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Condominiums: Berlin shines, Munich stagnates

Berlin is Germany´s city of superlatives. It is home to more citizens than in all other German cities. Nowhere else in Germany  more companies are founded. Also the cultural variety has yet to meet its match. Concerning the condominium market, Germany´s capital had a leadership role respecting the number of condominiums sold. Last year Berlin was able to move up to the first place in regard of the turnovers, therefore overtaking front runner Munich. According to the Accentro Condominium Report, Berlin´s residential property market achieved a total turnover of 4,28 billion Euro in 2013. That makes for an increase of 18.3 percent in comparison with the previous year. The Bavarian capital accomplishes a total turnover of 3.77 billion Euro – 0.7 percent less than in 2012. Actually the gap between Berlin´s and Munich´s results is even bigger, since the turnover figures of Munich include condominium as well as part ownership.

With a turnover mark of 4.28 billion Euro, the Spree metropolis sets a new record: ever since the first edition of the Condominium Report published in 2008, no other German city achieved such a high turnover with condominium sales as Berlin did in 2013. In order to accomplish these results, Berlin´s residential property market completed an impressive upturn. In 2009 the turnovers solely reached 1.83 billion Euro.

The supply does not match the demand

The number of condominiums sold also shows a positive development: 2013, a total of 23.100 sold condos added up to an increase of 2.4 percent in comparison with 2012. In Munich a clear decrease of turnover figures was noted. Round about 11.520 condominiums were sold last year in Munich, that makes for a decrease of 12,5 percent compared with 2012. Yet, the turnover increased by 0.7 percent, which illustrates the rising prices. Even Hamburg (third place concerning turnover figures) reported a decrease of 1.4 percent to 6.699 sold condominiums. This development is not due to a lack of demand, yet a scarce supply. In many metropolitan areas, the new construction activities cannot keep the pace with the increase of population.

Berlin profits from long phase of stagnation

This can also be noted in Berlin: 6.641 newly constructed apartments in 2013 met an inhabitant increase of approximately 47.000 people. In comparison with other German cities, the price level of Berlin´s property market is comparatively low. Berlin´s rents and purchasing prices developed sideways over a long time period. Therefore, the capitol´s residential property market was not able to promise appealing yields. Whoever searched for an attractive property investment in Germany invested in Hamburg or Munich. Subsequently years of not investing in new constructions followed.

A few years ago the tables turned: with Berlin´s rising popularity and the constant population increase, the prices and rents went up accordingly. One of many reasons for this development is the unique history of the capital. The city in its present form is very young and had to merge into the flourishing metropolis it is today. This development in popularity also applies when looking at other German cities as well as European capitals like Paris or London.

The signs are set for growth

For the next year an accordingly positive development as in 2013 is anticipated. Condominiums are a profitable investment due to the currently low interest phase – in terms of safety almost no other investment alternative can compete with a condominium in Berlin. An ease of the residential property situation in Berlin is not to be expected. Berlin´s population is going to increase within the next few years and the construction of new apartments will not be able to keep up in the foreseeable future. Consequently, the condo prices will increase. For investors from abroad the comparatively low prices in combination with the potential of increase in value as well as high architectonic standards make for paradisiacal investment conditions.