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I think Berlins "Poor but happy" times are fast coming to an end. Rents have been rising quickly the last few years and tech companies and startups becoming mor
by mhomde 8y ago
I think Berlins "Poor but happy" times are fast coming to an end. Rents have been rising quickly the last few years and tech companies and startups becoming more prevalent. Heck, Neukölln went from being a cheap alternative to being as trendy and expensive as Kreuzberg.
Berlin kinda, from what I understand, enjoyed it's special culture much because it wasn't an industrial city and lacked an large international airport, but cheap rent, international vibe and fun hipster values seems like the perfect void for tech to move into now that rents and prices in the usual "big cities" have gone through the roof. I can also imagine cities like Amsterdam and Berlin getting some Brexit escapees.
Mark my words, Berlin will be Europe's Silicon Valley within a few years.
- aestetix 8y agoI think this is overblown. The Berlin "housing crisis" is only happening in a few trendy neighborhoods-- Neuköln, Kreuzberg, F-schein, etc. There is a rather ill-informed effort to attempt to compare it to, for example, what is happening in the Bay Area, which is absurd. In the Bay Area, any place to live within walking distance of public transit is so expensive that only tech workers can afford it, extending far beyond the San Francisco/Oakland city limits. In Berlin, if you don't mind living in one of the less "cool" neighborhoods, or gasp outside the Ringbahn, you will be fine. I think the issue is that two decades ago, rents in Berlin were absurdly cheap for a number of reasons related to the DDR, and now things are starting to normalize a bit so people are complaining.
- uhnuhnuhn 8y agoThe Berlin housing crisis is very much happening almost everywhere. City-wide average rents increased 45% between 2009-2015. Rents doubled in some districts in that timeframe and even in the least affected areas (Marzahn and Spandau) rents increased by more than 30%.
- aestetix 8y agoI'd argue that's a reflection on what I said before (prices normalizing from dirt-cheap). I do not consider these numbers a crisis at all. Here is an example of why the Bay Area is in a crisis: https://abcnews.go.com/US/san-francisco-resident-fights-sudden-rent-hike-400/story?id=40158270 https://abcnews.go.com/US/san-francisco-resident-fights-sudd... A San Francisco man had his rent increased from $1800 a month to $8000 a month. True, it is one of the more extreme examples, but this is what I would call a crisis. Can you show me examples like this from Berlin?
- jpla 8y agoThe situation are a bit different though. The Bay Area is competitive despite its housing market, while Berlin to a large extent is competitive because of its housing market. If rents become similar to other major European cities Berlin will lose a lot of its appeal and potential compared to those other cities.
- jpatokal 8y agoSilicon Valley became what it is today because there was cheap industrial land for chip fabs and random startups.
- jpla 8y agoDebatable. As far as I know it wasn't really until around 2000 that Silicon Valley became dominate enough to really set it apart from other regional technology centers like Dallas, Boston or Pittsburgh. In any case that doesn't really help Berlin if it takes, say, five years for its housing market to catch up to its European neighbors.
- evanlivingston 8y agoWhat? You're overlooking an enormous number of factors. If it's cheap industrial land alone that made Silicon Valley how did Texas, Nevada, The Midwest and other places miss out on a tech business boom?
- ido 8y ago45% in 6 years is 6.21% compound per year, which is not unusually high for that time scale for an attractive large city.
- kayoone 8y agobut rent was also dirt cheap in 2000-2010, so its more moving towards the average in other big german cities now.
- erikb 8y agoEven in Lichtenberg, certainly not trendy at all, rents have increased significantly (although not doubled yet afaik).
- scandox 8y agoEven 5 years ago when I spent 3 months in Berlin the idea of calling Neuköln trendy would have seemed pretty nuts. So I think that suggests something radical is happening.
- ido 8y agoI think your memory may be faulty or you weren't that well integrated into the local "scene". 5 years ago was 2013, I was already living in Berlin back then and Neuköln was already billed as "the next Kreuzberg". 10 years ago...you may have had a point. But also remember that then and now we're only talking about very specific areas of Neuköln which are super hip, it's actually a huge district and most of it is still "not cool". The bits close to Tempelhofer Feld and Kreuzberg have been gentrifying for many years.
- scandox 8y agoYou're spot on. I just checked and I was there in 2009. Feeling old now.
- drinchev 8y ago> Berlin will be Europe's Silicon Valley within a few years. Things that need to happen before this : 1. Salaries need to grow faster. Rent is really high for the new comers specialists. 2. Companies need to increase the salary gap between good and bad workers. Right now you are not able to negotiate more than 10% on top of the "average" salary. 3. Germany needs to fix the privileges of employees having options / shares of the company. With the current legislation / founders attitude is quite boring and useless.
- mhomde 8y agoYeah I guess that's what stemming the tide :) Also a lot of German companies seem to require that you speak German. I know awesome programmers/designers living in Berlin but if they work for Berlin companies they seem to earn a pittance of what they'd would in for instance Stockholm. But if more tech companies, like Soundcloud, imports themselves into Berlin and Germany, employees and all, that will change. Can it be because venture capital hasn't come to Berlin/Germany in a big way yet? Typically German companies seems more aimed at the German market rather than an international one, which maybe doesn't fuel a bubble as quickly.
- drinchev 8y agoTypical Berlin startups as of 2018 usually look for importing developers from other countries with relocation help. This, IMHO, is already the beginning of the salary increase, which is inevitable. Unfortunately the progressive taxation [1] is quite complicated and makes it impossible to increase your life-style with just a salary bump. I guess that's one of the reasons Berlin is still considered as temporary place to work, before you find "something better". 1 : http://www.drinchev.com/blog/germany-freelancing-and-taxes/ http://www.drinchev.com/blog/germany-freelancing-and-taxes/
- valarauca1 8y ago> Salaries need to grow faster Berlin software engineer salaries are seriously worse then any where in america. I’ve seen desktop IT support in the US MidWest pay more than developers in Berlin. Hard to convince me to move internationally and write code. I can just move home, write zero code, and spend all day telling people to try, “turning it off and on again”. Cashing identical value checks.
- oblio 8y agoSorry for the hipsters, but Berlin is the capital of the biggest economy in Europe and it was once one of the biggest metropolises in the world plus one of the biggest hubs of economy and science. It was always destined to go towards its past glory once Germany reunited. The only question was: "how long will it take for that to happen?".
- mhomde 8y agoMaybe Leipzig is the new Berlin :)
- iuguy 8y agoNah, Bielefeld is where it's at ;)
- Schaulustiger 8y agoIt's closer to just being Hypezig. Source: am from Leipzig.
- rurban 8y agoIf so then Dresden. Dresden has all the brains and the industry. Plus it's the most beautiful town in Germany.
- barrkel 8y agoGermany (Prussia in particular) extended quite a ways further east of Berlin when it was capital before; Berlin was the Prussian capital. It is however very central for Europe, and is fairly well placed for growth in the eastern EU.
- ksec 8y agoSlightly Off Topic: I thought Germany has some form of protection by law so rent and property market don't get to hike the prices to whatever they want. So while the world 's property market is on fire by QE, Berlin hasn't moved a needle at all. So why has rent risen so much?
- Isn0gud 8y agoIt has risen for newer rentals. If I remember correctly, you can increase the rent max 3% per year for an ongoing contract and 10% in a new rental contract.
- adulakis 8y agoCity has failed to provide enough housing for incoming people. There is for example an old unused airport (Tempelhof) standing empy at prime location.
- m_fayer 8y agoIt's not empty. It's an enormous, unique, and beloved park that is starting to become as major an icon of Berlin as the Fernsehturm.
- stiGGG 8y agoIt's mainly because the rents in Berlin had been comparatively extremely low in average. What happened in the last 5-10 years is more or less an adjustment to other cities in Germany e.g. Hamburg or Munich. But it is a big problem, the typical young IT worker can afford it, but the wages of "normal" workers didn't rise much, so gentrification happened like crazy in all central districts.
- passiveincomelg 8y agoThey always find some loophole. Often it's some kind of construction work like "improving isolation". AFAIK the rent control laws also don't apply for furnished flats.
- taejo 8y agoGermany has fairly strong protection against rent increases for existing tenants: during a tenancy the rent can only increase up to the "ortsübliche Vergleichsmiete" (average rent of comparable properties in the same town), and by a maximum of 15%/20% (depending on location, 15% in Berlin) over three years. In Berlin and many other cities there's also rent stabilization ("Mietpreisbremse") for new tenants: new leases on old properties may not exceed the maximum of 110% of the "ortsübliche Vergleichsmiete" and the previous tenant's rent. This falls away if the property is substantially renovated. Renovations can stop both of these from working: in the former case by increasing the value of the apartment so that the set of "comparable properties" is much more expensive, possibly forcing the current tenant out so a new, wealthier tenant can be found to negotiate a new contract; in the second case, the control falls away completely if the value of renovations in the last five (?) years is at least a third of the total value. The Mietpreisbremse is widely ignored: advertised rents exceed the limit for more often than not, and the landlords choose tenants they think are least likely to sue over it. The worst case for the landlord is that they have to pay back the difference from the point where the tenant complained; the best case is that the Federal Constitutional Court invalidates the law (which is fairly new and not yet judicially tested).
- LifeLiverTransp 8y ago>Mark my words, Berlin will be Europe's Silicon Valley within a few years. It might happen- but it still wont have an airport.
- Mashimo 8y agoNice overview of the cost involved of trying to build the Berlin Airport: https://www.flughafen-berlin-kosten.de/ https://www.flughafen-berlin-kosten.de/
- dx034 8y agoIt'll probably still have two airports.. Luckily the flight to Frankfurt is short and from there you can connect to most places in the world. But wouldn't be surprised if Tegel gets a few more direct connection to the US west coast.
- hknd 8y agoMunich is still the city with the most IT jobs and companies - I don't know if Berlin will catch up. Berlin has this start-up flare image, but based on numbers that's just not true.
- laingc 8y agoYep, and compared to Munich, the startups I've seen in Berlin are extremely unimpressive.
- sveme 8y agoI agree on Munich - and most of its startups are in tough topics involving hardware such as robotics, IoT etc. Still believe that engineering B2B is a better fit for a startup company in Germany than the often B2C model in silicon valley.
- iuguy 8y agoBerlin has two airports, Tegel and Schoenefeld.
- rsynnott 8y ago
- haywirez 8y agoNot only Brexit escapees but from all over the periphery - it felt like half of Portugal, Italy and Greece was in Amsterdam. Same here in Berlin.
- ornitorrincos 8y agoIt does have two international airports: https://en.wikipedia.org/wiki/Berlin_Tegel_Airport https://en.wikipedia.org/wiki/Berlin_Tegel_Airport https://en.wikipedia.org/wiki/Berlin_Sch%C3%B6nefeld_Airport https://en.wikipedia.org/wiki/Berlin_Sch%C3%B6nefeld_Airport Although they are planned to be closed when the third one opens(this one doesn't have a lack of issues though): https://en.wikipedia.org/wiki/Berlin_Brandenburg_Airport https://en.wikipedia.org/wiki/Berlin_Brandenburg_Airport
- hknd 8y agoI think people think at something like FRA or LHR when talking about an international airport. Tegel+Schoenefeld have combined ~30M passengers per year. FRA has ~65M, and LHR has ~80M. Number of intercontinental flights from Berlin is just super low s.t. most business travelers fly do a stopover in FRA.
- dragandj 8y ago> it lacks an international airport Berlin has an international airport.
- mhomde 8y agoSorry, I think I meant transatlantic airport, or a "large" airport. Not sure, it used to lack something I heard but not sure exactly what and if it's still true. They're struggling with building a new one so something :)
- dragandj 8y agoI've just checked: there are plenty of direct flights each day from Berlin to New York for example. It is not the central hub like Frankfurt is, but I doubt you won't fly to Berlin because it does not have enough infrastructure...
- taejo 8y agoThere might be transatlantic flights from Tegel, I'm not sure, but they're rare. Moscow and the Canary Islands are more or less the limits. I usually find myself going through Frankfurt, Paris or Amsterdam for intercontinental travel.
- rsynnott 8y agoI was in Tegel a while ago, flying home to Dublin, so was in a non-Schengen section (Ireland's not in Schengen). The flight at the next gate was going to Beijing. I was kind of surprised, because Tegel has a very "small regional airport" feel (partially due to the weird design), but apparently there are flights to the other side of the world from there.
- dx034 8y agoThe lack of direct flights is partly due to the short connection to Frankfurt from where you can connect to most destinations in the world. That's also why some other German cities (Hamburg, Cologne, Hannover) have few transcontinental flights, despite the demand. There has been an increase in direct flights from Berlin recently but towards the US, Heathrow and Frankfurt are on the way and BA/LH can price out competitors easily. Berlin is certainly underserved given its size but that's just the Frankfurt effect (an airport with >60m passengers p.a. for a city <1m population).
- biztos 8y agoI agree completely that "cheap Berlin" is rapidly disappearing. Just this morning I was checking real-estate prices[0] for the first time in a few years and was a bit shocked. Folks in Silicon Valley or Munich or Hamburg would probably still find it cheap-ish but AFAIK local salaries have not remotely kept up with this trend. A million Euros for a nice family-sized flat in a good neighborhood is not exotic anymore, but for most Berliners that's an absurd sum. Another interesting thing is that there are more and more ways to spend more and more of your money in Berlin. Consumerism is definitely on the rise, which IMO is bad news for people not making much money. I wouldn't say Berlin lacks an international airport, I would say instead that the corruption/incompetence nexus managed to spare us the monstrosity of BER[1] and we can continue to use the lovely old urban airport at Tegel[2], though granted there are a lot of stopovers depending on where you're going. Anyway I really doubt Berlin will be anything like Silicon Valley, well, ever. You could start with how radically differently the local tech scene views labor, but that's just the tip of the iceberg. I would love to be wrong though. [edit: formatting] [0]: https://www.immobilienscout24.de https://www.immobilienscout24.de [1]: https://en.wikipedia.org/wiki/Berlin_Brandenburg_Airport https://en.wikipedia.org/wiki/Berlin_Brandenburg_Airport [2]: https://en.wikipedia.org/wiki/Berlin_Tegel_Airport https://en.wikipedia.org/wiki/Berlin_Tegel_Airport
- hknd 8y agoRents (and cost-of-living) are still super cheap compared to other metropolises like NYC, London or Singapore. Ratio of salary and cost-of-living is still looking good in Berlin.
- walshemj 8y agoHow do you think the views on labor differ between SV vs Berlin ?
- biztos 8y agoIn SV there is (it seems to me) an attitude that tech entrepreneurship is a win-win for capital and labor, meaning (among other things) talent is paid well. In Berlin I'm sure there are some companies that see it that way, but many are in Berlin because of the cheap labor and they have every intention of leveraging that. Once you get above a certain level, especially working for bigger companies, it levels out, and you won't be compensated in cash as much as in SV but you'll get all the other things that come with a reasonably well-run social democracy. But in SV, say, nobody who's any good would work for the Brothers Samwer. In Berlin lots and lots of people need the job. I could be wrong about this of course, I'm an old fart with a stable gig and all my data are anecdata.
- brombeer 8y agoI think it's more likely to be Amsterdam, Zurich or Stockholm. Large corporations don't want their headquarters in Berlin for tax reasons: There's a reason they're all moving to Switzerland. The tech scene in Europe is very scattered.
- dx034 8y agoStockholm has a thriving tech industry and not really low tax rates. Tech can easily headquarter in a low tax domicile and employ most people in another country, all bigger companies are already doing that. I don't think that the difference in income tax explains where tech companies settle, it'll be much more dependent on availability of talent (and how easy it is to get people to move there). That's why Amsterdam, Berlin and Stockholm are so successful, they are all within the EU and have a good reputation with internationals.
- mhomde 8y agoYeah, but a huge problem with finding accommodation for it's recruits. In contrast to Berlin it's impossible to get a first hand rent contract. A second hand is going to be super expensive and buying somewhere somewhat central is ridiculously expensive. https://www.reuters.com/article/us-nordics-housing/both-immigrants-and-it-startups-suffer-in-swedish-housing-shortage-idUSKCN0UQ1ZH20160112 https://www.reuters.com/article/us-nordics-housing/both-immi...
- sien 8y agoWow. I was there ~15 years ago and it was bad then. It's remarkable that it's even worse now. Stockholm is a fairly small city too. A million or so roughly.
- rurban 8y agoSo why is the car industry and the chip industry in Dresden then? It's about the talent.
- erikb 8y agoThis is also Mutti Merkel's proclaimed goal, stated like 10 years ago. She is patient, but she usually achieves what she sets out to do.
- tannhaeuser 8y agoIt's "poor but sexy".
- collyw 8y agoIts overrated in my opinion. I never really understood the appeal.
- thirduncle 8y agoBecause you got there way too late.
- collyw 8y ago~ 8 or 9 years ago?
- thirduncle 8y agoActually yes, hafta say. Granted there are few places in the world that are exactly the same as they were 20 or 30 years ago. But then again, certain places -- like San Francisco New York, London, and many, many other cities -- have arguably "tipped" to an extent such that, while the postcard views are pretty much the same -- the overall vibe and intensity is but a glimmer of what it once was. And sadly, Berlin seems to be one of those places.
- saintPirelli 8y agoNo way. Europe's Silicon Valley will establish in Eastern Europe, where living is cheaper and governments are more willing to ease up on regulations to accomodate the flexible start-up employer-employee relationships. Warsaw, Sophia, Tallinn, those are the spots to keep an eye out for.
- mstade 8y agoSpeaking of Estonia, I was at their embassy in Stockholm last fall and they were pushing hard for Tallinn as the next European capital of tech. Nearly every conversation you had with them, regardless of topic, would somehow gravitate toward how great Estonia is to set up a tech shop. Whether because of cheap real estate or the quality of their work force, or the prevalence of craft beer – it was all just a great place to be. Frankly I kind of bought it. I'm going to visit this summer.
- saintPirelli 8y agoI have vague plans to visit too. And keep in mind Estonia already has produced a success story in tech: Skype.
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- charlesdm 8y agoI know a guy who lives there (he moved there, not a native), doing consulting and working remotely. The advantage partially comes from the fact that developers are paid significantly above average wages, i.e. the average salary for most people is low (like 400 to 600 euros a month pre tax) yet developers take home 1,500 / 2,000 / 4,000 euros per month. Cost of living + taxes are low as well.
- piva00 8y agoHonestly speaking, Tallinn is a boring place. Might be good for business but I don't see it as attractive for people willing to move, maybe in the short-term for a job but it's not a place I'd see many settling in. Go visit it anyway, that's, of course, just my impression, but even living in Stockholm (a place I consider a bit boring for my standards of big city life) I found Tallinn very very dull.
- skgoa 8y agoThe quickest growing software cluster in Europe is Dresden, though.
- alexcnwy 8y agoDresden and Budapest much better options nearby :)
- expertentipp 8y ago> I think Berlins "Poor but happy" It went „poor but sexy”. The city is still poor but now got wrinkles and gray hairs here and there.
- Chris_Jay 8y agoI can't help but think of that Leanord Cohen song, "First we take Manhatten".
- jk2323 8y ago"Mark my words, Berlin will be Europe's Silicon Valley within a few years." Doubt it. Lack of professional attitude. Disastrous politicians. 3rd tier universities. Lack of capital. Large underclass, big welfare spending. It is very hard to set up a "silicon valley". The silicon valley had and has some very unique points, including military origins, if I remember right. Germany still has a strong and broad industry, which is lacking in most Eastern and Western European Economies. This is an advantage (try to do a non-software technology start-up in a country that does not have the suppliers and partners, then you know). In the end it is extremely unlikely that EUrope will achieve something similar than the Silicon valley. Yes, Berlin once was a scientific, cultural, industrial and technological powerhouse. These times won't come back. The more interesting question would be, can China manage to create a new silicon valley? I have my doubts.
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- HillaryBriss 8y ago> Large underclass, big welfare spending. I don't know what the comparable figures in Berlin are, but in Silicon Valley, about 11% live in poverty. "About 11.3 percent of Bay Area residents are living at or below the poverty level, according to the report, “Poverty in the Bay Area,” that was released by the Joint Venture Silicon Valley Institute for Regional Studies. The data reflects levels reached in 2013, the most recent year for which these statistics are available." https://www.mercurynews.com/2015/04/01/poverty-rates-near-record-levels-in-bay-area-despite-hot-economy/ https://www.mercurynews.com/2015/04/01/poverty-rates-near-re...
- ahartmetz 8y agoThe lack of legacy, good CS universities and capital may matter, I don't see how the other things you mention matter. The big plus is it's a great place to live - it is where things happen. IMO computer science education is crap everywhere in Germany - it's either mathematics or latest hype topic with no "working technology" in the middle. Professors say informatics alumni will design algorithms, programming is for the plebs, or some such. Where do I even start? There isn't a single respected programming language from Germany. We have nothing like OCaml, or Python, or INRIA or EPFL or ETH Zürich for that matter.
- hartator 8y ago> Mark my words, Berlin will be Europe's Silicon Valley within a few years. If Europe doesn’t pass more startups-killing laws, sure.
- passiveincomelg 8y ago> Mark my words, Berlin will be Europe's Silicon Valley within a few years. Reminds me of this classic: https://www.youtube.com/watch?v=e22vY4CWpEI https://www.youtube.com/watch?v=e22vY4CWpEI