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Germany

Berlin Is Hot! So Why Do Investors Have Such Cold Feet?

As a potential place to invest, Berlin ranks high. At least that’s what the polls say. But when it comes to putting its money where its mouth is, big business is shying away from launching into a long-term relationship with the attractive German capital.

A Berlin nightclub
A Berlin nightclub
Florian Eder

What are you supposed to say when asked what city you'd most like to invest in? Rankings of the most attractive markets in Europe read a lot like the Top 10 favorite travel destinations: London, Paris and Berlin followed by Frankfurt.

Allowing for the differences, the list is a testimony to the pull of the metropolis. Europe's capitals are favorite playgrounds of the elite, places where culture and consumerism meet. But one can also assume that the rankings, which are based on polls conducted among corporate board members, reflect choices made on the basis of esthetic criteria.

So why not Berlin? Its up-market vintage properties are still affordable, and it offers the dreamy prospect of a boho-tinged existence, with art galleries and whole foods markets, and entertainment that ranges from high culture to subversive. There's also the lake – Wannsee—with a leisure harbor for the sailboats. All these are plus points a board member would find persuasive.

On the other hand, Berlin doesn't have a truly international airport. And the city's dog-owners are less inclined than they might be elsewhere to clean up after pooping pets.

Residents take it all in stride, happy to see Berlin's shortcomings as part of the local color. For them, Berlin is simply sexy. The question though, is whether the German capital is as equally seductive for the economic elite.

Not really, as it turns out. Existing industry is a holdover from the West Berlin days. The new Siemens Infrastructure and Cities division, which Berlin would have welcomed with open arms, remains in Munich. Start-ups like Groupon, the Internet company, and Brands4Friends—firms that employ only a couple of hundred people—are among the top 200 largest businesses. Sectors that are gaining prominence in the German capital are culture, media and healthcare.

Maybe Berliners themselves are to blame – for not having enough confidence in their city. Asked where a company that packed a punch as big as Google or Microsoft was most likely to emerge, most participants in a recent survey replied: Shanghai. Only 1% of respondents said Berlin.

Whatever the reason is, not a single big player has shown any signs of wanting to start a long-term relationship with Berlin. And despite Berlin's definite charm and allure, there is the very real danger that things are going to stay that way.

Read the original article in German.

Photo - saschapohflepp

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