Property rents and prices increased in Berlin in 2018

Residential rents and property prices increased significantly in Berlin in 2018 and are expected to continue rising, according to a new analysis report.

Asking rents for apartments increased by 5.6% to €10.34 per square meter per month while asking prices for condominiums rose by 12% in 2018 to €4,159 per square meter, according to the annual report from ban Berlin Hyp and global estate provider CBRE.

But rent increases have slowed, down from 8.8% recorded in 2017. However, condo price growth has not slowed.

‘Berlin’s population, economic output and labour market continued to grow dynamically in 2018. In view of the low vacancy rate of only 0.9% in multi-storey residential construction, it is therefore not surprising that rents and purchase prices continue to rise sharply,’ said Henrik Baumunk, managing director of CBRE in Germany.

‘Even though rental price growth in Berlin has slowed a little, this is not necessarily a trend. On the contrary, the increase roughly corresponded to the level of 2016,’ said Gero Bergmann, member of the Board of Management of Berlin Hyp.

A breakdown of the figures shows that there was a relatively high increase in rents in the upper market segment at 7.1% while in the cheapest tenth of the asking rent prices it was 4.7%.

Friedrichshain-Kreuzberg experienced the highest growth of all districts, with a 9.1% increase in asking rents compared to the previous year, followed by Berlin-Mitte at 9%. The smallest was 2.6% in Neukölln.

The highest rise in the condominium market was an increase of 18.5% in Charlottenburg-Wilmersdorf to €4,873 per square metre, followed by Berlin-Mitte up almost 11% to €5,188 per square metre, exceeding the €5,000 mark for the first time, and Friedrichshain-Kreuzberg up 7.2% to €4,672 per square metre.

Apartment prices increased by 12.5% in 2018, slightly more than those for condominiums. As in the market for condominiums, the demand for apartment buildings exceeds the existing supply.

‘Many owners see no reason to sell in view of the unwavering upward trend in rents and purchase prices as well as the lack of investment alternatives,’ said Michael Schlatterer, director of residential valuation at CBRE in Germany.

He explained that low interest rates are driving the real estate market forward at a time when there is a lack of supply and Germany is also seen as a safe place to buy by international property investors.

The report also reveals that residential building activity also increased in 2018 with 25% more planned apartments than in 2017. However, the activity is not yet sufficient to meet the high demand.

Around a fifth of all new apartments and condominiums being built are in Berlin-Mitte, followed by the district of Lichtenberg with more than 6,500 planned units and Treptow-Köpenick with almost 4,200 units.

With a population of around one million, areas within commuting distance of Berlin are also seeing rents rise with double digit growth in almost all municipalities over the past five years. For example, in the first three quarters of 2018, the asking rents for apartments in Potsdam, the only major city in Berlin’s surrounding areas, were €9.86, only €0.48 below Berlin.

Kleinmachnow, an area just outside of Berlin, is the leading location in terms of purchase prices for detached and semi-detached houses with prices well over €4,500 per square metre.