Market Analysis
Berlin Valuation Committee, Q1 2016
Building land prices in Berlin: plots well above benchmark values in early 2016
According to the Berlin Valuation Committee, building land prices reached 113% of benchmark values by end of March 2016. Steglitz-Zehlendorf led at 133%, Pankow was most moderate at 102%.
Peter Guthmann
Plot prices rising faster than benchmarks
The "Ad hoc Market Report" published in early June by Berlin's Valuation Committee (Gutachterausschuss) shows that prices for undeveloped residential plots rose to 113 percent of current benchmark land values (Bodenrichtwerte) in the first three months of 2016, starting from an index of 100 at the beginning of the year.
Benchmark land values are derived from past transaction prices. The market was moving ahead of these official figures. Investors and developers were paying noticeably more than the benchmark suggested, a sign of a tight market with limited buildable land.
Differences by borough
Steglitz-Zehlendorf led at 133 percent. Close behind were Tempelhof-Schoeneberg and Lichtenberg, both at 132 percent. Demand was high in eastern Berlin too. The most moderate increase was in Pankow at 102 percent, though prices were rising there as well.
Consequences for apartment prices
Rising land costs are one of the largest cost drivers in new construction. Developers pass these costs on to buyers, meaning new-build apartments become more expensive. This effect carries over to the resale market. When new apartments cost more, demand for existing stock rises, and so do prices there.
For owners, this meant rising property values. For buyers, higher entry costs. The market data confirmed that the trend continued throughout the year.