Bohemian berlin is cheap but a black hole for investors, analysts claim

Property is a selling for 'silly' prices in Berlin but those tempted to invest could wait a long time for any return.

Real estate and banking analysts are warning that there is unlikely to be a boom in the German capital but there is huge potential for those seeking a long term investment.

'Berlin is a metropolis with provincial prices,' said Christine Schaefer, a property analyst at DZ Bank in Frankfurt.

Low property prices can be an advantages according to Tobias Just, a real estate analyst at Deutsche Bank. 'Isn't it better to buy into a market that's come down for a decade than invest in a market where the party's over?' he suggested.

He believes there is potential in the future. In Berlin unemployment is gradually retreating, the oversupply of housing is slowly shrinking and economic growth is picking up.

At Lehman Brothers, the real estate team issued a report in March entitled 'Finally the comeback of Berlin?' which highlighted an above-trend rate of rent increases of almost 10 percent over the past four years in the city.

Cheap housing may have attracted tens of thousands of students, but overall the population has remained stagnant at 3.4 million. It has become the home of thousands of artists, actors, filmmakers, musicians and even poets delighted to find such cheap places to live and work.

But there is hardly any industry left. Banking and finance is centred in Frankfurt and many government jobs have stayed in Bonn.

'A few select areas in Berlin are doing okay but in other parts prices are still practically give-aways,' said Michael Fredebeul, a real estate agent and assessor with 30 years of market experience in North Rhine-Westphalia and Berlin.

A friend of mine in Italy called to ask if it were true what she read in a newspaper that you can buy an apartment in Berlin for €50,000 euros,' said Carsten Marchinkowski, a telecoms expert who recently bought a house in a Berlin suburb.

'I told her "No, it's not true",' he said. 'You can buy an apartment in Berlin for €20,000 euros.'