During the past five years, the average purchase price for condominiums in Germany's first city has gone up by 83 percent, and now stands at 3,048 euros per square metre. Compared to other German metropolises, though, prices in Berlin remain rather affordable. For the sake of comparison: Buyers in Hamburg have lately paid an average of 3,677 euros per square metre, whereas condominiums in Munich have an average price tag of 5,747 euros per square metre. This is the upshot of the latest five-year price comparison conducted by the immowelt.de real estate portal.
Recent Surge in Condo Prices
At recently as 2010, property buyers spent an average of 1,668 euros per square metre for condominiums in Berlin. Since then, prices have steadily pushed up – and the trend continued. The steepest growth was registered between the first quarter of 2012 and Q1 2013. During that one-year period, square-metre prices rose from an average of 1,899 euros to 2,479 euros, an increase by 31 percent. In 2013, the growth rate slowed to seven percent, only to resume its upward trend in 2014 with a growth rate of 15 percent.
New-Build Apartments in the High-End Segment
The strong price growth is the result of the rising popularity of Berlin as place of residence and investment destination. In 2014 alone, the city grew by 44,700 new residents. However, the upward demand for housing contrasts with short supply. In order to ease the strain on the housing market, the Senate is pursuing an ambitious goal: It calls for the completion of more than 10,000 flats per year. To this end, a plethora or potential development sites were identified. According to Berlin's Senate Administration, there is enough zoned land in the city to accommodate 220,000 new flats. The immowelt.de real estate portal stated recently that the housing construction of no other city in Germany compares to the volume now registered in Berlin. In 2013, around 6,640 new-build flats were completed, among them many high-priced ones.
This makes the development business rather interesting for investors, too. More than anything else, the rent control scheme colloquially called the “rent freeze,” which will become effective in Berlin on 01 June 2015, will make the acquisition of new-build homes even more attractive. For while existing flats may not exceed the local reference rent by more than ten percent when re-let on a new lease, the rent freeze exempts newly constructed buildings.