Building in Berlin is getting more expensive. According to the Berlin-Brandenburg Statistics Office, the price index for new residential construction rose 1.1 percent from November 2013 to February 2014. Compared with February 2013, the increase was 2.1 percent.
Where costs are rising
Both shell construction (+0.9 percent) and fit-out work (+1.1 percent) have become more expensive in recent months. Over a twelve-month period, the increases are even more pronounced. Waterproofing work saw a 6.8 percent rise, plumbing work increased by 3.8 percent, and heating and hot water systems by 3.7 percent. Glazing and scaffolding also became pricier. High capacity utilization across Berlin's construction sector is driving prices up.
Maintenance costs also climbing
It is not just new builds that cost more. Owners of existing properties paid 2.4 percent more for maintenance work in February 2014 than a year earlier. Cosmetic repairs rose by a more moderate 1.6 percent. For owners of apartments and apartment buildings, this means reserves for renovation and modernization need to be adjusted to the new cost reality.
Impact on the housing market
Rising construction costs are hitting Berlin's housing market at an already tight phase. Combined with increased land prices, particularly in boroughs like Charlottenburg-Wilmersdorf, building new apartments is becoming harder. The planned rent cap adds further uncertainty: private developers are already holding back because future rental income is harder to project. Higher construction costs and regulatory intervention at the same time make new rental housing construction less predictable for investors.
