Prices and trends in 2018 for Berlin’s real estate market: an overview

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Metropolitan areas in Germany are booming all across, and the Berlin real estate market is particularly dynamic. On average, property values have doubled in the past 10 years and could continue increasing! The country is considered the economic powerhouse of Europe, with an employment rate as low as 3.6% and a sustained GDP growth of 1.9%. This situation is an attractive investment opportunity in Germany. How and why is the Berlin real estate market growing so fast? Does it still make sense to invest in the creative seed of the EU?

Berlin’s turbulent history left it a rather poor and empty city after the fall of the Wall in 1989. In the 1990s, it was one of the only European capitals losing inhabitants every year! Since 2005, however, Berlin has been growing very fast. More than 62,000 people moved to the city in 2016, and 47,000 in 2017 according to the Berlin-Brandenburg Statistics Office.

How prices have evolved in the Berlin real estate market (2006-2017)

How prices have evolved in the Berlin real estate market (2006-2017)

 

A creative city expanding fast

Fast population growth creates a strong demand for housing. But the Berlin real estate market is not expanding fast enough: there is a shortage of housing, which drives prices up for property sales and rentals. New construction is slow to pick up, and the existing buildings are not enough to take in all the new Berliners every year. This makes Berlin a very competitive market. In the graph below, you can note the increase in property values in Berlin since 2006:

Where are Berlin’s newcomers from? The city is celebrated for its creative industry, cultural scene, quality of life and innovative tech companies. Therefore it attracts a qualified workforce from over 250 countries to come work or study in Berlin. And the influx of refugees is also making the population of the city (and of Germany) grow considerably: over 50,000 asylum seekers have settled in Berlin since 2012.

 

The different districts of Berlin real estate market

The Berlin real estate market is very attractive for international buyers. On an international comparison, property prices remain moderate and the cost of living is quite low. In 2018, the average quotation per square meter is around 4100 euros –while London plummets at 13,500 euros per square meter!. In the past ten years, property prices in Berlin have more than doubled: one square meter of living space, in 2008, was quoted on average at 1800 euros.

Across the metropolitan area of Berlin, there are strong differences for property sales and rentals. The districts of Mitte, Friedrichshain and Prenzlauer Berg, in the former East side of Berlin, have seen the most change, along with the creative havens of Kreuzberg and Neukölln.

They were some of the cheapest areas ten years ago, and today almost no properties on offer in these districts are below 3000 euros per square meter! Overall, property values have grown exponentially for the past decade, particularly in some districts. FOR DETAILED MAPS AND DISTRICT BY DISTRICT ANALYSIS, DOWNLOAD OUR COMPLETE GUIDE TO THE BERLIN REAL ESTATE MARKET IN 2018 (PDF)

  

Overall, the capital city of Germany is a city of tenants. Out of 1,9 million apartments in Berlin, over 1,6 million are rental apartments! Because of the housing shortage, there are much more people looking to rent or buy apartments than there are on offer. Young, high-income households are increasingly immigrating to the city in large numbers. This suggests excellent long and short-term investment opportunities in the real estate market in Berlin!

Don’t hesitate to consult with ADEN IMMO for further guidance on how to sell or buy a property! The Berlin real estate market is attractive at the moment. However, transactions and regulations remain a complex affair. Both buyers and sellers should seek adequate professional advice to recognise and take advantage of the unexploited potential of the city of Berlin.

Sources:

Senatsverwaltung für Stadtentwicklung (2001): Bevölkerungsentwicklung in der Metropolregion Berlin 2002-2020, Statistische Landesamt Berlin, Senatsverwaltung für Stadtentwicklung

IVD Berlin-Brandenburg (2016): Immobilienpreisservice des IVD Berlin-Brandenburg e.V.

  

 

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