Market Analysis
New construction in Berlin
10,000 new apartments in Berlin: How the construction record affects the market
In 2014, around 10,000 apartments are completed in Berlin, up 61 percent. For the first time, the Senate meets its own construction target. The focus shifts to rental apartments.
Peter Guthmann
Berlin is building around 10,000 new apartments in 2014. State Secretary Engelbert Luetke Daldrup announced the figure at an event in the German Architecture Center. The previous year saw 6,200 units, making this a 61 percent increase. For the first time, the Senate meets the target set two years ago of building 10,000 new apartments in Berlin per year.
More rental apartments, less ownership
In 2013, the majority of new builds were condominiums. In 2014, the focus shifts toward rental housing construction. The tight rental market with rising rents across the city makes this reorientation understandable. For investment buyers, this means the supply of new development apartments for purchase shrinks relative to total new construction. That could maintain pressure on purchase prices.
Free land for municipal housing companies
To reach the construction targets, the Senate is providing five municipal housing companies with 27 state owned plots free of charge. These include larger sites in Neukoelln, Treptow-Koepenick, Mitte, Pankow, and Spandau. The free plots reduce construction costs and are intended to enable affordable housing.
Long term plans to 2025
By 2025, a total of around 120,000 new apartments are planned across the city. Twenty to thirty percent are to be subsidized so that cold rents of no more than EUR 6.50 per square meter are possible. For investors, the question is how the massive supply expansion, particularly in the price regulated segment, will change the market development. Ongoing population growth supports demand, but the growing supply will influence Berlin's market over the long term.