Posted at 16.02.2017 | | in Market news, News, Press
Despite the introduction of a rental cap (‘Mietpreisbremse’) in 2015, rental prices in Berlin continue to rise, according to a new residential market report by Berlin Hyp and consulting company CBRE. In 2016 apartments were being offered at 9 EUR per square metre and month, a 5.6% increase on the previous year – and there are other significant changes to the market, as shown on the new Berlin Price Map and Berlin Rental Map from leading international estate agent Black Label Properties.
Berlin Housing Market Report 2017
Berlin’s population is growing rapidly and its housing market is developing dynamically. The city has a diverse scene that ranges from major projects by public housing experts to private developers and co-operative projects, to exclusive apartments in the centre aimed at international clients. Refugee numbers have had some impact on the statistics, but there are also professionals and families relocating to the city for quality of life and to study – free education being a key factor. In 2015 Berlin gained 48,000 residents, and since 2005 has grown by 270,000 people. There is plenty of planned construction (32,240 apartments) but this does not cover the influx.
Here are the key findings of the Berlin Housing Market Report:
- Biggest growth in the outskirts of the inner city, i.e. districts with smaller apartments like Neukoelln (17% growth) and Marzahn-Hellersdorf (10% growth). Rapid growth in two Neukoelln postcode areas: Richardplatz and Silbersteinstrase where rents increased by 32% to 11.92 EUR within one year, and 24% to 11.17 EUR.
- Strong growth in Humboldthain (Mitte) with rental prices rising from 47% to EUR 10.60 per square meter and month. “Such enormous deviations are explained by several new projects, which were let for the first time in 2016,” says Michael Schlatterer, Team Leader Residential Valuation for CBRE in Berlin.
- Furnished apartments in inner city areas now account for 27.4% of the total rental offer. Landlords typically let these at an extra charge of 3-4 EUR per square metre, which helps them to get around the rent brake in certain circumstances. More than half of furnished apartments were rented in three inner city districts – Mitte, Charlottenburg-Wilmersdorf and Friedrichshain-Kreuzberg with ads for these accounting for 40% of rental housing offers.
- Fewer empty apartments in the city – just 1.2%, slightly higher than Cologne and Stuttgart.
- Price reductions in some areas – the biggest fall was in Kreuzberger Prinzenstrase at 16.8% to 9.26 EUR per month and square meter; Buelowbogen in Schoeneberg also fell 11% to a rent of 7.73 EUR.
- Rents are currently highest in Hackescher Markt (Mitte) at 13.70 EUR and Unter den Linden at 13.38 EUR. Ahrensfelde (Marzahn-Hellersdorf) has the cheapest rents at 5.75 EUR.
- Home ownership continues to be more expensive – because of the rise in prices there is more international interest in residential property in Berlin. The price for owner-occupied apartments rose by 9.6% to 3,289 EUR per square metre. The highest prices are in Mitte, Friedrichshain-Kreuzberg and Wilmersdorf; the largest increases in Spandau and Lichtenberg (23%) and Tempelhof-Schoneberg (21%).
“One of the key highlights of this report is the sustained growth of Berlin’s residential sector. Over the past few years investors have been shifting capital in increasing amounts into Europe’s most undervalued capital city,” says Ian Sigmund, Investment Associate, IP Global Ltd. “Whilst investment in previous years has been concentrated solely around more central locations such as Mitte, Charlottenburg and Friedrichshain, we are now seeing potential in Berlin’s outer districts. Lichtenberg is a prime example of a location that has been a recipient of this investment. In 2015 it saw a meagre 3.4% capital appreciation yet a strong leap in rentals, 8.7% a key indicator for future growth. Lichtenberg’s top market segment appreciated an astonishing 29.7% over the year 2016, with much of this growth attributed to areas surrounding the Tierpark.
“Looking ahead, this report solidifies the Berlin investment case with the average residential capital growth over all districts at a healthy 9.6%. With uncertainty surrounding traditional safe haven markets such as the UK and the US, Berlin remains an attractive alternative for investors in search of strong, sustainable returns.”
Where to invest in Berlin
The Berlin Price Map and Berlin Rental Map show you how much it would cost to buy or rent near every train station in Berlin. It is easy to see that the actual market price is much higher in practice compared to the average rental price of 10.84 EUR per square metre in many areas of Berlin despite the rental brake. Despite the higher prices, new buildings are now a better investment. This is reflected in the quality of the building, the contemporary housing the legal security in lettings and the foreseeable trend that the demand for new buildings will grow steadily over the next few years.
“We advise buy-to-let investors to buy properties that are new build or completely refurbished to avoid the rental capping law because the new restrictions to not apply there,” says Black Label Properties’ director Achim Amann. “A 3% yield for buy-to-let investors in Berlin for the new builds is realistic, but not more. Please look for areas where the rents are still cheap if you wish to invest into a capital growth. In the areas where renting is still cheap we see the best options for capital growth. More and more people will move there and then the rents will pick up. e.g. Spandau, Lichtenberg (last year) and south Neukoelln.”