Guide
Sales strategies for property owners
Selling an apartment building in Berlin: Bulk sale or condominium conversion?
Purchase price multiples of up to 30 times the annual net cold rent are no longer uncommon in Berlin. For owners of apartment buildings, the question is: sell in bulk or convert into individual units?
Peter Guthmann
If you want to sell an apartment building in Berlin, you generally have two options: a bulk sale of the entire property or a condominium conversion under the Condominium Act (WEG). Both paths have their advantages and drawbacks.
Purchase price multiples in Berlin 2017
Demand for apartment buildings in Berlin is strong. A few years ago, purchase price multiples of 15 to 18 times the annual net cold rent were standard. Today, multiples of up to 30 times are achieved in good locations. This trend is visible not only in established boroughs like Charlottenburg-Wilmersdorf but also in emerging areas like Neukoelln.
Bulk sale: Fast and straightforward
In a bulk sale, the entire building goes to a single buyer, typically an institutional investor or family office. The advantage is speed and certainty. There is one contractual partner, and the transaction can close within a few months. However, the total price is usually lower than what individual unit sales would generate.
Condo conversion: Higher proceeds, more effort
In a conversion, the building is divided into separate units through a declaration of division. These can then be sold individually, for example when a tenant moves out. The buyer pool for individual apartments is much larger: owner-occupiers and investors both enter the picture. Achievable prices per square meter are higher than in a bulk sale. But the process takes longer, typically over a year, and requires coordination with notaries, architects, and public authorities.
Tax considerations
To avoid speculation tax, the property should have been held for at least ten years. If the holding period is shorter, the profit is taxed at the owner's personal income tax rate. At the top marginal rate, the burden can be substantial.
Valuation as a foundation
A professional property valuation should consider not only the current condition and rental income but also the development potential of the property and its location. In Berlin, today's secondary locations regularly appreciate within a few years. Factoring this potential into the pricing can significantly increase the sale proceeds.