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City Ranking: Berlin is Germany’s Most Dynamic City

For more than 15 years, the Cologne Institute for Economic Research (IW) has compared the major German cities and published its findings in a number of differentiated rankings. This year, Berlin took the top spot as most dynamic city for the first time. The city fittest for the future, according to the survey that the IW Institute conducted on behalf of the WirtschaftsWoche business weekly and the ImmobilienScout24 real estate portal, is Darmstadt. Meanwhile, Munich prevailed in the level ranking, which maps the actual situation.1

Darmstadt and Jena Show Plenty of Future Potential

That Berlin has ascended to the very top is explained by the survey’s authors primarily as a result of the city’s fast dynamics in term of demographics, labour market and real estate market. Berlin gained 250,000 new residents between 2012 and 2017, while condominium prices and residential rent rates surged during this time. Another city highlighted by the survey because of its brisk dynamic is Leipzig: with the best score of any city in East Germany, the Saxon city made ninth place in this ranking, which scrutinises the changes of 36 indicators over a period of five years.

Darmstadt, the city with the brightest future prospects benefits from its location within the prospering Rhine-Main region. According to the survey authors, it is complemented by a large number of innovative enterprises.2 They point out specifically Merck Chemicals because the group employs 11,000 staff in this city in southern Hesse. Also worth noting in the ranking of future prospects is the placement of Jena, as this city in Thuringia has the fifth-best outlook among all German cities. The good score is due especially to the high share of academics among Jena’s population, with nearly one in three employees having a degree. The reason for this high ratio is evidently the active recruitment policy on behalf of the research institutes.

Berlin and Leipzig Have Most Dynamic Housing Markets

Munich ranked second both in dynamics and outlook, and thus took the lead in the level ranking. This means that the Bavarian state capital scored the top spot for the seventh time in a row. Apart from Munich, the survey foregrounded three other cities in Bavaria, namely the tri-city area of Erlangen, Nuremberg and Fürth in Middle Franconia. The survey found that the region has emerged as a new “economic powerhouse” characterised by a very strong labour market and a dynamic real estate market. The highest-scoring East German city in the level ranking is Potsdam, which placed 17th.

Specifically in terms of its real estate market, Berlin registered the strongest momentum over the past five years. According to the survey, its rent rates increased by 37.5 percent between 2014 and 2019, which is almost twice as fast as the average of all major cities studied. Prices for condominiums in the German capital actually increased by 77.1 percent during this time. Another city that turned heads was Leipzig with a rent increase by 74.4 percent.