Property investment: The emerging German state of Mecklenburg

Posted on: 16 June 2010 by Mark O'haire

Germany’s ‘Iron Curtain’ state of Mecklenburg is finally emerging from its Soviet past, with real estate top of the agenda. Laura Henderson reports.

Locals like to take their time in Mecklenburg, a habit that provoked Otto Van Bismarck, the Iron Chancellor of the German Empire to remark that the end of the world would arrive there a good hundred years later than anywhere else. It’s a way of life that has served this serene Baltic state well.

Modern day interventions have, for the most part, passed the region by. The 19th century saw conservative aristocrats and the Landed Junkers fighting the introduction of the railways and clamping down on business enterprise. More recently, the area’s vintage fortunes have been stifled in more repressive ways, after British and American troops marched into the capital Schwerin, at the end of WWII, and ceded the state to the Soviet zone of occupation. Now, with east-west borders finally torn down and Germany at one again, the place is finally awakening from its blinkered slumber.

Not enough time has past since reunification for any major shifts in culture, but a reformist agenda steered by Chancellor Angela Merkel has put the region firmly on the country’s tourist map. “Like many eastern provinces, Mecklenburg has taken its cue from a heavily regenerated Berlin,” explains Thomas Lorenz of international real estate agents Exclusive Residences. “The country’s recent poor economic performance, including high unemployment has meant the huge cost of integrating former communist states remains a work in progress, but the results to date are no less impressive.”

“The area has all the essential holiday trappings,” adds Janet Kuether of local property firm Kuether Immobilien, “from historic towns and inland waterways to a beautiful stretch of coastline. Homeownership rates are also one of the lowest in the country with property a good third cheaper than western states, which leaves huge opportunities for foreign buyers.”

Schwerin summer houseCocooned by an outer-ring of navigable waterways, handsome capital Schwerin is proving a popular second-home choice with foreign and domestic investors alike, the city’s revamped blend of medieval and neo-classical architecture and old quarter packed with art galleries and restaurants attracting harried Berliners, and countless denizens from Germany’s other big cities, along with growing numbers of Danish, Spanish and British buyers. “Many have checked out the well-heeled north coast resorts of Schleswig-Holstein and the Frisian Islands,” Kuether adds, “and are now settling here at a fraction of the price. Lock-up-and-leave waterfront cottages start from £100,000, traditional timber fronted family homes with good-sized gardens fetching upwards of £200,000 Most come with private moorings, with holidaymakers often hiring a boat for the duration of their stay.”   

Adding a touch of grandeur to the capital’s real estate mix, is the collection of state-owned castles and former Prussian manor houses at ‘knock down’ prices, many put up for sale for as little as £80,000 by cash-strapped authorities unable to cope with the cost of upkeep. “We inherited more than 1,800 such properties after the collapse of communism,” explains Stefan Wenzl head of the local authority’s stately homes department. “Most were built during the 19th century by Prussian Junker landowners and confiscated after WWII by East Germany. We’ve been marketing a wide range, but they’re not for everyone - many require a major cash injection to bring them back to life.” Prospective buyers, adds Julia Hasse of the Ministry of Housing, also often find the vetting process “rigorous”, with proof of funds to take on a restoration project required before sales negotiations even begin: “State grants are available towards the renovation, as much as 20-30 per cent of the refurbishment costs for personal use, considerably more if investors plan to convert the property for tourism purposes like a hotel. But it’s still a major undertaking.” Interest, has however, been rekindled during the past eighteen months, a trend Kai Rocholl of local agency NDGA, puts down to targeted marketing to well-networked agencies in western Europe and beyond. “These are niche projects, which means buyers with deep pockets, either that, or a heightened sense of philanthropy. A budget of £200,000 will get you a large manor home with outbuildings, but you can expect to shell out as much again on the renovation. Profit margins, on completion can, however, top the million-euro mark.”

Further south, lakeside dreams are being peddled at keen prices in the wooded surrounds of the state’s largest national park, Mueritz. Homey one-bed cottages can be picked up for £50,000, open-plan chalets for families-on-the-go fetch £100,000. Two hours drive from Berlin and Hamburg airports and straddling the districts of Mueritz and Mecklenburg-Strelitz, the park boasts over 100 lakes teeming with white-tailed eagle and osprey, the most scenic stretch running along the eastern shore of Lake Mueritz to the fishing port of Waren. A top getaway destination in the 1920s for hikers and swimmers, the town today is the region’s primary tourist port of call. Unspoilt and uncommercial, golden steeples and red roofs rise from a picturesque harbour, the waterfront radiating the same intimate sophistication of Capri or Cap Ferrat, cosy restaurants dotted along the quayside, and winding alleyways in the old quarter lined with half-timbered houses and quaint antique shops. “It’s a peaceful place,” says Linda Sheard a freelance photographer from Devon, who bought her two-bedroom canal-side cottage for “a steal” in the nearby village of Grabau in 2007. “There are no holiday crowds, but the area’s still geared up for foreigners, with several bi-lingual real estate firms. Three to four months worth of holiday lets a year is feasible, as it’s a year-round season - management fees can set you back around 10%.”     

Breaking free from tradition meanwhile, with the area’s first integrated leisure and holiday resort, is leading German hotels and resorts group Condex. Located close to the shores of Lake Mueritz, the 1,200-acre community of Land Fleesensee will comprise four luxury hotels, a limited edition collection of private residences and a raft of leisure facilities from sailing and tennis to horse riding and hiking.

The focal point will be a 6,000sqm wellness centre, including a day spa, with a choice of four golf courses including a family course, a state-of-the-art driving range and golf school. “The residential tourism component is low-density,” explains project Marketing Director Bernadette Wustmann, “with plots for just 60 bespoke build off-plan homes and a choice of fairway or countryside locations. Average plot sizes of 500sqm start from £180,000 for a three-bed villa rising to £600,000 for a five-bed country house.” Self-build will give buyers a choice of property styles from cosy country cottages to manor houses. Architectural accents include half-timbering, brick and even homey thatching on the roof. Interiors will have high-spec fitted kitchens and designer bathrooms, with luxury extras including ‘smart home’ accessories and under floor heating. Local reactions to the project have been mixed although few dispute that the development will add an upscale dimension to the tourist mix. Adds Wustmann: “If riding, golf or sailing’s your thing, and you hate crowds, Fleesensee’s hard to beat. With 1,200 acres to stretch out in, you’ve as good as got the place to yourself.” 

Further Reading

By Laura Henderson

Property journalist, columnist and author

Laura is a UK-based property journalist and author specialising in domestic and overseas markets. A regular contributor to the Financial Times, Sunday Express, Daily Telegraph and Homes Overseas magazine, she also edits a monthly property column for the Scotsman newspaper and is the author of several on-line investor guides for among others, Channel 4 Homes.

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