Trend in Berlin’s real estate prices: Sustained run on freehold apartments

Berlin is a sought-after place to invest in real estate and particularly in premium apartments. In a comparative survey of cities throughout Germany, the capital city reported the highest number of residential property sales. Approximately 21,000 freehold apartments changed owners here in the first half-year of 2018. “The persistently low level of interest rates combined with strong economic growth make properties for sale in Berlin an attractive and sound investment,” said Johann Helms, Member of the Management Team at Engel & Völkers Berlin. The limited availability of properties and the growing level of demand at the same time mean that further increased prices can be expected in the city in 2019. 

These and other findings are documented in the “Market Report on Residential Property in Germany 2018/2019” published by Engel & Völkers.

High price brackets in all boroughs

The most expensive addresses in Berlin include Charlottenburg, Mitte, Prenzlauer Berg, Schöneberg and Wilmersdorf. Freehold apartments in Mitte and Prenzlauer Berg reached prices per square metre of up to 16,000 euros in the first half-year of 2018. Besides location, the year of construction is also a key determining factor in the sale price. Clients are looking to buy either grand old properties with stucco ceilings, alcoves and a well-managed community of owners. 

Or they are seeking top-quality new developments with parking spaces, high ceilings, and large terraces and balconies. Designer apartments, lofts and penthouse apartments located within Berlin’s suburban subway system are particularly popular with clients and capital investors. Families tend to prefer substantial mansion plots in more natural settings, in the upmarket boroughs including Dahlem, Grunewald and Zehlendorf. Sale prices of up to 6.5 million euros were reached here for detached and semi-detached properties in the first half-year of 2018. Among the up-and-coming regions are prestigious old addresses in Frohnau, Pankow and Köpenick.

Berlin leads ranking of transaction volume from freehold apartments

Compared to other cities in Germany, Berlin comes top of the ranking of transaction volumes on the residential property market for the third time in a row, at 5.68 billion euros. At a total of 21,356 sales, more than double as many freehold apartments were brokered in the capital than in Munich, the city ranked next in second place. In the ranking of detached and semi-detached properties, Berlin comes in third place with a transaction volume of 1.12 billion euros, directly behind Hamburg and Munich. 

“There is still a shortage of land plots and construction projects required to meet the demand for housing. We expect prices in all segments to rise further,” said Günter Th. Fischer, Managing Partner of Engel & Völkers Berlin-Mitte.

Outlook: Real estate hotspot for international investors

Domestic buyers are currently dominating the market in Berlin. This group is made up predominantly of Germans looking for a second home rather than necessarily a place to live. The remaining buyers are from other countries in Europe, the USA, Russia and China. In comparison to other cities across Germany and other major European centres, real estate prices in Berlin are relatively moderate. This makes entry for investors easier. “The potential for new project developments is far from exhausted. Newly built freehold apartments in prime locations can reach prices per square metre of 17,000 to 20,000 euros. Now is a good time to invest,” said Johann Helms, Member of the Management Team at Engel & Völkers Berlin.

Other trends relating to purchase power and Berlin’s real estate prices can be found in the “Engel & Völkers Market Report on Residential Property in Germany 2018/2019” (in German).