Market Analysis
Statistics office reports May 2015 figures
Construction Costs in Berlin Rise 1.5% in 2015
The cost of building new residential properties in Berlin rose by 1.5% in May 2015. Finishing works and cosmetic repairs were the main price drivers.
Peter Guthmann
Construction costs in Berlin continued to climb. According to the Berlin-Brandenburg Statistics Office, prices for new residential construction in May 2015 were 1.5 percent higher than a year earlier. For developers and investors, this is a factor that feeds directly into project calculations.
Shell construction vs. finishing works
The price increase was unevenly distributed across construction phases. Shell construction costs rose 1.4 percent year on year (February 2015: +1.0 percent). Finishing works increased by 1.6 percent, down from 2.0 percent in February.
The sharpest increases, according to the statistics office, were in painting and lacquering work and roller shutter installation (each +4.8 percent) and waterproofing (+4.4 percent). On the other hand, screed work (-1.2 percent), thermal insulation composite systems (-0.8 percent), and plastering and stucco work (-0.7 percent) became cheaper.
What this means for new developments
Higher construction costs squeeze margins. Investors building in locations like Neukoelln or as part of large urban development projects either had to set higher sale prices or accept lower returns. For project calculations in the second half of 2015, this market trend was directly relevant.
Maintenance costs rising faster
Owners of existing properties should also take note. Maintenance costs for apartments in Berlin (excluding cosmetic repairs) rose 2.1 percent year on year. Cosmetic repairs alone increased by 4.5 percent. These costs directly affect operating expenses and reduce net rental income.
Commercial and civil engineering also affected
The cost pressure was not limited to residential construction. New office buildings and commercial facilities each saw a 1.8 percent increase. In civil engineering, the range ran from +1.2 percent for bridge construction to +1.9 percent for road construction. The strong building activity across the metropolitan area, especially in central locations like Mitte, was driving prices across the entire sector.