Residential property in Berlin: high demand from private and institutional buyers

Prices for freehold apartments, detached properties and semi-detached homes in Berlin remain high and continue to increase. In the first half-year of 2016, prices rose once again over the previous year. There is no end to the market upturn in sight, particularly in the city’s most central districts. These are the findings of the “Market Report on Residential Property in Germany 2016/2017”, published by Engel & Völkers. This survey focuses on market and price trends in a total of 51 selected locations for 2016, as well as transaction volume in 2015.

Inhalt_Penthouse Berlin Mitte Strong demand for residential property in almost all districts
“The high level of demand for prestigious old properties and modern high-end developments is causing prices for residential property to rise in practically every district,” said Sebastian Fischer, Managing Director of Engel & Völkers Berlin. Apartments for sale located within the boundary of the circle line “Ringbahn” are proving especially desirable. In the first half-year of 2016, asking prices for properties in very good locations reached as much as 15,000 euros per square metre on average. In the segment for detached and semi-detached properties, Engel & Völkers observed a rise in the sale prices recorded. The top end of the average price bracket in very good locations grew in the first half-year of 2016 by 200,000 euros, to 5.2 million euros. Popular districts in this segment include upmarket neighbourhoods in the southwest of the city, such as Grunewald and Dahlem in particular.

Asking prices for exceptional properties in both segments were even higher in several isolated cases. These prices are completely separate from trends impacting the rest of the market. There is also a strong interest from national and international investors in residential property in the German capital. “The relatively low ratio of freehold to rental real estate (only approx. 15.6 percent), combined with rising rents, are making Berlin real estate an increasingly attractive investment prospect,” said Mr. Fischer. Persistently low interest rates and strong economic growth in Berlin are making real estate here a popular and safe investment. 

Berlin leads the way for transaction volume of apartments for sale
Compared to other locations throughout Germany, Berlin witnessed by far the strongest growth in transaction volume from the sale of freehold apartments in 2015. Revenues increased over the previous year by 29 percent to around 5.28 billion euros. This put the German capital in first place in the transaction volume ranking. In the segment for detached and semi-detached properties, Berlin was ranked second after Hamburg with a transaction volume of 1.23 billion euros in 2015.

Outlook: growing demand from international buyers
Engel & Völkers is forecasting that residential property prices in all locations and segments in Berlin will rise once again in 2017. Germany’s most populous city is increasingly drawing the attention of international buyers, due both to the relatively moderate rental and sale prices when compared with other cities internationally, and the fact that Berlin continues to become increasingly attractive as a city.

You can download the “Market Report on Residential Property in Germany 2016/2017″ (in German) here.

Posted in Company | Residential.