Market Analysis
IVD property service 2010/2011
Berlin rental market 2010: New lease rents are climbing
Berlin's average rent is €5.85 per sqm. But new leases in central locations already reach €9.50/sqm according to the IVD, 30% above the official rent index.
Peter Guthmann
Berlin tenants pay an average of €5.85 per sqm in cold rent (Kaltmiete). That puts the capital below the national average. But the figure conceals what is happening in new lettings.
The gap to the rent index
According to the IVD property service report 2010/2011, new lease rents in Berlin exceed the local reference rents recorded in the official rent index (Mietspiegel) by more than 30 per cent. One reason: the current rent index is based on 2008 data and does not capture the demand increase over the past two years. Existing rents rose by around 3 per cent year on year, a moderate figure that does not reflect the momentum in new leases.
Where the highest rents are paid
In preferred residential areas in Mitte, Prenzlauer Berg, and Charlottenburg-Wilmersdorf, new lease cold rents reach up to €9.50 per sqm. The average new lease rent in good locations is around €7.20 per sqm, according to the IVD.
What this means for owners
Higher rental income from new lettings creates room for modernisation and maintenance. Scaffolding is up on many apartment buildings across the city; the streetscape in some neighbourhoods is visibly changing. At the same time, tenant associations report a growing number of rent increase reviews. For owners, this means: document your reasoning carefully and comply with the legal framework.
Market data point to a market in which the era of uniformly low rents in central locations is drawing to a close.