Berlin Apartment Building Report 2024 | Q4
Dear Readers,
After a prolonged consolidation phase, Germany's largest market for residential and commercial buildings—which we will refer to as apartment buildings—is stabilizing. For the concluding real estate year, we observe clear upward trends based on data from the Berlin Appraisal Committee (GAA).
Closings are increasing again after previous declines, and the willingness to invest is returning. As of October 2024, the GAA has reported 404 sales of apartment buildings. While valuation multiples show stabilization, a general trend reversal is not yet evident. The monetary transaction volume, which had been declining recently, is also increasing, although the floor space turnover continues to decrease.
More closings, less floor space turnover, rising monetary volume: Berlin's investor profile is divided. Many private buyers are increasingly focusing on affordable properties in B and C locations with higher value-add potential. Larger investors are concentrating on reputable A locations, also benefiting from currently lower entry prices.
With our latest Apartment Building Report for Q4 2024, we offer a valuable guide for your investments and invite you to shape them successfully with us. In a dynamic market environment, we remain your reliable partner, executing the sale of apartment buildings in Berlin discreetly, securely, and with sound expertise.
Sincerely,
Peter Guthmann
Overview
Market Activity
Although the attractive purchase price levels have recently led to an increase in transactions, these figures remain significantly below those of previous years. In 2018, 990 residential and commercial buildings—referred to here as apartment buildings—were notarized. If the current trend continues, there will likely be around 540 closings by the end of 2024.
Transactions 2018 - Q4 2024
Market Dynamics
In 2023, approximately half of the total 600 purchase transactions were relatively evenly distributed across all districts, except for Reinickendorf, Spandau, Lichtenberg, and Marzahn-Hellersdorf. In contrast, 2024 shows a shift towards central western and eastern districts, with most closings occurring in Steglitz-Zehlendorf.
Local transactions
Transaction Volume
In 2023, approximately half of the total 600 purchase transactions were relatively evenly distributed across all districts, except for Reinickendorf, Spandau, Lichtenberg, and Marzahn-Hellersdorf. In contrast, 2024 shows a shift towards central western and eastern districts, with most closings occurring in Steglitz-Zehlendorf.
Multipliers (Purchase Price Factors)
According to the data we have analyzed, the average purchase price multiplier in Q4 2024 is 23.3 across Berlin. The downward trend appears to have halted. In Prenzlauer Berg, Schöneberg, and Wilmersdorf, higher multipliers are already being paid again.
| Year | 2024 | 2023 | 2022 | 2021 | 2020 | 2019 | 2018 |
|---|---|---|---|---|---|---|---|
| Average Multiplier | 23,3 | 25,0 | 31,1 | 32,1 | 29,4 | 30,8 | 30,2 |
Local Multipliers
Due to partially low transaction numbers or purchase cases not yet fully recorded, reliable average values cannot be determined for all districts. In Schöneberg, Prenzlauer Berg, and Wilmersdorf, the multipliers are rising again.
Multiplier: Development by District
Transaction Prices
Over a period of more than 15 years, square meter prices for Berlin's apartment buildings ranged between 500 and 800 euros. The poor condition of many buildings, low rents, and stagnant population growth limited the attractiveness of investments at that time. It was only around 2010, with the influx from European countries, that demand and rents gradually increased. The growing shift away from gross rents and extensive renovations made residential and commercial buildings in Berlin a sought-after asset class. From 2012 onwards, the market gained noticeable momentum, reaching a preliminary peak in 2022 at over 3,300 euros per square meter of residential space. The ECB's interest rate reversal, in conjunction with the Building Energy Act (GEG), inflation, and rising construction interest rates, temporarily ended this upward trend.
Additionally, during the 1990s, the Berlin property market was significantly influenced by the aftermath of German reunification. Property prices remained low, and investment activity was subdued due to economic uncertainties and the considerable need for renovation in many buildings. This period of adjustment set the foundation for the gradual growth in demand and prices that began in the early 2000s.
Average SQM Prices 2018 - 2024
Established Locations More Resilient
Not surprisingly, Berlin's inner-city districts have been the focal point for apartment building investments for years. Even under the changed conditions of the past two years, this hasn't significantly altered. The peak in Hohenschönhausen in the northeast can be attributed to high-volume transactions of newer buildings. On the GUTHMANN® Price Atlas for apartment buildings, you can trace the price development back to 2019.
Apartment Buildings Berlin - Price Map
Peak Prices Have Leveled Off
A trend following the concluding consolidation phase is the narrowing gap between the lowest and highest achieved purchase prices. This development reflects the more homogeneous demand and supply situation. In this analysis, extreme price peaks were smoothed by calculating the average of all transactions within the districts.
Apartment Buildings Berlin - Price Range
Rental Market
Approximately 85 percent of Berlin's residents live in rental apartments. The current housing stock amounts to just over two million units (about 2.02 million). In the current rent index, which applies to about 1.4 million units in the Berlin housing market, the average net cold rent is 7.21 euros per square meter—only 5 cents or 0.7% above the previous year's values. Nevertheless, the 2024 rent index shows significant deviations from its predecessors in both directions. The winners are average and particularly good residential locations, where values have partly increased significantly. Simple residential areas, on the other hand, have tended to be downgraded. Based on data from the GWZ (Building and Housing Census) from the recent 2022 census, we have created a rental atlas that aggregates the 16,000 rental data points collected.
Rent Map Berlin
Conclusion
The Berlin apartment building market is concluding a two-year consolidation phase. Prices are no longer declining, and initial upward movements can be observed locally on a quarterly basis. Motivated by rising returns and attractive purchase price factors, demand is particularly increasing for smaller and medium-sized residential and commercial buildings. Investors are taking advantage of favorable entry prices to spread their capital across multiple properties rather than concentrating on a few large ones.
The intensive negotiations between parties in Q1 and Q2 have given way in Q3 and Q4 to a more balanced supply and demand situation with swift closings.
In 2024, the multipliers (purchase price factors) have continued to decrease with few exceptions. However, this trend has halted as prospective buyers with bids that are too low are being filtered out. The Berlin apartment building market thus leaves little room for "fortune seekers."
While purchase prices and factors have decreased, rents continue to rise steadily. This mechanism compensates for the unfavorable interest rate environment through better yields and prevents further erosion of purchase prices. Similar to purchase prices, a belt from the southwest to Berlin-Mitte is also emerging in rents, underscoring some investors' preference for prime locations.
The further development in 2024 and 2025 will be influenced by macroeconomic conditions. Should interest rates follow the recently significantly decreased inflation rates, the investment climate will continue to improve, and purchase prices are expected to rise again.
At the same time, investors place great importance on thorough property evaluation. A detailed analysis of location, potential, and property—as we offer to you and our clients—pays off for both parties. Buyers acquire a property along with a potential analysis, and sellers achieve higher sales prices.
Our Expertise For Your Success
Rents, tenancy duration, ownership structures, and vacancy rates are critical factors for investors. We identify value-enhancing elements for your Berlin apartment building and guide your sale to success, always aiming for the optimal market outcome. As recognized experts and trusted brokers for apartment buildings, we offer a free, non-binding consultation to provide you with tailored advice.
Timeline for the Sale of Your Investment Property
The entire transaction process for selling a multi-family house (MFH) in Berlin can be made streamlined, secure, and efficient through professional preparation and execution.
- Initial Consultation: Clarification of the property’s status and determining market-appropriate pricing
- Documentation Preparation: Creating comprehensive documents to facilitate the review process for buyers and banks
- Marketing: Discreet off-market placement within a solvent internal client network
- Contract Handling: Legal review of the contract with lawyers and notaries, including notarization
- District Review Period: (Applicable to social preservation areas; see our blog post on pre-emption rights)
- Execution of the Purchase Agreement: Signing and payment due date
- After Sales: Handover of the property and follow-up support
For sales in designated "milieu protection" areas, districts have a three-month review period, despite the pre-emption practice being halted by court decisions. If a property is managed in accordance with the rules of the preservation ordinance, no pre-emption right applies.
About GUTHMANN®
Since 2006, as a family-run company, we have focused on personal service and tailored solutions. Our profound market knowledge and data-driven analyses, combined with excellent and reliable buyers, enable us to precisely evaluate your property and market it with great success. With our long-standing experience, we ensure an efficient and transparent sales process—achieving outstanding results. Since 2006, we have successfully brokered approximately 100 residential and commercial buildings. We are recognized as one of the relevant Berlin brokers for apartment buildings. We provide discreet and to-the-point advice.
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Individuelle Beratung
This report was last updated on 06.12.2024 .
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.