Interesting facts about Berlin

The much more than doubling of real estate prices in Berlin within 10 years comes more from a tectonic shift on the Berlin real estate market than from a price explosion. Immigration and catching-up effects are the two main players in this process. The estimation is between 135,000 and 200.000 apartments will be needed by 2030.

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Building stock in Berlin. A brief outline of post-war history.

The housing stock in Berlin is mixed. Classic old buildings built up to 1919, which in many places are dominant on the streets of Berlin, account for only about 16 percent of the total stock. 25.6 percent of the buildings date back to the decades between 1919 and 1949.
As part of the reconstruction programme (Marshall Plan), West Berlin received financial aid, which was used in the 1950s and 1960s to quickly remedy most of the war damage. The formerly very dense inner city development was lightened up, while large housing estates were built on the outskirts of the city. In the 1970s, construction policy in the west of the city dedicated itself to revitalising the city centre.
The situation was different in East Berlin, where there was no comparable economic support and where reparations had to be made in addition. Reconstruction in the eastern part of the city began around 1961 after the construction of the Berlin Wall, initially with a focus on redesigning the city centre to replace the pre-war capitalist buildings with a socialist architectural style. In the 1950s and 1960s, few apartments were built in East Berlin, which led to a housing shortage that was so serious in 1971 that housing construction became the focal point of the GDR's policy. As a result, large prefabricated housing estates were built on the outskirts of the city.

Immigration

  • Young, high-income households are immigrating to the city. Households with medium to high incomes are growing. New segments of buyers are developing, which is quite normal for the acquisition of property.
  • Even though the number of completed buildings is rising, an excess demand is still expected. Long-term investment opportunities are also given with the building of rental apartments.
  • In an international comparison Berlin shows moderate prices. Prices per square meter are very attractive for international buyers. The focus is not mainly put on the return but on the potential increase in the value of a property. Choosing to invest in Berlin real estate is safe.

Singles, singles, singles

55 percent of the 2,084,336 private households in Berlin are one-person households. With the expected influx and type of immigrants, the share of small households will continue to play a central role in the development of the Berlin housing market in the future. The rapidly growing population and the disproportionate share of small households and the progressive reduction in the number of households in the Berlin population will strengthen the demand trend for small apartments. In our "Demography" section we go into this topic in more detail.

Berlin has not always been popular

There were times when Berlin was neither in Germany nor internationally the desired address number 1. The city had a certain cult status but reality in Berlin, however, was so harsh that the economy in the divided city was unable to survive without financial support. While other regions in the former "West Germany" grew, Berlin had to attract and retain the people and companies with costly subsidies. In addition to a series of structural policy measures for the economy, there was the so-called Berlin bonus for residents of West Berlin from 1971 to 1994. Every employed person, for example, received a monthly bonus amounting to 8 percent of his or her gross salary and also benefited from a lower income tax. For example, those who earned 3000 Marks received 240 Marks untaxed as a bonus. In addition to these structural and fiscal policy measures, rents were also very low in Berlin until the end of the 1980s. A high vacancy rate and technically weakened buildings did not make new rentals easy. Landlords were happy to help with the conclusion of gross contracts, which included heating and operating costs.

Many upcoming investment opportunities

Germany’s capital is the city of tenants, which means excellent investment opportunities. Out of a total of 1,9 Mio. apartments in Berlin, 1,6 Mio. of them are rental apartments. About 18 percent belong to housing associations and 12 percent to cooperatives. The remaining 70 percent are owned by big institutions or private persons. A few examples show why the real estate market in Berlin is so interesting despite or just because of the rental market.

Assumption

If 400.000 people move to Berlin until 2030, with 1,77 people per household, around 226.000 apartments have to be built. This means 17.4000 apartments have to be built per year between 2017 and 2030. With 17% of owner occupied housing, around 2.780 freehold apartments per year are theoretically needed.

Are rents in Berlin high?

Ob eine Miete als hoch empfunden wird, hängt vor allem vom Verhältnis von Miete und Einkommen ab. Ein weniger einkommensstarker Haushalt empfindet eine Miete auch dann als Belastung, wenn diese im direkten Vergleich, z.B. mit Mieten aus dem Umfeld, niedrig ist.
Das Thema Mieten entwickelt dann politische Dimensionen, wenn in einem Mietermarkt viele Haushalte in ein Missverhältnis zwischen Nettoeinkommen und monatlicher Mietbelastung geraten. Die Faustregel besagt, dass ein Aufwand für die Kaltmiete zuzüglich Betriebskosten in Höhe von einem Drittel des Nettoeinkommens normal ist. Diese Regel trifft in Berlin auf den überwiegenden Teil des Mietwohnungsbestandes zu.

Tenant protection in Berlin

In recent years, the State of Berlin has introduced several measures to regulate and control the Berlin real estate market:

  • Prohibition of misappropriation: The regulation is intended to prevent the use of apartments as holiday homes. Landlords of holiday homes have to register officially. The two-year waiting period expired in May 2016.
  • Rental price brake: The rent brake decided by the federal government was introduced throughout Berlin.
  • Conversion Regulation: Districts can decide in conservation areas (milieu protected areas) whether or not a conversion of rented apartments into condominiums is approved.
  • The pre-emption right for tenants in the case of first sale of freehold flats after the conversion and the special termination protection against personal use was extended to 10 years.

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