The phrase “poor but sexy” that has been uttered everywhere in Germany for years no longer corresponds to reality. Berlin is growing steadily and tourism is booming. Real estate prices have been rising for several years and the supply is becoming significantly scarcer every year. The result is constantly rising prices in sought-after districts, but also in peripheral areas and near the city’s commuter belt. Therefore, for many homebuyers, places further afield that have an S-Bahn or regional train connection are now also an option.
The influx of 40,000 – 60,000 new Berliners to the metropolis from Germany, Europe and all over the world conveys an international flair on the one hand and crowns Berlin as the only international metropolis in Germany. The other side of the coin is an increasing need for living space, which cannot be satisfied at the moment. This is where politics comes into play, which for many is still not moving enough in terms of housing policy. The tense housing situation has led to rising prices for five years. Rents are rising faster than purchase prices. Purchase offers over EUR 20,000 per m² are no longer uncommon. Cash transactions for undeveloped properties increased significantly in 2017, by +21% to around €1.7 billion and for developed properties by +17% to around €10.4 billion. This circumstance is essentially due to individual, large and high-quality properties. The median purchase prices for condominiums have increased by around +13% overall and by around +13% for new builds. +11% up. The average purchase price for one- and two-family houses has risen by around +7%. With the exception of prices for condominiums, however, the rapid price increases have now slowed down somewhat (Source: Expert Committee of the City of Berlin)
In city locations such as Berlin-Mitte, Prenzlauer-Berg and Charlottenburg, gentrification is in full swing. The red-red-green government is now reacting with measures to stop social displacement from residential areas. The environment protection is one of the measures: The conversion of rental apartments to condominiums is now to be reported in around 40 parts of the city and room divisions are often not allowed to be carried out. The real estate industry fears that investors will no longer invest in Berlin due to measures that are too restrictive. That doesn’t help the city either. More social housing should be promoted – after all, according to an analysis by the Berliner Zeitung of January 12, 2018, Berlin has received around one billion euros in property transfer tax – but only 242 million euros have been approved for housing subsidies. The noticeable energy and growth of the city cannot be stopped and can be clearly felt and seen in many corners of the city. Many successful start-up companies have their headquarters in the capital and promote the influx of young people, but also some corporations, such as Daimler, operate their think tank in the young, creative environment. Some Brexit candidates also found what they were looking for in Berlin. A state-of-the-art technology park for numerous professional fields was created at the science location Adlershof.
On the one hand, the constant growth is due to the charm of Berlin as a young and only international German metropolis and, on the other hand, to the still low price level. Compared to all other European metropolises, Berlin is one of the cheapest capital cities. In a national comparison, we still have the big cities of Hamburg, Munich, Frankfurt and Düsseldorf in Germany, which are also comparable in price comparison and are sometimes significantly more expensive. This circumstance is still the investment argument for many foreign buyers. Asians, Scandinavians and Southern Europeans often invest through “family offices” or set up small funds that include real estate as investment properties and manage them well. Nevertheless, the Germans and especially the Berliners are of course also an important buyer clientele. Many young families who bought property in urban districts such as Mitte, Prenzlauer-Berg or Wilmersdorf a few years ago sell the apartments at a significant profit and invest in houses and land. Depending on the financial situation, the home is reinvested in a nice house and property in the bourgeois south-west or purchased in the somewhat more economical north of the city. Standard land values of EUR 2,100 are not uncommon in the districts of Dahlem, Grunewald and Schlachtensee and are simply too expensive for many. The alternatives are now in the suburbs of the city and some are already in Brandenburg and offer the dream of an affordable home in the countryside with good S-Bahn or regional train connections to the city. Those who prefer to live in the city center can now also consider the districts bordering on the trend districts. Central locations such as Lichtenberg, Wedding. Moabit and Neukölln have developed splendidly in the last 3 years and also recorded significant price increases – and the trend is rising! Pankow is located to the north of Prenzlauer Berg and is described by project developers and real estate agents as a residential area with particular potential. Buying a house here is still possible for many, plots of land are often developed by building communities with creative architects and the air of change can be clearly seen around every corner. The price increase in Berlin will continue and due to the constantly growing demand and the significant influx of people, the supply will continue to become scarcer – in an international and national comparison there is still room for improvement in prices. The city’s economy has also recorded continuous growth in recent years, so that one can really say: Berlin used to be “poor but sexy”.
Sources:
Bellevue Magazine “Market Report Berlin” – Author: Johannes Bohrmann,
Expert committee for real estate values in Berlin
