws, and the investors can now benefit from the highly educated labor class with advanced technical knowledge at a very cheap rate.
The German government has put forth very flexible business regulations. The rules for establishing a business in Berlin are simple and all the work is kept transparent to retain the interest of the investors. Barring a few sensitive industries which require high protection standards, the government allows private players to invest in all other sectors.
Berlin offers a myriad of investment opportunities for foreign companies to invest in its diverse sectors. The world class business environment, the potential for economic growth, liberal, stable bureaucratic set-up and a good, transparent legal system has attract foreign companies from different countries to invest in Berlin. This not helps the foreign investors to not only invest in the country and establish their business in the city without any hassle but it also it encourages the investors to reinvest there.
In addition, to the favorable business environment and the co-operative political, legal and judicial system in place, Berlin also has a very strong and competitive market for exports. Foreign investors consider investing in the following sectors that offers promising returns on capital investment.
The investment in the real estate sector is rapidly increasing through out Germany especially in major cities like Berlin. An Economic Research Institute based in Essen suggested that the foreign investment in the German real estate sector is likely to increase by up to 2 – 3% over the next couple of years.
The major contributing factor for the increase in foreign investment in Berlin real estate is the rapid growth of the city’s economy. Foreign investors are reaping great benefits from the low property prices prevailing in Berlin. The real estate prices in Berlin are about 30% low than other German cities.
Studies suggest that only 40% of the Germans have their own property. However, due to the growing purchasing power of the people, the demand for buying property and subsequently the prices for it is also likely to increase in the forthcoming years. Foreign real estate companies can cash in on this opportunity and get valuable returns on their investments. The German government’s ambitious plan to liberalize the mortgage market is sure to boost foreign investment in the Berlin real estate sector further.
Besides the Real Estate Industry, Berlin has several other sectors that investors can consider investing in including:
• Chemical industry
• Ship building
• Food and beverages
Berlin is truly a world class business destination and its well developed business sectors are poised to provide great value to foreign investors.
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