Monday, August 26, 2013

Boomtown Berlin

The German economy is growing at a slow and steady pace, expected to speed up in 2014. But Berlin is clearly happening right now: During the first six months of 2013, almost 6 million people came to visit the capital, 9 % more than a year ago. This increase is putting Berlin right after Paris and London, and before Rome as a tourist destination. And tourism is expected to continue to grow at this pace. Currently, 280,000 people are employed in the tourism industry.

The downside: Too many people invest in apartments and turn them into vacation rentals, contributing to the squeeze on available and affordable housing. The Berlin parliament is currently discussing a new law to curtail the use of rentals for tourists. Whole neighborhoods have fallen into the tourist trap. A few weeks ago we walked around Friedrichshain, formerly a sweet, organically grown middle class quarter, now a row of restaurants, tchotchke shops and bars, populated by drunken bachelor parties from the UK. Many residents of Kreuzberg also feel they have lost their hood over the last 10 years, to 24/7 clubbing and drinking visitors. Rent per square meter in Kreuzberg and Friedrichshain is now higher than the upper class high end western and southern districts Charlottenburg and Zehlendorf. Which is why we get to live in a leafy green, yet central part of town, and pay less than the hipsters.

Berlin is also the capital of fastest growth in start-ups, 10,000 new businesses incorporate here every quarter. Many of them occupy lofts in Mitte, Friedrichshain und Kreuzberg.  Many of these are internet start-ups, some with names that are now familiar outside of Berlin: Babbel, Ableton, and SoundCloud. When Rory had a problem with Ableton (a music production software), he could call the guys right here in town. Airbnb uses Berlin as its European hub. The startup-map looks crowded. Now Berlin is called Silicon Valley of Europe, or Silicon Allee.

Two large incubators support the growth of new start ups, and connect them with venture capital. One of them, springstar, talks to a dozen startup teams every week. Those that become part of the family receive support through capital and technical assistance.

My cousin Christian works for three-year old start-up that sells a search engine optimization (SEO) subscription. They are doing well, expect that all their staff is constantly being harassed by recruiters, often successfully, making it hard to run a consistent business with ever changing staff.

All new small businesses in Berlin can take advantage of a large array of funding incentives, tax breaks and educational opportunities for new business owners. You can learn accounting, writing a business plan, marketing and latte art, all free or very affordable. Maybe we’ll do that coffee shop here after all. But not in Friedrichshain.

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