Market Analysis
Market analysis 2016
Property investment Berlin 2016: why the capital leads in Europe
Berlin sits at the top of European property markets in 2016. PwC and E&Y confirm strong investment pressure. Residential apartments lead demand, but commercial property is also highly sought after.
Peter Guthmann
Berlin ranks first in Europe
In the "Emerging Trends in Real Estate" study by PwC and the Urban Land Institute, Berlin climbs from fourth place last year to first among European property locations. This assessment aligns with other surveys of fund managers, institutional investors and housing companies. The driving forces are high investment pressure, low interest rates and large capital availability.
From underperformer to growing metropolis
This ranking is remarkable considering the picture 15 years ago. Between 1995 and 2001, Berlin's property market was shaped by population decline and suburbanisation. Many residents moved to the Brandenburg commuter belt, creating vacancies particularly in the western inner-city boroughs.
That phase is over. The city benefits from its appeal through art and culture as well as a growing tech and start-up economy. Steady inflows of new residents from across Germany and abroad keep demand consistently high.
Residential property as the most sought-after asset class
Within the Berlin market, apartments are currently the most attractive asset class. The rising population is increasing pressure on the housing market. More and more newcomers to Berlin are no longer coming for a limited period but planning to stay long term. This secures stable rental demand and creates potential for value growth. Beyond the residential segment, commercial and specialised properties are also seeing increased interest.
Outlook for investors
Investors expect property prices to continue rising until at least 2030. Low interest rates are keeping transaction volumes high. According to studies by E&Y and PwC, investor risk appetite is growing, and project developments and niche segments are also finding buyers.
Financial investors from Asia and North America in particular are showing interest. The establishment of tech companies, especially in central locations like Mitte, is generating economic momentum. The market trend suggests Berlin will remain a relevant location for owners and investors.