For sale: 18th century castle with a medieval prison tower, moat and lake on 14 acres. The price: 350,000 euros ($445,000), less than the cost of a Manhattan studio. The catch? It’s in eastern German.

It’s not just the location that’s a deterrent; the dilapidated property with peeling paint and socialist-era chandeliers will cost as much as 6 million euros to renovate, estimates Carsten Graf, mayor of Mutzschen, the town sandwiched between Dresden and Leipzig where the property is located.

“It’s not realistic to expect a rich banker from Frankfurt to come all the way to Mutzschen and make this his home,” said Graf, who knows it will be a challenge to sell a castle nestled in Saxony, one of the country’s poorest states. “There aren’t as many wealthy investors in the region as there are in other parts of Germany.”

Castles, mansions and other historic estates in eastern Germany that survived two world wars and communism may in the end be done in by capitalism. Rural communities, often grappling with weak economies and shrinking populations, are left searching for a wealthy buyer to rescue the grandeur of their past wealth before it crumbles away.

Germany has about 5,000 castles and forts, with more than 1,000 in the eastern part of the country, said Wolfgang Illert, head of the German Landmarks Foundation, adding that he was unable to estimate the number in disrepair. Under the communists, the buildings were used as supermarkets, schools or hospitals. Historic architectural flourishes were often destroyed to obscure a patrician past.

Government Subsidies

“The regime in power after the war didn’t like aristocrats and their vestiges,” said Gerhard Wagner, secretary general of the German Castles Association. “So if stucco fell off the ceiling, it was simply swept away.”

After the Berlin Wall came down 25 years ago, many of the castles were privatized. The government offered billions of euros in subsidies to real estate investors, which drove up prices for all types of properties, including offices, apartments and stores. Eastern German home prices rose to match western German levels after reunification, and then dropped 22 percent between 2005 and 2010, according to data compiled by Jones Lang LaSalle Inc. The burst bubble left a trail of failed renovations.

With local governments unable fix up the properties alone, and investors preferring to buy castles in good shape, structures often don’t get repaired and are in danger of eventually caving in.


“We can’t allow buildings which have stood for centuries and which even survived the GDR, to be left to crumble in the reunified Germany,” Illert said. “We have to save them because it’s our cultural heritage.”

The Mutzschen castle, built by Prince-Elector August the Strong of Saxony in 1703 atop a medieval fort, was privately owned until East Germany nationalized the property after World War II and turned it into a youth hostel. Small bedrooms were added, the attic raised and a new floor squeezed in. The damage today is extensive, with exposed utility pipes running alongside floral wall trim, and bathroom tiles covering stone floors.

In 2003, a western German investor who planned to turn the castle into a drug-rehabilitation center backed out after gutting the interior. Investors from Switzerland, France and Dubai have approached Mutzschen in recent years but none have come up with a viable business plan.

“We need someone with financial backing,” Graf said. “Ideally a company would put its headquarters here and create jobs.”

National Landmark

Graf has reason for hope, judging by successful sales in other regions. In Mecklenburg-Western Pomerania, the eastern German state with the weakest economy, developer Torsten Kunert bought the 18th century Schloss Kummerow estate on a two-acre park near the Baltic coast for 150,000 euros.

He’s turning it into a photo-exhibition space that can be rented out for events. Because it’s a national landmark, the restoration work qualifies for European Union subsidies, and Kunert expects to spend about 10 million euros on renovations.

“The purchase price is the least of it,” Kunert said. “Getting through all the obstacles, chasing after the subsidies, finding the craftsmen, that’s the hard part.”

Other historical gems in the region have already been fixed up at great expense. Saxony’s government has spent 450 million euros since reunification restoring its 25 state-owned castles, which attract about 2.5 million tourists each year.

Upkeep Costs

Outside Berlin, a villa built by the Siemens family in 1910 is now on the market for 20 million euros, having last sold in 2003 for 3.5 million euros. The estate is in Potsdam, a wealthy suburb of the German capital, and the seller aims to cash in on growing demand for luxury properties in the area, said Alexander Kropf, the broker who’s marketing it.

“These properties cost a lot of money to maintain; the old structures have to be continuously restored,” said Wagner, the German Castles Association chief. “There are many old families that take their properties back, but it’s a big black hole that you throw money into.”

In Mutzschen, the mayor is counting on a steady population -- about 2,300 since reunification -- and 900 jobs to attract a buyer for the castle. Companies including Inc., Deutsche Post AG’s DHL and Volkswagen AG’s Porsche brand have also created about 24,000 jobs in the past five years in neighboring Leipzig.

“The investments that have been made in the economies of the big cities are beginning to trickle down,” Graf said. “We’re becoming more attractive.”