Berlin’s real estate market

Whether the influx of business founders, artists, students or refugees – all of them are putting pressure on the housing market. Our city is changing: cranes rise up into the sky, free areas are cultivated and gaps between existing buildings are closed – the city is getting denser.

The real estate market in Berlin is characterized by a high dynamic, but also by some uncertainties. Real estate owners are considering if the market is approaching a reversal in interest rates and want to know when the right time to sell has come. Investors have to protect their deals against potential risks. Buyers are faced with the persistent shortage of the supply of real estate. The given situation asks for differentiated information about the market in order to make the right decisions. Our market report is the first orientation for stakeholder particularly on Berlin’s property markets.

Our data and research is your advantage. We help to review considerations about the location and investment even on a micro level.

Contact us for advanced information, research and individual counseling.

Everybody wants to be in Berlin
The place to go. The place to be.

Berlin is one of the top locations for investments thanks to the dynamic development of the real estate market and the ongoing demand.

Berlin is one of Europe’s most requested metropolises. In no other area in Germany so many new apartments are needed, planned and built. People from around 250 countries are coming to Berlin every year. The city registered 60.000 new residents in 2016. The map above is showing which countries the new residents are coming from. The map below is showing the status quo of the city in 2016.

Berlin’s future has not always been this bright

The development of Berlin’s population was regressive between 1994 and 2000. Even a population forecast in 2002 assumed a negative trend for an unknown time period. Only a few years earlier the movement on Berlin’s real estate market was quite euphoric. The high of the building boom of the 90s was reached in 1995 when almost 30.000 apartments were finished. The number was a record of the post war time. The boom of new building project stopped only shortly after the historic record was reached.

At the beginning of the new millennium, the real estate game mainly concentrated on the renovation of the old-city buildings in Berlin. Parts of the phase of suburbanization were the few movements on the real estate market and the aftereffects of increased rental and buying prices in the past. During that phase many Berliners started moving to new built settlements in the suburbs.

Vacancy rates partly reached above 5 percent. A low demand, high interest rates and shabby concrete bedraggled constructions in Berlin’s east were challenging for stakeholder on Berlin’s real estate market.

Prices continue to rise
A solid real estate market in Berlin

One reason for Berlin’s solid real estate market is the continuing increase of prices. The demand results from population growth, raising land prices and building costs as well as ever more demanding energy efficiency standards are forcing prices higher.

Evolutionary stage of real estate prices in Berlin

Berlin’s real estate market managed to differentiate further in 2016. Lower, medium and upper price segments are expanding across all parts of the city.

  • The lower price segment between 500€/sqm and 2.000€/sqm is becoming less important for Berlin’s real estate market. Between 2015 and 2016 the number of offered apartments decreased about one third. Today only 17% of all offered apartments are in the lower segment. In some parts of the city there were almost no offered apartments of this segment last year.
  • The medium price segment in the price range between 2.000- 4.000€/sqm was slightly regressive in 2016. Nevertheless, it is the strongest price segment on Berlin’s real estate market with 57%.
  • Everything above 4.000€/sqm is part of the upper price segment, which increased in 2016 and has a share of 26% in the total housing supply of Berlin.

Evolution in Berlin’s districts

Berlin’s districts are developing in a heterogeneous degree. The lower price segment almost completely disappeared in the districts Mitte, Kreuzberg, Charlottenburg, Wilmersdorf, Friedrichshain and Prenzlauer Berg. At the same time the upper price segment continues to grow. Our district reports show a detailed price evolution of Berlin’s districts from 2007 until today.

Average offering price of an apartment in Berlin: 3.940 EUR/sqm

According to our research the average price per square meter is at 3.940 € in 2017. This analysis includes the whole area of Berlin and all existing buildings. More significant than for new built apartments, the location, age, size, quality and type are important influential factors for existing apartments.

It should be noted that almost one half of all new built apartments and houses are meant for ownership not for rental purposes. Many projects have already been permitted and will be offered to the market in the coming years. The pressure on the housing market could decrease with increasing new building projects.

An increase of prices for apartments in new buildings has been registered. According to our research the average offering price in 2016 was around 5.000€/sqm. The price range of a new built apartment goes from 4.000 to more than 10.000€/sqm, depending on the equipment and location. Looking at it prospectively, prices for new built apartments will continue to increase.

Transformation over new building projects

More apartments were developed by partition processes than building completely new ones. The recreational act enforced by Berlin’s senate is lawful since March 2015. According to the law, the transformation of rental apartments into freehold apartments in all existing as well as planned social conservation areas needs approval. This recreational act is going to make such transformations much harder in the future. There are already 35 of such conservation areas (Erhaltungsgebiete) in Berlin and 6 more are already planned.

In 2015 most transformations were done in Prenzlauer Berg, Kreuzberg and Friedrichshain. The most new built apartments were developed in Mitte, Wilmersdorf, Treptow-Köpenick and Wedding. The districts where the most freehold apartments were developed in 2015 are Schöneberg, Charlottenburg, Friedrichshain, Kreuzberg and Wilmersdorf (district listed in increasing order). Reinickendorf and Marzahn reached the lowest numbers.

Angebotspreise 2007-2016
Angebotspreisentwicklung Berlin

Right now is a good time to sell properties in Berlin. The growing amount of new building projects will have a regulating impact on the market for existing apartments. New and energetic requirements start to turn into cost risks for old buildings.

Prices for the different apartment types

The average price for all types of apartments (excluding new built apartments) is at 3.940 EUR/sqm in 2017. Prices differ from this average price more or less depending on the apartment type. According to our research attic apartments are offered for an average price of 5.334 EUR/sqm in 2017, whereas penthouse apartments were around 6.718 EUR/sqm. The prices for all apartment types doubled within the past 10 years.

Real estate in Berlin at a glance

2.084.336
Households in berlin (2015)
320.302
Residential buildings in berlin (2015)
541
Apartments per 1 000 inhabitants
39,5
sqm
Living space per capita
73,1
sqm
Living space per apartment
1,77 Personen
Ø Haushaltsgröße

Berlin, the city of tenants
Many upcoming investment opportunities

Germany’s capital is the city of tenants, which means excellent investment opportunities. Out of a total of 1,9 Mio. apartments in Berlin, 1,6 Mio. of them are rental apartments. About 18 percent belong to housing associations and 12 percent to cooperatives. The remaining 70 percent are owned by big institutions or private persons. A few examples show why the real estate market in Berlin is so interesting despite or just because of the rental market.

  • Young, high-income households are immigrating to the city. Households with medium to high incomes are growing. New segments of buyers are developing, which is quite normal for the acquisition of property.
  • Even though the number of completed buildings is rising, an excess demand is still expected. Long-term investment opportunities are also given with the building of rental apartments.
  • In an international comparison Berlin shows moderate prices. Prices per square meter are very attractive for international buyers. The focus is not mainly put on the return but on the potential increase in the value of a property. Choosing to invest in Berlin real estate is safe.

Assumption

If 400.000 people move to Berlin until 2030, with 1,77 people per household, around 226.000 apartments have to be built. This means 17.4000 apartments have to be built per year between 2017 and 2030. With 17% of owner occupied housing, around 2.780 freehold apartments per year are theoretically needed.

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