Reshuffling the cards in Berlins real estate developer market

Against the backdrop of rising real estate prices, developers have built new construction projects in recent years. At their own risk, they have bought plots of land, developed them and built on them. After completion, they now want to sell the individual residential units at the planned prices. But can that still work in 2023? Hasn’t the purchase of a property moved into the unattainable distance for Berliners due to increased inflation and high financing costs?

And what happens when the developers can no longer sell their apartments? How long can they survive without sales? Do they then stop their business? In that case, what then happens to the buyers of a new construction property? Should they be afraid? These and other questions are asked by many customers.

Black Label Properties

With approx. 30 to 50 new-build apartments that we sell on average per year, we are one of the medium-sized brokerage houses in Berlin. Since the turnaround in interest rates, we have observed that demand for new-build apartments has slumped significantly. The prices are too high for most locals. However, many developers are unable to lower prices because construction costs and land prices are too high.

What does this mean? The developers can now either finance longer-term and rent at market rents (it starts at about 18 € cold the m²) or you sell to capital-strong package buyers with a still presentable discount. Individual buyers hardly get a discount. Rather still provide developers a kitchen, help with the purchase incidental expenses such as taxes or brokerage fees and if it goes, is built energetically so that the KFW takes over part of the financing. Keyword passive house and KFW 40.

However, not all developers will realize this. Especially if a lot of mezzanine capital has been used and/or there are investors in the background who expect high returns.