January 11, 2024 | 2023 was a challenging year for the Berlin real estate market, including in the residential and commercial property sector. Despite the challenging market environment, characterized by rising interest rates and a continued high level of caution among institutional investors in many areas, Engel & Völkers Commercial was able to support more than 100 residential and commercial property transactions in Berlin. With a market share of around 25 %, the brokerage house has a particularly detailed insight into the Berlin real estate market and can provide nuanced insights into the current dynamics.
In a nutshell: 3.9 million euros - that's how much a buyer had to pay Engel & Völkers Commercial for an average residential and commercial property in Berlin in 2023. And a little time: on average, 148 days were needed to prepare and finalize the sale of a property. The average multiplier of a Berlin commercial property in 2023 was 24.1 times the annual net cold rent, resulting in a yield of 4.1%. The average price per square meter was €2,523/m² and the average residential rent was €7.95 per m2. As easy as it is to summarize the more than 100 transactions of the real estate agency in figures, the market presented itself as diverse in the more detailed individual analysis. We have analyzed the most interesting insights for you here:
The mid-price segment was the sweet spot in the Berlin residential and commercial property market in 2023. Almost half of the transactions managed by Engel & Völkers Commercial in Berlin took place in the price range between €2.5 million and €5 million. 27.6% of all brokered properties were available for less than €2.5 million. As many as 16.3% of properties were traded within the €5 million to €7.5 million range, while only 5% of the properties traded were priced above €10 million.
The clear majority of purchases accompanied by Engel & Völkers Commercial in Berlin (83.9 %) were made with the aim of maintaining the portfolio. This confirms investors' confidence in the long-term value development of Berlin real estate and is a clear sign that many buyers are focusing on durability and believe in sustainable returns despite rent restrictions and political intervention.
While medium or long-term value appreciation potential was the main motive for almost 40% of the purchases accompanied by Engel & Völkers Commercial in Berlin, the variety of reasons reveals the different perspectives and strategies of investors. In almost 13 % of the accompanied purchases, for example, buyers opted for a property because there was already existing stock in the neighborhood. 16 % of purchases were made with the aim of developing or dividing up the property. From long-term value appreciation to collecting trophies - the motives are as varied as the market itself.
From project developers to private individuals - Berlin's residential and commercial property market is also a melting pot of diversity. Over 40% of the properties traded by Engel & Völkers Commercial in 2023 went to private individuals, 21% were acquired by funds and 16% found their way into the portfolios of family offices. This shows that the Berlin WGH market is attractive to many buyer groups, regardless of the size of the portfolio.
Berlin is not only a local magnet, but also attracts international capital. 67% of buyers in 2023 came from Germany, almost half of all buyers even came from Berlin itself, which underlines Berliners' attachment to their home market. At the same time, the international participation of around 33% shows that Berlin's reputation as a global investment hotspot continues to shine. Alongside the DACH region, Israel was the largest international buyer group.
Most sellers in 2023 were private owners (77.3 %). This shows that the market is also characterized by individual structures. More than 90% of the owners who sold a Berlin residential or commercial property with the support of Engel & Völkers Commercial in 2023 were not only from Germany, 55% even came from Berlin itself. The sellers' domestic presence speaks for the strength of the local market. The motivations for the sales were varied. Above all, the increased demands posed by ESG issues are currently presenting owners with major challenges - a reason for many to part with their property. However, the possibility of a tax-free sale and the realization of increases in value in recent years were also reasons for many to sell.
Many property owners held their properties for a long time before selling - almost a quarter even for more than 20 years, which indicates a long-term investment strategy and solid confidence in the market. This means that the majority of sellers were able to take home impressive increases in value from the many years before, despite falling prices in the last 12 months. 80.3% of sellers had held the property they were selling for more than 10 years - it can be assumed that the expiry of the speculation period in particular had a major influence on the decision to sell.
Engel & Völkers Commercial's data for 2023 paints a picture of a lively, diverse and constantly evolving Berlin residential and commercial property market. It is a market that combines tradition with modernity, local strength with international influence and long-term investments with dynamic development opportunities: a market that is as diverse and fascinating as Berlin itself.
The estate agent also sees the prospects for the Berlin market for residential and commercial properties as very promising for the current year. "Owners continue to show increased interest in selling, driven by rising ESG requirements, good yield opportunities with alternative investments and tax incentives. Investors, on the other hand, are benefiting from favourable entry prices and capital values as well as a stabilizing capital market," says Benjamin Rogmans, Managing Director at Engel & Völkers Commercial in Berlin and Head of the Residential and Commercial Property division, assessing the coming months. In addition, he believes that stagnating new construction and rising demand for residential space will ensure that existing properties will become increasingly valuable in the long term.
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