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Real estate market trends in Berlin for 2017

Posted by investabcom on March 3, 2017
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Berlin remains a very dynamic market, constantly moving from to year to year. The big picture is changing, along with our insights. As for every year, we use our unique access and knowledge of the local market to let you know about the upcoming real estate market trends in Berlin for 2017.

The demand remains strong

In all corners of the German capital, the real estate trend leans on the same side in 2017; an ever growing demand together with a chronic shortage of new properties of the market. This is quite straightforward to understand; Berlin’s renewal & rebirth as a metropolis is still well under way. Long gone are the years when one could argue and doubt over the long-term prospects of the current economic and demographic explosion. The unemployment rate keeps on falling and every year, 30 000 to 40 000 additional souls are moving to Berlin.

Foreign investors from Russia, China or Switzerland are keen and continue to contribute to the current upwards trend on prices.

2 trends for the real estate market in Berlin for 2017: more construction & rehabilitation projects

Berlin’s senate is trying to find solutions to the extrem tension on the market. A real task force has been set up in order to speed up building permit approval rates and identify any empty lot that could be used for housing projects in the near future. To date, permits for 50 000 housing units have been granted. Other locations for an additional 150 000 have been identified, particularly inside the Ring, where demand is the strongest.

Another trend trying to answer to the lack of properties on the market is to put more and more investment in refurbishing & rehabilitating previously unconsidered spaces such attics & sheds. This type of property is more and more visible and it allows to add another level on older buildings. It is interesting to see that there is a stronger demand on properties on the ground floor, particularly for older tenants who might want to avoid the stairs altogether. It also sometimes comes with a small garden or patio.

The watchful eye of public authorities

Berlin continues to come up with ways to limit the increase of rent prices in 2017. In some districts, it has almost doubled in a few years only. The city hall wants to protect tenants from the ongoing estate boom. Regulatory tools such as the “Milieuschutz” or a law limiting rent increase on some new contracts can limit yield in some cases. It is therefore important to also include those new parameters when looking into investing. However, one can still expect yields between 2,5% and 4% with an average rent (“Nettokaltmiete”) around €10.74 in Berlin.

Price Development in Berlin Real Estate Market

Source: Housing Market Report Berlin (berlinhyp.de)

Interesting districts to explore in Berlin in 2017

It is now a well-known fact: all districts located within the Ring are very much sought-after. There is a renewed interest in western districts like Charlottenburg, which has been put in the background the past few years, while everyone rushed to contribute to the eastern districts’ gentrification (in Kreuzberg & Prenzlauer Berg for example). Friedrichshain is still very popular, even though prices have sharply been rising. In 2017 however, our attention shifts to more peripheral districts such as Alt-Treptow, Köpenick or Öberschöneweide. They all have in common a very good connection to the city center as well as a more quiet residential lifestyle. Each has also a unique atmosphere and self-contained life.

The German capital remains a dynamic and solid bet with the upcoming real estate trends in Berlin for 2017. Berlin continues to convince foreign and local investors alike thanks to stable long-term prospects and prices on the rise.

If you are interested in assessing your investment potential in Berlin, feel free to contact us on this page.

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