Property Market Report 
Berlin 2025 Q3

Berlin’s Fragmented Real Estate Market

Dear readers,

By mid-2025, Berlin’s real estate market is showing diverging trends. The recovery in the existing property segment continues, supported by more stable transaction activity and prices. In contrast, the new construction sector remains stagnant. The rental market continues to be characterised by a shortage of supply. Overall, the market is positioned between stabilised interest rates and strong demand on the one hand, and persistent structural supply bottlenecks on the other.

The key findings can be summarised as follows:

Transaction volumes in the existing property market are beginning to recover from the low points of 2023 and 2024. Citywide price growth is moderate but positive. With around 6,100 transactions at an average price of EUR 5,140/m² and a price trend of +3.2%, the downward movement has come to a halt. However, price trends vary widely across districts.

The new construction segment remains at the bottom. Despite a recent rise in building permits, there is little activity. Limited liquidity and high construction and financing costs currently form a toxic combination for the sector. Although prices have increased by approximately 5.5% to around EUR 8,390/m² of living space, this gain obscures the structural issue: only around 750 contracts for new-build apartments were notarised in the first half of 2025. By comparison, there were 3,606 units in 2021 and 7,400 units in 2016.

The rental market remains tense. It continues to face the greatest pressure, reflected in double-digit annual increases in asking rents. Over half of rental listings are now offered with fixed-term contracts. As a result, competition in this sub-segment is rising, which is leading to slightly lower final rents in fixed-term agreements. Landlords should expect further regulation.

The complexity is evident: On the one hand, stabilised interest rates are improving buyer sentiment, and rising prices for existing properties show that investors are adapting to the new environment and expressing confidence in Berlin. On the other hand, high construction costs, liquidity constraints among developers, regulatory uncertainty and the aftermath of market consolidation are weighing on the market.

We believe the coming quarters will be shaped by the following factors:

• Demand pressure: Population growth remains a key driver.

• Shift effects: Weakness in new construction strengthens the existing market.

• Rents: Rental levels in Berlin are losing momentum.

• International: Residential and commercial buildings are regaining investor attention.

• Fill-up: Units from previous condominium conversions are entering the market.

We hope this update provides you with a solid overview. Wishing you a pleasant summer,

Yours,

Peter Guthmann

Clear Signs of Recovery in the Existing Property Market

According to half-year data from the Berlin Expert Committee (GAA), notarised purchase prices in the existing property segment showed a slight increase in Q1 2025 after a cooling phase in 2023 and sideways movement in 2024. Although prices have not yet returned to 2022 levels, the market appears to have bottomed out. A typical existing apartment in Berlin offers around 70 m² of living space and currently sells for approximately EUR 373,000—an increase of 3.2 percent or EUR 160/m² compared to the previous year. Over the past 15 years, the average apartment size has decreased from 74 m² to 70 m², while the average sales price has risen from EUR 125,000 to EUR 370,700.

Focus on central city districts

Most transactions in the first half of 2025 were notarised in Charlottenburg-Wilmersdorf, followed by Mitte, Pankow, Friedrichshain-Kreuzberg, Tempelhof-Schöneberg and Steglitz-Zehlendorf, each with similar results.

Transactions according to availability

Of the approx. 6,100 purchases, 71 per cent were for flats not requiring occupancy, 23 per cent for rented units and 6 per cent for tenant purchases.

Plus 10 to Minus 13 Percent: District Performance

Across the city, prices have developed in the low single-digit range year-over-year. However, performance varies significantly by location. Some districts that previously experienced more substantial corrections are now recovering those losses. These include Lichtenberg (+10%), Prenzlauer Berg (+9%), and Köpenick (+8%). In contrast, we observe declines in Marzahn, where notarised purchase prices have fallen by nearly 13%. Year-over-year corrections are also recorded in Steglitz (–4%), Pankow (–3%), and Wedding (–3%). Stable to moderate price increases are seen in Schöneberg, Tiergarten, and Treptow (each +4%), as well as Mitte, Kreuzberg, Tempelhof, and Reinickendorf (each +3%).

Additional Supply Coming Through Condominium Conversions

An additional dynamic shaping the market in the coming years stems from the conversion of rental units into condominiums in previous years. In conservation areas (Milieuschutzgebiete), a statutory seven-year restriction applies after conversion, during which sales are only permitted to sitting tenants.

This restriction now expires for units converted in 2018. As a result, a potential additional supply emerges that could, in principle, enter the open market.

The volume is considerable: In 2018 alone, more than 11,300 apartments were converted across Berlin. Concentrations were highest in districts such as Neukölln, Friedrichshain, and Wilmersdorf, each with well over 1,200 units. One of the key developments to monitor in the coming quarters will be how many of these units actually reach the market and influence supply in their respective submarkets.

No Relief in the New-Build Segment

The notarised transactions in the first half of 2025 highlight the structural problems in the new-build segment. While a price increase of 5.1% for new-build apartments is observed based on completed sales, this figure is statistically negligible given the very low volume of fewer than 750 notarised contracts.

The combination of high construction costs and elevated interest rates makes mid-market new-build apartments increasingly unaffordable for buyers and economically unviable for developers. As a result, transaction volumes in the new-build sector have dropped sharply, as reflected in the extremely low number of sales. The lack of turnover is causing liquidity shortages for developers, which in turn affects future projects.

The result is a self-reinforcing cycle: projects are paused or enter insolvency, reducing the supply of new housing and further intensifying the crisis.

Rental Housing Market Remains Stalled

To understand the current challenges, it helps to look at the cost structure. Nationwide, construction costs for a multi-family building—excluding land—are around EUR 4,500 per square metre. A general guideline says that each EUR 1,000 in construction costs requires approximately EUR 4 in monthly rent. Based on this, a privately financed new-build project would require a net cold rent of EUR 18/m²—compared to less than EUR 9/m² a decade ago.

This surge in costs collides with a housing shortage that has built up over years. Today’s supply deficit is the result of prolonged underinvestment in municipal housing, landlord-adverse policy, and extensive regulation.

The result is a fundamental dilemma: new construction is too expensive to deliver affordable rents without substantial subsidies, while the existing regulatory framework has failed to ease the situation.

In addition to the unresolved housing shortage, the development of new contract rents for existing apartments remains one of the key challenges for Berlin.

In Q3 2025, the citywide average rent reached approximately EUR 16.00 per square metre—an increase of 11% compared to the previous year. Across districts, rents range from EUR 11.90/m² in Marzahn-Hellersdorf to just under EUR 20.00/m² in the City West.

Berliners will have to continue accepting rising new contract rents, while existing tenancy rents remain low by both national and international standards. The most recent figures, recorded in the 2022 Census, show an average rent of EUR 7.67/m² across the city. Only in prime locations and central districts do average existing rents significantly exceed this level.

In Charlottenburg, the average net cold rent is EUR 8.43/m²; in Mitte, EUR 8.30/m²; and in Friedrichshain-Kreuzberg, EUR 8.19/m².

This illustrates that the core of the housing issue lies in a fundamental shortage—not in existing rents. The long-standing backlog in housing construction creates cascading effects, as a rigid supply meets a growing and changing demand:

On the one hand, demand continues to rise due to the increasing number of single-person households. On the other hand, the absence of a “filtering effect” blocks internal market dynamics: older households are unable or unwilling to downsize, occupying larger flats that are no longer available to younger generations and families.

Trend

The Berlin property market is divided: while the resale segment shows signs of stabilisation, new construction remains weak. Transactions in the resale market are picking up slightly, with prices rising moderately by 3.2% to EUR 5,140/m². In the new-build sector, high costs and financing barriers continue to block activity despite a rise in building permits. Only 750 contracts were notarised in the first half of the year.

The rental market remains under pressure: asking rents are increasing at double-digit rates. Around 50% of listings are fixed-term, leading to intensified competition in this segment.

Interest rate stability supports buyer sentiment, and confidence in Berlin remains strong. However, the overall environment remains tense—particularly for developers—due to construction costs, labour shortages and regulatory uncertainty. Data from the Valuation Committee suggests a market bottoming in the resale segment. Average resale flats now cost around EUR 373,000, with a slight decline in size.