Condominiums in the German capital are becoming more and more popular. Revenues generated by residential real estate sales in the city have lately increased by an amazing 40 percent year on year. It has made Berlin the first of Germany's metropolises where sales crossed the threshold of five billion euros. This is one of the findings of this year's ACCENTRO Homeownership Report. The impressive dynamic of Berlin's housing market has surprised even the experts. The real estate market report published by the city's Land Valuation Board shows moreover that the boom is not limited to condominiums. Last year, 18.1 billion euros worth of flats, houses and plots changed hands, which implied an increase by well over one third since 2014, and a record turnover in its own right. The plot area sold rose by 11 percent to 11.66 million square metres, the equivalent of over 1,166 football fields. The trend reflects the enormous dynamic of the city: Berlin's growth story has continued to gather momentum.
Steady Increase in the Number of Condominiums
In 2015, the number of condominium completions totalled 24,452, which implies a one-year increase by almost two thirds. Some of the these represent new-build or yet-to-be-built units, but the number of rental flats converted into freehold property increased as well. Already developed plots registered a turnover hike by roughly one third, and a price hike by roughly 14 percent. The average price tag of the condominiums sold in 2015 read 2,851 euros per square metre of residential floor area. At approximately 13,500 euros per square metre, the highest absolute purchase price was quoted for an apartment close to Gendarmenmarkt in downtown East Berlin.
Prices for existing detached and semi-detached homes averaged 2,753 euros per square metre of floor area, and were thus nearly as high as the average for condominiums, although prices differed considerably from one urban district to the next. Berlin's priciest detached and semi-detached homes were sold in Wilmersdorf, Grunewald and Dahlem. The most affordable ones were available in Köpenick and Hohenschönhausen.
Construction Boom in Berlin
So what can the body politic and the housing industry do to slow the price growth? The obvious answer is to step up construction. The ACCENTRO Homeownership Report shows clearly that this segment is rapidly gaining in significance in Berlin: The number of new-build flats built in Berlin is six times higher today than it was in 2009. Last year, the city shattered yet another record with about 5,200 new-build flats sold. The stats speak a very clear language: Regardless of whether people are buying to invest in an owner-occupied home or to generate income by letting – condominiums are getting ever more popular in Berlin.
The Property Market Report released by Berlin's Land Valuation Board (GGB) paints a similar picture. Roughly one in two of the 1,687 undeveloped plots sold was earmarked for the construction of detached or semi-detached houses. Well over one tenth of the entire construction areas will be developed into multi-dwelling units, and seven percent into commercial units. In response to the persistent demand for building land in Berlin, the city raised its benchmark land values at the start of this year. These benchmarks represent average rates based on square metres of plot area while taking the typical use and value ratios in the respective location into account, but ignoring the specificities of the individual plot. They serve as baseline values for the market trend. Yet they can also be used to determine the values of individual plots, and in this way they are reflected in the eventual property price. The benchmark for detached and semi-detached homes was raised by a fifth on average, and by nearly half of the indicative value in the south-western part of the city. This development shows what sort of profit property owners stand to derive from the boom cycle on Berlin's real estate market.
The trend is likely to continue, because unchecked demand coincides with a contracting real estate supply, the predictable result being further price growth. Berlin's Land Valuation Board actually expects the turnover value to rise by 14 percent for undeveloped plots, by 8 percent for detached and semi-detached homes, and by 10 percent for freehold and commonhold property. Overall, recent developments make it quite safe to say that seeking homeownership in Berlin will remain a sound investment now and for the future.