Why real estate investments in the Berlin residential and commercial property market remain unbeatable throughout Germany

Despite the current political debate about the rent price cap and further regulations, the Berlin residential and commercial property market remains a highly sought-after investment location that really convinces in a nationwide comparison.

As the most populous city in Germany, Berlin also has the largest real estate market: there are about 1.84 million flats in the city, predominantly located in about 128,000 residential and commercial buildings. Due to strong population growth, living space is in high demand in the capital.

10 reasons to invest in real estate in Berlin

1. Berlin’s attractiveness: Berlin is a magnet for new residents, for companies and for investors from both Germany and abroad. Around 29,435 residents arrived in Berlin in 2018 alone.

2. Strong economy: With 3.1% economic growth, Berlin has left all other federal states behind, exhibiting better growth than the national average for the fifth year in a row. In Germany as a whole, economic growth was 1.4% in 2018.

3. High demand for housing: The demand for housing far exceeds the supply. Even with capped rents, residential units remain in high demand.

4. Lack of new construction: There will be a shortage of 194,000 flats in the city by 2030. This is a gap that is becoming increasingly unrealistic to close.

5. Affordable price level: Real estate prices are still low compared to other cities in Germany and Europe.

6. Advantageous interest rate level: Interest rates are at a low level. With some equity, financing can be provided under unique conditions.

7. Whether for asset protection or development – convincing investment opportunities: Real estate in Berlin offers more opportunities with lower risks in relation to other investment possibilities.

8. Special write-downs: Depreciation opportunities amounting to 2 to 2.5% remain interesting.

9. Buying is still cheaper than building: Average construction costs of approx. 3,500 euros/sq. m can be compared to market square metre prices of approx. 3,088 euros/sq. m.

10. Look before you leap: In recent years, private investors often lost out to professional investors, but now the market offers them the opportunity to carefully prepare for pending investments and examine properties in depth.

In detail: Economic development in Berlin

A strategic investment ensures long-term advantages. The key figures verify the positive development of both Berlin’s economy as a whole and its housing market.

+ 2.2% increase in income: The disposable per capita income rose by 2.2% in 2016 according to the State Statistical Office (as of May 2018).

+ 1.9% increase in GDP: With an increase in price-adjusted gross domestic product (GDP) of 1.9% in the first half of 2019, Berlin posted the best result of all the federal states (as of September 2019).

+ 2.5% employed: The number of people employed in Berlin rose by 2.5% in the first quarter of 2019 compared with the same quarter of the previous year (as of October 2019).

- 0.1% unemployed: The unemployment rate in Berlin was 7.8% in September 2019. This represented a decrease of 0.1% compared with the previous month.

+ 29,435 net migration: At the end of 2018, Berlin had a total of 3.6 million inhabitants – an increase of 0.9% over the previous year.

+ 134.7% increase in sq. m price since 2013: Price increase for residential and commercial buildings and housing complexes brokered by Engel & Völkers in Berlin.

High excess demand: There is only a 1.1% vacancy rate on the housing market.

High purchase price level: A residential and commercial building changed hands for an average of around 5.36 million euros in 2018.

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Engel & Völkers
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