Rents in Berlin have kept going up steadily for several years now. In 2016, however, the rental growth picked up steam, rising even faster than in previous years. Specifically, rents outpaced the average growth rate of two to three percent in 2016, climbing 6.7 percent to a rack rent of 8.00 euros (in standard locations) and 5.5 percent to 9.50 euros (in favoured locations) per square metre of residential floor area and month. This is the upshot of the latest Property Price Schedule for 2016/2017 (“Immobilienpreisservice”) compiled by the IVD Federal Investment and Asset Management Association. The IVD defines the standard residential location of a borough as a mostly fair location compared to the rest of the local housing stock. Any location superior to it is by definition a favoured residential location. According to the IVD, the rents listed represent “benchmark rents,” meaning the most frequently quoted rents. Prices and rents both for rental flats and condominiums were analysed for the purposes of the survey. Important to note, the listed rates are based on 1,500 actually negotiated leases and deeds, not just on quotes. Also, the survey ignored first-time lettings of new-build apartments (which are not subject to rent control in Berlin).
Substantial Price Differentials among the Twelve Boroughs of Berlin
Rent levels in Berlin vary considerably from one borough to the next. The highest rent average anywhere in the city was registered in the favoured residential locations of Charlottenburg-Wilmersdorf. Here, square-metre rents averaged 11.50 euros (net, per month). Analogously, rents in standard residential locations in Charlottenburg-Wilmersdorf were also the city's highest at 9.50 euros. Runner-up is the borough of Mitte, where the going rate for a flat in a favoured residential location is 11.25 euros per square metre. Other boroughs where rents pushed past the average level include Steglitz-Zehlendorf and Tempelhof-Schöneberg (10.25 euros each), as well as the boroughs Friedrichshain-Kreuzberg and Pankow (10.00 euros each). The most affordable rents in 2016 were negotiated in Spandau, where the average rent was 8.25 euros in favoured locations and 7.00 euros in standard locations.
Condominium Prices have also Rallied in Berlin
Meanwhile, condominium prices skyrocketed in sync with residential rents in the course of 2016. For instance, prices for existing condominiums in favoured residential locations increased by an average of 12 percent to 2,800 euros per square metre, increasing by an actual 13.5 percent to 2,100 euros per square metre in standard residential locations. This implies a year-on-year increase in the price growth for standard residential locations (up from 12.2 percent in 2015). New-build condominiums in standard locations commanded 12.5 percent higher prices (3,600 euros on average), whereas prices in favoured residential locations rose by around 7.5 percent to 4,300 euros per square metre. According to the IVD, the trend is explained mainly by the short housing supply on the market, as the number of residential units to let or to sell continues to lag far behind demand. Neither are there any signs for a trend reversal, as far as the IVD experts can see.