Berlin's residential property market enters 2012 with rising prices. Demand for apartments in the capital remains strong, driven by low interest rates, a growing population and Berlin's appeal to both domestic and international buyers.
Purchase prices outpace rents
While purchase prices per square metre (Kaufangebotspreis pro Quadratmeter) are rising noticeably, rents are following at a more moderate pace. According to our market data, initial rental yields on newly acquired properties are declining as a result. For investors, the focus is shifting from short-term yield towards long-term capital appreciation.
In established inner-city locations, price negotiations have become difficult. In Mitte and Prenzlauer Berg in particular, prices per square metre have reached levels comparable to other European capitals.
Which locations investors are watching
Beyond prime locations, boroughs (Bezirke) like Friedrichshain-Kreuzberg and Neukoelln are attracting more attention. Entry prices there are lower, and investors expect catch-up potential. The commercial market is also showing signs of recovery: declining vacancy rates in office and retail space suggest growing demand in this segment too.
If you are looking for apartments in Berlin in early 2012, the market is defined by its long-term appreciation potential. Careful analysis of location and property quality remains the decisive factor.
