Real estate news: The property market in Berlin

Continuing low interest rate levels, strong economic growth and the growing number of people moving to Berlin have turned the city into one of the most popular residential real estate locations in all of Germany. New residential construction has gained momentum. In 2014, more than 7,000 new apartments were completed – a first. 3,100 of these were freehold apartments. The wide range of offers and the comparatively moderate price level is attracting more and more international investors to the German capital.

Real estate news: The property market in BerlinThe market is already quite tight in all of the city’s most popular neighbourhoods, which is causing an increase in demand in mid-market and secondary residential areas. However, there is still potential for new developments in all parts of the city. More living space is being created by re-development projects such as Forum Museumsinsel in Berlin-Mitte, where a new residential quarter is currently being built. Other prime locations in the centre of Berlin can be found in Tiergarten and Prenzlauer Berg. Elderly couples of a higher income bracket generally prefer freehold apartments in Wilmersdorf and Charlottenburg, while families tend to favour single-family homes in the more quiet neighbourhoods like Dahlem, Grunewald, Frohnau, Köpenick and Lichterfelde – with waterfront locations being especially popular. Due to the attractive yields and appreciation potential, capital investors are particularly interested in trendy areas within the S-Bahn circle line, such as Neukölln, Wedding or Weissensee. The number of property transactions has declined for the first time after the record results in previous years. In the residential home segment, 2,789 houses with a total value of 954.40 million euros were sold. On average, buyers paid 342,222 euros for a house (+3% compared to the previous year). In 2014, the average transaction volume for apartments increased by 6% to 192,600 euros.

Price development

All in all, prices for residential properties are on the rise in all areas, but growth rates vary from neighbourhood to neighbourhood. Entry-level prices for freehold apartments in prime locations have climbed to 3,100 euros/m2 in the first half of 2015. In the residential home segment, prices have increased in all parts of the city. Maximum prices for villas in prime locations, for example, have increased to 5 million euros. In the rental segment of the housing market, strong demand has affected the prices in nearly all districts. The average maximum value for new developments has increased to 25 euros/m2, while entry-level rental rates in secondary locations are now at 5.20 euros/m2.


The continuing influx of new residents will further increase the overhang in demand. For this reason, Engel & Völkers is expecting a slight price hike for the entire Berlin residential property market. It is especially the mid-market and secondary locations which are expected to benefit from the supply bottleneck in good and very good locations. The impact of the rental price ceiling remains to be seen.

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