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11 02 2016
Whether Purchase Prices, Rents or Property Ownership – Berlin Keeps On Growing

Berlin is growing in almost every field. This applies particularly to rents. In 2015, the asking rents in Berlin rose by 5.1 % to EUR 9 per square metre. Although the increase was slightly slower compared to the previous year’s ratio of 6.6 %, the drop is still significant. This is the conclusion of the joint Housing Market Report Berlin conducted by the global leader in real estate brokerage services CBRE and the mortgage provider Berlin Hyp. A total of 110,000 rental offers and more than 67,000 advertisements for condominiums have been evaluated. The conclusion drawn by this report is the following:  the Rental Price Break has had a low impact on rental trends since it came into force last summer.

Berlin’s demography is still profiting from a high influx rate. Moreover, round about 57,000 refugees were newly registered as asylum seekers last year in Berlin. The number of employees paying social insurance contributions increased by 3.1 % to mid-2015 and the Senate expects for 2015 an economic growth of 2.2 %. Thus, the capital is among other German federal states the leader. Although the purchasing power is still lower here than in other German metropolis, if the positive trend of its economic conditions and in the labour market continues, Berlin may progressively catch up to other major cities.

Dynamic Growth In Berlin-Mitte

A particularly high influx rate of new inhabitants was registered in the district of Berlin-Mitte. The population grew by 2.4 % and new construction activities, mainly apartment buildings, are here at the highest. By the way, most of the single-family houses and semidetached houses have been completed in Pankow.

According to the report, rental increase varies greatly between the districts. Berlin-Mitte recorded with +7 % the highest growth rate in asking rents. A rapid increase of +5.9 % could be observed in Friedrichshain–Kreuzberg, too. This district has the same rank as Reinickendorf. Rental growth was also recorded in Lichtenberg (+5.9 %) and in Marzahn (+2.4 %).

Purchasing Prices Increase More Than Rents

What applies to asking rents, equally applies to purchase prices. Indeed, the average price of condominium apartments increased by 10.1 % to EUR 3,000 per square metre. The prices therefore grew at twice the rate of the asking rents. Even in Steglitz-Zehlendorf prices grew by 16.3 %. Prices for apartment buildings increased substantially in comparison to condominiums. In 2015 and compared to the previous year, the offer price per square metre for apartment buildings increased by 18.5 %. Furthermore, according to the report the number of offers decreased from 1,511 to 930.

The data of 240 new construction projects was gathered for the report. Overall in Berlin, more than 22,000 apartments should be constructed in the next few years; however, almost 40 % of the new constructions are planned as rented apartments.

Regarding to the new building volume, the districts show significant differences. Whereas only 220 apartments will be developed in Marzahn-Hellersdorf, 270 in Reinickendorf and solely 550 in Tempelhof-Schöneberg, the planned number of flats in Treptow-Köpenick is 3,300, 3,650 in Lichtenberg and as many as 4,870 apartments are planned in Mitte.

The overall impact of the Rental Price Break will remain rather insignificant. The reason for the slightly lower increase in asking rents compared to the previous year is according to the report, that fluctuation rates have decreased. Berlin’s population relocates less than before.

Moreover, strong investments are being made in the Berlin real estate market. Overall, the CBRE has included in the report Portfolio transactions amounting to EUR 3.6 billion. This is 15 % of Germany’s whole transaction volume. The group of investors is heterogeneous .Those who invests in properties, are beside of listed portfolio holders, fund and investment companies, private clients and investors. Pension foundations, assurance companies, regional or state-owned companies, at the moment, rather focus on new construction projects.