Apartment Buildings in Berlin: Opportunities and Trends 2024
Dear readers,
The second half of 2024 could bring some momentum for rental properties in Berlin. Falling inflation data and the first ECB interest rate cut are noticeably brightening the market. Overall, almost all signs point to a recovery. However, the fact that sellers and buyers have not yet completely given up their caution is reflected in the 20 per cent lower completion rate compared to the previous year. As of 1 July, the Berlin expert committee reported a total of 255 transactions for rental houses with and without commercial units. With only around a third of the contracts analysed so far, it is difficult to predict price trends. However, there are more understandings between sellers and buyers. However, the question of performance in typical investment periods seems more interesting to us than an analysis over short periods of time. Private investors consider an exit at the earliest after the speculation period of 10 years has expired. Institutional investors and family offices develop portfolios over periods of up to 20 years. Taking this into account puts the recent real declines in purchase prices into a relative perspective. From a long-term perspective, the trend ranges from 585 EUR/m² of living space in 2004 to around 2,750 EUR/m² in 2023, which corresponds to an increase of 470 %. We have roughly calculated the average prices for one square metre of living space since 2004 on the basis of the market reports of the Gutachterausschuss Berlin (GAA):
Average notarized purchase prices per sqm for apartment blocks in Berlin
| Year | EUR/m² Living Area | Percentage change |
|---|---|---|
| 2004 | 585 | |
| 2005 | 575 | -1,71% |
| 2006 | 540 | -6,09% |
| 2007 | 645 | 19,44% |
| 2008 | 580 | -10,08% |
| 2009 | 832 | 43,45% |
| 2010 | 832 | 0,00% |
| 2011 | 845 | 1,56% |
| 2012 | 975 | 15,38% |
| 2013 | 1105 | 13,33% |
| 2014 | 1599 | 44,71% |
| 2015 | 1950 | 21,95% |
| 2016 | 1820 | -6,67% |
| 2017 | 2314 | 27,14% |
| 2018 | 2366 | 2,25% |
| 2019 | 2561 | 8,24% |
| 2020 | 2730 | 6,60% |
| 2021 | 3110 | 13,92% |
| 2022 | 3178 | 2,19% |
| 2023 | 2673 | -15,89% |
| 2024 (estimated) | 2450 | -8,34% |
Psychological momentum
More important than the question of square metre prices or factors is the investor's concern about entering during a falling market. The key question is often not so much where prices currently stand, but when the downward trend will stop and the ideal entry point will be reached. There are clear indications of this bottoming out. This assumption is also confirmed by the declining number of offers. Existing owners without pressure to sell are more resistant to price fluctuations than investors with an exit plan defined from the outset. The slight drop in the completion rate in the first half of 2024 could indicate that sellers will not accept further price reductions and prefer to postpone a sale. Under these circumstances, buyers will have to take action or accept the risk of prices rising again soon.
Investment security for decades is guaranteed
The investment environment in Berlin is well known. The demand for residential property to rent is higher than ever and is unlikely to fall in the long term. Berlin's economic performance ranks third among EU Capitals and net household incomes in the German Capital are in the German midfield. Berlin is developing into an international centre for science and technology, supported by Germany's largest university landscape. Young people love Berlin and create ideal conditions for secure, predictable and long-term investments in residential property.
With prices at 2019 levels, a wide range of properties on offer and interest rates set to fall in the foreseeable future, there is only one recommendation: take advantage of the opportunities.
Yours, Peter Guthmann, Managing Director
Overall Berlin: Completed sales and median purchase prices 2018-2023
| Year | No. Transactions | Average EUR/m² Living Area | Difference to Previous Year |
|---|---|---|---|
| 2018 | 990 | 2.643 | |
| 2019 | 855 | 2.861 | +8% |
| 2020 | 873 | 2.730 | -5% |
| 2021 | 914 | 3.110 | +14% |
| 2022 | 751 | 3.178 | +2% |
| 2023 | 599 | 2.673 | -16% |
| 2024 | 255 | not enough data | not enough data |
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Pricing factors for 2024
The market value of your rental property is influenced by various key figures. Rental income and the local factor and price per square metre, as well as the quality of the location and condition, are the main considerations for buyers.
Factors (muliples)
In 2023, the factor, which represents the multiple of the annual net cold rent, fell significantly. In practice, the trend is partially offset by rent increases and is currently being spread across all districts and locations.
| District / ø Multiples | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|---|
| Mitte | 42,2 | 37,1 | 36,4 | 40,7 | 38,9 | 35,3 |
| Tiergarten | 33,7 | 30,8 | 29,0 | 29,9 | 31,3 | 24,8 |
| Wedding | 33,7 | 31,9 | 27,3 | 35,4 | 27,1 | 24,1 |
| Prenzlauer Berg | 34,9 | 33,9 | 31,1 | 33,5 | 33,8 | 28,9 |
| Friedrichshain | 35,3 | 36,4 | 31,1 | 34,1 | 36,3 | 26,7 |
| Kreuzberg | 38,1 | 31,1 | 32,2 | 32,6 | 31,4 | 25,3 |
| Charlottenburg | 34,3 | 35,3 | 34,3 | 40,0 | 1247,0 | 27,1 |
| Spandau | 26,1 | 23,6 | 25,2 | 28,9 | 26,9 | 24,5 |
| Wilmersdorf | 34,7 | 36,7 | 34,7 | 39,7 | 36,6 | 23,1 |
| Zehlendorf | 32,6 | 30,0 | 0,0 | 0,0 | 30,3 | 0,0 |
| Schöneberg | 32,5 | 32,4 | 32,1 | 33,5 | 33,8 | 23,8 |
| Steglitz | 28,7 | 27,5 | 23,9 | 32,1 | 34,9 | 24,4 |
| Tempelhof | 25,8 | 28,7 | 25,6 | 29,1 | 28,9 | 24,9 |
| Neukölln | 29,4 | 31,6 | 27,9 | 29,9 | 30,4 | 24,8 |
| Treptow | 32,7 | 0,0 | 28,9 | 33,5 | 28,4 | 0,0 |
| Köpenick | 30,1 | 30,1 | 29,1 | 30,2 | 27,3 | 0,0 |
| Lichtenberg | 26,5 | 30,9 | 26,9 | 28,7 | 28,6 | 20,0 |
| Weißensee | 25,3 | 28,6 | 26,1 | 29,2 | 27,7 | 25,9 |
| Pankow | 30,2 | 27,6 | 28,2 | 31,6 | 33,9 | 23,5 |
| Reinickendorf | 25,6 | 25,0 | 26,1 | 26,1 | 28,4 | 21,5 |
| Marzahn | 21,2 | 24,9 | 0,0 | 0,0 | 26,6 | 0,0 |
| Hohenschönhausen | 22,9 | 28,8 | 29,9 | 0,0 | 0,0 | 24,7 |
| Hellersdorf | 19,2 | 24,1 | 26,8 | 29,9 | 28,1 | 0,0 |
| Gesamt Berlin | 30,2 | 30,8 | 29,4 | 32,1 | 31,1 | 25,0 |
Prices per square metre
The correlation between location, multiplier (factor) and square metre prices for apartment buildings is complex and cannot be reduced to a simple formula. The multiplier is primarily influenced by macroeconomic parameters, such as the interest rate level of financing. In contrast, the price per square metre is primarily based on the location and condition of the property. A low multiplier can be offset by higher net cold rents. Although the price per square metre is determined to a certain extent by the condition of the property, an above-average condition in a less sought-after location can have a positive impact on the sales result and exceed the typical price per square metre for this location. This applies up to the point where it becomes possible to buy in a better location at a lower price level. We offer an individual valuation of your property to determine the maximum market value and advise you on measures that can increase the value of your property. The following table provides an overview of the current prices per square metre for value-relevant floor space in the Berlin districts. This floor space corresponds more or less to the gross area (BGF).
Average Sales Prices per SQM Living Area
| District | 2022 EUR/m² | 2023 EUR/m² | Difference % |
|---|---|---|---|
| Mitte | 5308 | 3864 | -27 |
| Tiergarten | 2745 | 1709 | -38 |
| Wedding | 2660 | 2043 | -23 |
| Prenzlauer Berg | 3551 | 2481 | -30 |
| Friedrichshain | 2824 | 2448 | -13 |
| Kreuzberg | 3058 | 2455 | -20 |
| Charlottenburg | 3769 | 3379 | -10 |
| Spandau | 2943 | 2275 | -23 |
| Wilmersdorf | 3778 | 3894 | 3 |
| Schöneberg | 3133 | 2626 | -16 |
| Steglitz | 3242 | 2393 | -26 |
| Tempelhof | 3201 | 2155 | -33 |
| Neukölln | 2484 | 2275 | -8 |
| Köpenick | 3162 | 3263 | 3 |
| Lichtenberg | 3659 | 2300 | -37 |
| Weißensee | 2987 | 3224 | 8 |
| Pankow | 3284 | 2930 | -11 |
| Reinickendorf | 2771 | 2615 | -6 |
| Marzahn | 2985 | 3180 | 7 |
| Hohenschönhausen | 2213 | 2460 | 11 |
| Hellersdorf | 3266 | 2389 | -27 |
| Berlin (total) | 3178 | 2673 | -16 |
Purchase price spread
The spread or purchase price range shows the lower and upper end of the scale when determining a market-driven sales price. The spread usually depends on the year of construction and state of maintenance as well as investment requirements. Recently, residential buildings from the post-war years in particular have lost value due to their poor energy balance. The effect has been fuelled by a long period of unclear legislation and the difficulty of calculating the costs of energy-efficient redevelopment. The downturn in the construction of new buildings has recently led to a decline in modernisation and refurbishment costs, and there is now also common empirical data available for such measures. However, energy efficiency upgrades are being factored in.
| Jahr / Year | Mitte | Tiergarten | Wedding | Prenzlauer Berg | Friedrichshain | Kreuzberg | Charlottenburg | Spandau | Wilmersdorf | Zehlendorf | Schöneberg | Steglitz | Tempelhof | Neukölln | Treptow | Köpenick | Lichtenberg | Weißensee | Pankow | Reinickendorf | Marzahn | Hohenschönhausen | Hellersdorf | Jahr |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 1.267 bis 5.247 | 1.255 bis 4.447 | 950 bis 3.004 | 1.582 bis 3.510 | 888 bis 5.793 | 1.165 bis 5.655 | 1.350 bis 6.401 | 301 bis 11.919 | 1.048 bis 5.366 | 1.526 bis 7.453 | 1.068 bis 3.089 | 1.065 bis 3.687 | 983 bis 2.817 | 695 bis 4.849 | 1.062 bis 3.873 | 1.081 bis 2.066 | 844 bis 4.840 | 805 bis 2.379 | 468 bis 4.652 | 570 bis 5.695 | 1.350 bis 2.959 | 500 bis 2.097 | 857 bis 2.320 | 2018 |
| 2019 | 1.208 bis 6.168 | 1.425 bis 3.647 | 874 bis 3.154 | 1.461 bis 4.964 | 1.395 bis 3.404 | 1.082 bis 4.197 | 1.423 bis 11.340 | 606 bis 3.192 | 1.601 bis 9.143 | 2.446 bis 5.173 | 1.314 bis 3.917 | 1.164 bis 4.071 | 862 bis 5.997 | 1.032 bis 2.941 | 1.318 bis 2.656 | 1.579 bis 2.650 | 698 bis 4.630 | 1.000 bis 3.376 | 671 bis 3.090 | 396 bis 4.839 | 1.018 bis 2.339 | 1.382 bis 2.028 | 846 bis 3.858 | 2019 |
| 2020 | 1.594 bis 8.481 | 1.454 bis 2.811 | 1.003 bis 4.084 | 1.310 bis 3.280 | 1.248 bis 3.284 | 1.424 bis 4.894 | 1.364 bis 6.181 | 431 bis 5.758 | 1.151 bis 10.526 | 3.230 bis 4.837 | 1.363 bis 4.841 | 1.637 bis 3.183 | 770 bis 4.909 | 592 bis 4.392 | 986 bis 4.069 | 930 bis 5.683 | 1.230 bis 5.748 | 1.126 bis 4.594 | 895 bis 2.819 | 654 bis 5.248 | 1.589 bis 3.255 | 1.729 bis 2.307 | 1.495 bis 3.090 | 2020 |
| 2021 | 1.603 bis 8.475 | 1.106 bis 3.422 | 841 bis 5.446 | 1.436 bis 6.835 | 1.314 bis 6.696 | 1.167 bis 4.264 | 1.570 bis 16.262 | 841 bis 4.633 | 1.596 bis 7.347 | 2.560 bis 6.944 | 1.625 bis 7.047 | 1.489 bis 5.253 | 1.125 bis 4.644 | 896 bis 6.326 | 1.794 bis 5.217 | 984 bis 5.812 | 1.142 bis 4.960 | 1.390 bis 3.167 | 1.109 bis 6.111 | 601 bis 3.873 | 2.006 bis 3.012 | 1.525 bis 4.482 | 1.248 bis 3.389 | 2021 |
| 2022 | 1.489 bis 16.844 | 1.193 bis 3.702 | 1.358 bis 3.867 | 347 bis 7.736 | 458 bis 3.141 | 862 bis 5.068 | 1.707 bis 6.579 | 472 bis 6.013 | 874 bis 7.043 | 1.976 bis 3.897 | 1.735 bis 4.707 | 1.799 bis 3.821 | 1.232 bis 3.670 | 824 bis 4.515 | 1.467 bis 2.931 | 1.716 bis 3.999 | 287 bis 6.116 | 1.691 bis 3.186 | 1.421 bis 5.626 | 954 bis 5.094 | 2.195 bis 2.733 | 1.081 bis 2.150 | 1.717 bis 4.312 | 2022 |
| 2023 | 1.495 bis 5.777 | 660 bis 1.823 | 446 bis 2.594 | 994 bis 2.964 | 1.374 bis 2.844 | 911 bis 6.567 | 1.093 bis 7.927 | 800 bis 4.608 | 1.466 bis 6.024 | - | 1.339 bis 4.404 | 1.827 bis 2.082 | 1.069 bis 2.570 | 756 bis 5.590 | - | 2.302 bis 2.912 | 357 bis 3.134 | 1.247 bis 5.177 | 950 bis 4.509 | 866 bis 4.270 | 1.266 bis 4.667 | 1.138 bis 2.714 | 1.425 bis 2.523 | 2023 |
Declining inflation, falling interest rates, growing momentum
The changed interest rate scenario has led to a turning point in the market for rental properties. The high construction interest rates are the result of the war in Ukraine and the explosive rise in inflation rates. Conversely, it is unlikely that construction interest rates will fall as quickly as they have risen as inflation eases, especially as the development of government bonds and mortgage bonds sets the direction for construction interest rates.
Nevertheless, most experts expect interest rates to gradually fall to a level below 3 per cent over the course of the year. This will result in a noticeable revitalisation of the apartment block market. We have compiled the key figures for you in a compact chart that reflects the status of the ECB key interest rate and the building interest rates currently on offer with a 10-year commitment.
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Typical timing of a sale
The transaction duration for the sale of a multi-family house (MFH) in Berlin can be expedited and made more efficient and secure through professional preparation and execution.
- Consultation: Clarifying the initial situation and determining a market-appropriate price.
- Professional Documentation: Accelerating the review by clients and banks, fostering trust through transparency.
- Marketing: Discreet off-market brokerage within a solvent internal client base.
- Contract Handling: Contract review with lawyers and notaries, notarization.
- District Review Period for Preemptive Right (Read our blog post on the preemptive right).
- Completion and Payment Due.
- After Sales: Smooth transition and follow-up support.
We get you through every challenge
The current situation on the market for apartment blocks in Berlin is challenging. Although the market is starting to pick up again, developments vary widely from one district to another. Specific property characteristics must be in line with the market.
The key to the best possible sale is careful analysis and preparation, including transparent documentation of your property, a targeted marketing strategy and a focus on maximising your proceeds. The right preparation enables potential buyers to better understand the investment risk and to go through the due diligence process efficiently. A well-planned sales strategy can counteract trends and prevent value erosion.
Regulation: What could still come
Although there is currently less talk about regulation, there could be new measures coming for landlords/property owners, considering the rising rents.
There are several points on the political agenda:
- Tightening of rent control, e.g. a legislative proposal from Hamburg and Bremen: Federal Council try to stop furnished rental
- An expert group in the Bundestag is working on the revival of preemption rights
- The Greens and the Social Democrats are considering a rent moratorium, meaning a freeze on rent for a certain period of time
- Profit taxation. The abolition of the speculation period or extension of the holding period is being discussed repeatedly
- Reduction of the permissible rent increase from 15 to 11 percent over 3 years
- It has been decided that municipalities are obliged to create a standardized rental index
In the regulatory radar, we have summarized the proposals circulating regardless of their feasibility.
This report was last updated on 23.07.2024 .
Disclaimer
The Guthmann Market Report is a semi-automated report about the property market in Berlin. All information has been carefully researched and is given to the best of our knowledge and belief. We assume no liability for completeness, deviations, changes and errors. Our report does not represent an investment recommendation.
Sources
Amt für Statistik Berlin-Brandenburg: Einwohnerregisterstatistik (Bewegungsdaten), Fortschreibung des Wohngebäude- und Wohnungsbestandes, Ergebnisse des Haushaltegenerierungsverfahren KOSIS-HHGen, Baufertigstellungen. IMV GmbH: Rohdaten Preise und Mieten. Senatsverwaltung für Stadtentwicklung und Wohnen: Umwandlungsdaten (2018), Geoportal Berlin (FIS-Broker). Immobilienverband Deutschland IVD (2018/2019): Immobilienpreisservice 2018/2019.
Methodology
Housing deficit (Treemap): The Statistics Office updates the household data based on the 2011 micro-census. Determination of household count and statistical household size via household generation procedures (KOSIS). We calculate the real household size / housing deficits via the ratio number of inhabitants to number of apartments.
Purchase prices and rents (charts and reports): Calculation of the median on the basis of raw data, own visualization.
Migrations: Aggregation and visualization based on transaction data.