June 2019

Investors Guide Berlin Kreuzberg 2019

Until the turn of the millennium, Kreuzberg still carried its genetic make-up as a working-class quarter. In less than 20 years, the district has undergone fundamental changes and is now one of Berlin's most popular residential areas. A young multinational mix populates the neighbourhood and rules the economy. Properties in Kreuzberg are among the most valuable assets in Berlin.

Berlin-Kreuzberg

Multinational Hotspot

The progressive, modern Berlin is omnipresent in Kreuzberg. Thousands of young people from almost 200 nations populate the neighborhood and provide 365 days a year one of the most agile street, work and nightlife in Europe. The district's economy is booming and incomes are growing. It wasn't always like that. In divided Berlin, Kreuzberg had become a suburb; the name stood for scene, nightlife and its own folklore. Then, with the fall of the Berlin Wall in 1989, the former border district abruptly found itself back in the middle of Berlin. The transformation from the shady and rough underdog to a modern, multinational hotspot has not gone entirely without friction to this day. But the development itself is unstoppable. The modern Kreuzberg is international, cosmopolitan, unpretentious. Kreuzberg can look ahead to an excellent future.

Existing buildings

Median Asking price
5,080 EUR/m²
+12.40 %
Median Asking rent
14.05 EUR/m²
+0.70 %

New buildings

Median Asking price
8,680 EUR/m²
+24.10 %
Median Asking rent
18.70 EUR/m²
+5.40 %

Markets

Kreuzberg lies south of the river Spree and since the district reform in 2011 it forms an East-West district together with Friedrichshain. Almost all of Kreuzberg's sites have risen very much in value in recent years. The residential areas are classified as predominantly simple to medium. Due to the high demand, the internal differentiation in purchase prices is low; the differences between Kreuzberg 61 and Kreuzberg 36, which were still clear a few years ago, are disappearing. The dynamics of the housing market are currently contrasted by a restrictive housing policy that is expressed in six milieu protection areas ("Milieuschutzgebiete"). Even if Kreuzberg 61 and 36 grow together more and more, the neighborhoods are still different. The quarters located south of Gitschiner Straße and Skalitzer Straße (formerly Kreuzberg 61) are considered to be a bit more chic and bourgeois. In addition to the Bergmann-Kiez, the Graefe-Kiez is also internationally popular. In the former Kreuzberg 36 the Wrangelkiez, the streets around the Oranienstraße and the Mariannenplatz, as well as along the Engelbecken are very popular. In addition to the small neighbourhood locations, Kreuzberg also has also large-scale quarters such as the blocks along the highrailway route on both sides of Prinzenstrasse, which are defined by the extensive constructions of the 1970s. Behind these blocks, very attractive medium-sized projects have emerged in recent years. The housing density in most quarters is very high, as is the calculated housing deficit.

Buy

The real estate prices in Kreuzberg are in Berlin's top range. With slightly declining rates of price increase in the higher single-digit range, the average demand price for existing properties of all types is currently 4,150 EUR/m² and for new properties 6,100 EUR/m²

Price index Kreuzberg

Period Existing buildings Median Offer price Index (base 10 years = 100) New buildings Median Offer price Index (base 10 years = 100)
Today 5,080 EUR/m² - 8,680 EUR/m² -
1 Year 4,520 EUR/m² 12.40 % 6,990 EUR/m² 24.10 %
3 Years 4,130 EUR/m² 23.10 % 4,990 EUR/m² 73.90 %
5 Years 3,400 EUR/m² 49.50 % 4,180 EUR/m² 107.80 %
10 Years 1,880 EUR/m² 170.00 % 2,790 EUR/m² 210.60 %

Snapshot

Supply situation over the past 12 months on the Kreuzberg property market. The colors mark the year of construction classes, the size of the bubbles the quantity of offers, the location in the coordinate system price radius (square meters) and apartment sizes.

Price segments

Development of price segments (existing apartments) in Kreuzberg. The chart shows price increases and segment shifts over the 10-year period. 

Rent

About 2,210 rentals of all types of flats were offered on the market in the 12-month period. Currently the average offer rent on the free market in Kreuzberg is about 14.05 EUR/m². This corresponds to a price development of approx. 0.70 % compared with the same period of the previous year.

Rent index Kreuzberg

Period Existing buildings Median Offer price Index (base 10 years = 100) New buildings Median Offer price Index (base 10 years = 100)
Today 14.05 EUR/m² - 18.70 EUR/m² -
1 Year 13.95 EUR/m² 0.70 % 17.75 EUR/m² 5.40 %
3 Years 11.80 EUR/m² 19.20 % 13.50 EUR/m² 38.70 %
5 Years 10.00 EUR/m² 40.60 % 13.10 EUR/m² 42.80 %

Snapshot

The Bubble Chart shows the supply situation of the last 12 months for the property market in Kreuzberg. The colors indicate the year of construction classes, the size of the bubbles the quantity of offers, the location in the coordinate system the price radius (square meters) and apartment sizes. The letting portfolio in Kreuzberg mainly comprises old buildings and post-war residential buildings.

Rent segments

Approximately 50 percent of the apartments offered by 2010 were in the price segment between 5 EUR/m² and 8 EUR/m². Meanwhile, the price segment with rents above 14 EUR/m² dominates the market for new rentals. After declining figures until 2015, the supply of apartments in Kreuzberg is growing again. The construction of new rental apartments in Kreuzberg is almost exclusively carried out by private companies. In the 12-month period about 130 new apartments were offered for rent. First rentings are carried out for approx. 18.70 EUR/m².

Apartment buildings

The housing stock in Kreuzberg amounts to about 5,330 buildings with approx. 92,000 households and a statistical household size of approx. 1.72 persons, which is, however, far exceeded in all quarters. Since the majority of households are held by one person, it can be assumed that the remaining households are even larger than we assumed above (see chart Housing deficit).

The housing stock is heterogeneous. In the central areas of the district, old buildings predominate, mixed with large residential buildings from the 1960s and 1970s. In principle, almost throughout the entire era of the Berlin Wall, many apartment buildings were literally dilapidated. For decades, the low rental income meant that there happened only little or no investment in buildings. Especially in Kreuzberg 36 this led to an erosion of the old building stock. Before the fall of the Berlin Wall, the dominant mix of the population consisted of students, workers, many inhabitants of Turkish origin and a small international scene. After the fall of the Wall, the scene scattered into the "new" old districts like Prenzlauer Berg, later to Friedrichshain and Mitte. The local population was "augmented" by international arrivals. As the population grew and vacancy rates fell, rents rose. Investments in apartment buildings became feasible again. At the beginning of the 2000s there was an increase in the number of conversion into conos.

Prices per square meter for apartment buildings in Kreuzberg have risen by around 400 percent since the beginning of our records in 2006/2007. In 2017 and 2018 a consolidation level has taken place, caused by the introduction of extensive milieu protection areas. Most investors have aligned their investment correspondingly to long term investments strategies. We achieve very high prices for your property in Kreuzberg. 

Construction era Simple to medium locations Medium to good locations
1900 - 1949 1,900 - 3,000 EUR/m² 2,400 - 3,300 EUR/m²
1950 - 1978 1,600 - 2,400 EUR/m² 1,800 - 2,500 EUR/m²
1979 - 2000 1,800 - 2,700 EUR/m² 1,900 - 2,800 EUR/m²
since 2001 2,000 - 3,200 EUR/m² 2,600 - 3,800 EUR/m²
Source: IVD Immobilienpreisservice 2018/2019

Milieu protection

In Kreuzberg, six milieu protection areas are in effect as of 2019. The conservation areas represent approximately 53% of the total area of the district.

Milieu protection area In force since Area in ha Extended Last update
Graefestrasse 1995 64.1 2018 2017
Luisenstadt 1995 239.1 2018 2017
Bergmannstrasse-Nord 2003 45.8 2018 2017
Hornstrasse 2004 36.0 2018 and 2019 2018
Chamissoplatz 2005 23.9 2018 2017/2018
Kreuzberg-Nord 2017 156.4 - -

Please see the GUTHMANN milieu protection map for details.

General background

Kreuzberg was merged with Friedrichshain in the course of the district reform in 2001. The district mayor is currently provided by Bündnis 90/ Die Grünen, as is the resort for construction, planning and facility management. The housing policy of the district is very restricted and turns against ownership.  In Kreuzberg 6 milieu protected areas are established, among them the two oldest from the 1990s. The focus of the district is not on the creation of new residential space, but on the pre-purchase acquisition of existing stock. Paradoxically, already divided properties benefit from the restrictive policy, as further splitting is prevented and the supply is kept tight. With an average apartment size of 70.7 m², the district is located in the midfield of Berlin. One-person households predominate the housing market with 62.3 percent.

Migration

Kreuzberg has grown in the past few years. Like its neighbour Friedrichshain, the growth is based on international influxes, while the district is losing residents on an internal basis. In Kreuzberg it gets visible how Europe works. Looking at international migration movements in a time series from 2013 to 2017, it becomes clear where economic crises have led to emigration movements and also when the flow of movements back begins. Economic crises lead to immigration and, once they have been overcome, to emigration again. This is particularly evident in Kreuzberg, since the district is in great demand by young international people.

  • All migrations
  • International
  • National
  • Suburban
  • Binnen
  • Hotspot

Trend

In Kreuzberg, prices will continue to rise. On the one hand, the district benefits from the influx of young buyers from Western European countries. On the other hand, Kreuzberg's household income is growing and with it the desire for ownership and the general acceptance of ownership. The principle of supply and demand is stronger than regulation, especially in the central neighbourhoods demanded by young buyers. The competition between residential and commercial space is increasing, with young companies in the digital economy in particular looking for space. In principle, Kreuzberg still has large potential areas available for subsequent compaction, for example on the 47,000 m² Dragoner site. Unfortunately, the planning for such an area takes decades. In principle, the district would have to rely on smaller-scale densification, e.g. in the form of attic extensions. However, many projects are slowed down or hindered. In addition, the re-municipalisation strategy of the state and municipalities (districts) is worsening the housing shortage. The Transformation Ordinance (Umwandlungsverordnung) will reduce supply even further, which will boost prices. Despite (or because of?) the numerous regulations, Kreuzberg remains interesting for medium and long-term investment projects of all sizes, with great potential for value appreciation.

This report was last updated on 24.06.2019 .

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.