In Berlin Anything Is Possible

In his momentous Cold War speech in 1963, President Kennedy asserted “Ich bin ein Berliner”… I am a Berliner. He visited Berlin to show support for the then West German government whilst the East was occupied by the Soviet Union. Kennedy boldly pronounced:

Two thousand years ago, the proudest boast was civis romanus sum [“I am a Roman citizen”]. Today, in the world of freedom, the proudest boast is “Ich bin ein Berliner!”... All free men, wherever they may live, are citizens of Berlin, and therefore, as a free man, I take pride in the words “Ich bin ein Berliner!”

JFK’s words heartened Berliners on both sides of the Wall and now almost 60 years on the words still resonate in the City for natives as well as thousands of ex-pats who consider Berlin their home. With a population of 3.7 million and sustained positive demographic trends, many originate from over 180 other countries. Some 14 million tourists flocked there last year making it the third most visited city in Europe after Paris and London. 

With a German father and Spanish mother, I spent 10 wonderful and formative years as a student in this bustling City and am glad to have a reason to visit regularly. As a TPG Partner in European Real Estate one of our current portfolio companies is A&O Hostels who are headquartered in Berlin. CEO, Oliver Winter is a native himself having grown up in the east of the City and was educated in the western part of Berlin when the wall came down. We have built A&O Hostels into Europe’s largest hostel owner and operator with 30,000 beds, which has become the provider of choice for discerning young travelers in over 30 key gateway cities including Berlin. Another current investment we have made in Berlin is in the student housing sector, with the City offering strong real estate fundamentals and being one of the most popular destinations for national and international students.

Booming on every front: startups, real estate, culture

Start-ups are drawn to Silicon Allee in Berlin now rivaling not only Silicon Valley but also London and Paris where costs of doing business (rent, talent, etc.) have sky rocketed. Berlin is more reasonable for new ventures although the initial bureaucracy of setting up is more arcane and onerous than other countries. Berlin has become Europe’s start-up capital, eclipsing London in 2014 in venture capital investments. Berlin is now one of the top cities in the world for entrepreneurs drawing talent from across the globe lured by exciting opportunities, affordable living and hip attractions.

Berlin is Germany’s prime tech hub with more than 100 large tech centres including Daimler and Google. As in most major economies, digital businesses are viewed as the engine of economic growth. The government is planning a ‘Future Fund’ to promote start-up financing.

Some of the barriers to pace of growth going even faster include laborious bureaucratic procedures, access to capital and the need for German language (although many increasingly work in English). Although total financing for the second half of 2019 was over €3 billion, which is impressive. Also, the much needed and vaunted new international airport due to open in 2011 has been plagued with delays and failures but now promised to be open in October 2020. 

The public sector is also investing in the future with €32 million committed for a new AI Competence Centre (Berlin Institute for Foundations of Learning and Data). Fintech and mobility ventures are expanding at pace overtaking e-commerce and building centres in Berlin. Other innovative key technologies around sustainability, social enterprise and the green economy are attracting investment there as well.

Tech and home hubs

Having seen the housing crunch that followed the boom in Silicon Valley with many talented workers unable to afford or even find accommodation near jobs, in Berlin new technology parks are building offices with apartments like the Adlershof Technology Park. This is just one of eleven such locations planned for more than 500 new companies with 7,000 employees.  

Compelling culture

As a Londoner myself now, I concur with Samuel Johnson’s claim that “when you tire of London, you tire of life.”  But Berlin certainly gives London a run for its money in terms of culture and fun. Young techies, students and artists alike have decamped from Shoreditch and East London because of the hip club culture that has almost disappeared from London. Berlin in contrast, offers a unique nightlife scene, and has established itself for some time now as the most diverse and differentiated option in Europe. 

Berlin was the first German City named a Capital of Culture (1988) and is even more so today. Museum Island is the largest museum ensemble in the world and a UNESCO World Heritage Site.  Book a weekend just for this and you still only see a fraction of what is on offer. There is a total of 180 museums in the City, 400 galleries, three opera houses, eight symphony orchestras and many theaters including Friedrichstadt-Palast, the largest in the world.

Future-proofing itself

Attracting enterprise, investment and young talent means that Berlin is paving the way not just as a leader in Germany but also on the continent showing what’s needed to revitalise a classic, historical tourist centre into an economic engine. It has all that any city-breaker is looking for but so much more in terms of real economic benefit for its inhabitants today but also for the future.

Whilst the private sector is leading most of the growth it requires the support of both state and federal governments to sustain the magic.   As long as the states of Berlin-Brandenburg continue to respond at pace and give their thrusting start-ups and digital innovators what they need to thrive they will still attract who they want. The Bundestag must continue to be proactive with decent investment like ‘the Future Fund’ to kick-start new sectors (e.g. AI).  In their hearts, all politicians and all Germans know that Berlin has become the jewel in their national crown. My prediction is that Berlin will continue to thrive and prosper.