Jul,2024

Berlin Apartment Building Report, 2nd Half 2024

Positive signals are coming from the Berlin apartment block market. In addition to decreasing inflation data and an initial cut in the base rate, lower prices are creating more momentum. Read more here.  

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%
Quelle: Marktberichte GAA Berlin, eigene Berechnung

Psychological elements

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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TOP Location Prenzlauer Berg

Block of flats with over 3,000 m² of living space. Milieu protection. Brokered to private buyer off market in 2023.  

District Report Prenzlauer Berg

Spandau: Solid apartment building in a great location

Apartment building with 970 m² living space. 2023 brokered to private buyer off market.  

District Report Spandau

Sanderstraße, Berlin-Neukölln

Apartment building with 30 units under milieu protection. Off market to private buyer.
High multiplier and short marketing time.  

Guthmann Report Neukölln

Gneisenaustraße, Berlin-Kreuzberg

Apartment building with 9 units. Brokered internally to private buyer.
High factor, fast off market sale with bidding process.

Guthmann Report Kreuzberg

Hermannstraße, Berlin-Neukölln

Support throughout the entire sales process. Due diligence and accurate preparation. 
Placement to national buyers.

Guthmann Report Neukölln

Birkenstraße, Berlin-Moabit

Potential analysis, rent adjustments, marketing concept and internal placement.
Purchase price factor 34.3

More information

Stephanstraße, Berlin-Steglitz

Top address in Steglitz, old building in excellent condition. 
Generational ownership, sold for reasons of age. Factor on request.

Guthmann Report Steglitz

Kienitzer Straße, Berlin-Neukölln

Residential and commercial building, redevelopment property, Kiez location, milieu protection
Discreet off market brokerage to international clients

Jetzt informieren

Schnellerstraße, Berlin-Treptow

High-quality refurbished residential and commercial building, milieu protection.
Factor and price per square metre on request.

Guthmann Report Treptow

Wrangelkiez, Berlin-Kreuzberg

Apartment block: 20 apartments plus commercial, milieu protection
Price on request, international seller, national buyer

Guthmann Report Kreuzberg

Leykestraße, Berlin-Neukölln

MFA with space reserve, 32 units, 2 commercial units. Preparation AB, TE, global off market sale
Factor on request 

Guthmann Report Neukölln

Weberplatz, Potsdam

Apartment block in listed ensemble in "Weberviertel" with commercial remises
Due diligence, off market mediation for international sellers

 

Admiralstraße, Berlin-Kreuzberg

Dwelling in double pack with roof blanks
Off market sale from fund portfolio to private buyer

Guthmann Report Kreuzberg

Brunnenstraße, Berlin-Mitte

Dwelling with running public subsidy (IBB), 9 apartments, 2 commercial units, large shed
Quick mediation to international private buyer

Guthmann Report Mitte

Gervinusstraße, Berlin-Charlottenburg

Dwelling with roof blank and building potential of a side wing destroyed in the war
Internal brokerage, due diligence, preliminary examination of buildability

Guthmann Report Charlottenburg

Bastianstraße, Berlin-Wedding

Partially refurbished apartment building with 31 units in the Milieuschutz investigation area.
Trustworthy marketing for private person, due diligence, examination of roof extension

Guthmann Report Wedding

Claszeile, Berlin-Zehlendorf

Well-maintained apartment building with 13 apartments and parking spaces.
Off market from family ownership to private buyer.

Guthmann Report Zehlendorf

Reichenberger Straße, Berlin-Kreuzberg

Well-maintained post-war building with 12 residential units and large plot of land
Off market from private to private, due diligence, preliminary examination at the building authority

Guthmann Report Kreuzberg

Biebricher Straße, Berlin-Neukölln

Grand Wilhelminian style building with 33 units and extended roof
Swift off market sale, due diligence

Guthmann Report Neukölln

Weserstraße, Berlin-Neukölln

Solid 1990s MFH in Kreuzkölln.
Internal off market mediation following excellent cooperation with owners. 

Guthmann Report

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
Quelle: Gutachterausschuss Berlin, eigene Anfrage

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. 

Are you considering selling your apartment Block in Berlin? Our strategies and assessments are in demand internationally.

Dipl.-Ing. Almut Guthmann Prokuristin

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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.

Newsletter and listings

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This report was last updated on 15.07.2024 .

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.

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