Berlin fights to keep its charm, creativity while securing status as startup hub

Can Berlin become a startup hub without losing its "poor but sexy" appeal?

Berlin needs to find a way to balance growth and development, without losing the very characteristics that draw startups and workers to the city.

“By now gentrification seems to be a word you need in order to describe the development of Berlin,” said Amalie Warberg, content manager for the Berlin-based startup Unu.

Warberg, who lives in Kiez, has watched Aesop, a high-end cosmetic store that was recently opened in the area, have its windows bashed in and the facade tagged on a regular basis. Even the building Warberg lives in was featured in The New York Times due to its resistance to gentrification, she explains.

Berlin’s status an ideal startup hub is due largely in part to the low cost of living and reasonably priced flats and office spaces, but an influx of international talent is threatening the city’s “poor but sexy” image.

Lots of people, too little housing

The city attracts the largest percentage of startups from outside the country – 11 per cent – compared to any other European countries. The European average is 2 per cent. And 43 per cent of founders in Berlin are immigrants. This is the second highest globally, trailing only behind Silicon Valley. The global average is 19 per cent.

Locals living in Berlin districts, like Kreuzberg and Neukölln – areas well-known for their diversity and cheap rent – are at risk of losing their flats as investors gobble up real estate and sell housing to international tenants, who are willing and able to pay a higher price.

“International workers are not really aware of the regular rental prices in Berlin, so when looking for a flat – usually doing it in a rush – they are willing to pay a very high rent compared to Berlin standards,” said Ananda Fernandes, who works for the Berlin startup Digidip. “I’m sure flat owners see that quite clearly and take advantage.”

As a result locals are banding together to form resistance groups or organizations, like the F54 Kiezladen (German) and Bizim Kiez Initiative, and voicing concern about the continued influx of international employees, development and soaring rent.

Earlier this month, Google was denied a construction permit to build a 2,400 square meter startup campus in a historic electric power distribution station in Kreuzberg, by the Friedrichshain-Kreuzberg district office.

Magnus Hengge, an active member of the Bizim Kiez Initiative, told the newspaper Neues Deutschland, that the Google campus would make the Kreuzberg district “even more hip for the phone-crazy, unrestrained disruption-focused youths of the new economy…”

Bizim Kiez is also opposed to the German fashion retailer Zalando’s plans to build 34,000 square meters of office space in the Cuvry area, also located in Kreuzberg.

“I’m definitely a part of the problem,” says Fernandes, acknowledging the role she plays in Berlin’s gentrification.

When first moving to Berlin, Fernandes’ must have was being living in Prenzlauerberg, another popular district among the city’s internationals. If she were willing to live elsewhere, she could help balance the market, she explains. “I’m sure there are hundreds of people like me.”

Ieva Soblickaite, co-founder of Medigo, a medical tourism startup in Berlin, employs 40 foreigners that all live in Berlin. “We had a very low interest from German applicants,” Soblickaite tells the Heureka. “Perhaps due to lower wages that a startup pays or lower job security.”

But she does not feel that hiring internationals is bad: “As long as I am sticking to the laws, paying taxes and contributing to the local society, I do not feel in the wrong.”

Berlin’s catch-22

In an attempt to protect local tenants, a handful of German cities have implemented milieuschutz laws, the Guardian’s Kate Connolly reports. These laws keep owners “from changing floor plans, merging two flats into one or splitting large flats up into several, adding balconies or terraces larger than four square metres, installing fitted kitchens or undertaking luxury bathroom renovations – or using the flat as a holiday let.”

In 2016, an anti-Airbnb campaign launched in another attempt to curb gentrification.

“Everyone moving here somehow contributes to gentrification, whether they want to or not,” Warberg says. “But I have this naive hope that everyone who moves to Berlin does so because they love the spirit here, choosing to live in the Berlin way – rather than trying to change it.”

But the question is: Can Berlin grow without destroying exactly what it is that draws people to it?

Gentrification is, unfortunately, an inevitable consequence of startups and international employees coming to Berlin, Soblickaite says.

“Ironically… underdevelopment makes Berlin so attractive for newcomers,” Soblickaite says. “It’s like a new secret restaurant – at some point others will find out about it and ruin all the fun.”

However, economic growth often has its own benefits: improved infrastructure, access to education, revenue from tourists and better healthcare.

“One way or another this city is going to evolve and gentrify,” Soblickaite continues. “It depends on the local government that is elected by local people to shape how this development is happening.”

Photo credit: duncan via Visualhunt / CC BY-NC

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