Is it worthwhile investing in residential property in the capital? How is the property market developing, and what are the prospects for the coming years? If you are interested in buying a property in Berlin as an investment, you will find helpful background information here.
The capital is booming: In recent years, Berlin has developed into an attractive business and innovation location. The city, therefore, is attracting both well-known companies such as Google or Siemens, as well as international start-ups. In essence, a new start-up is founded here every 14 hours. The population growth is correspondingly high. According to forecasts by the Senate Department for Urban Development and Housing, around four million people will live in Berlin in 2035.
The positive economic situation and the continuing increase in the number of inhabitants ensure a high demand on the housing market. According to the Cologne Institute for the German Economy, the ratio of supply to need in the capital is 1 to 1.37 – and the trend is rising. These are ideal conditions for everyone who wants to buy a flat or apartment in Berlin as a capital investment.
Compact apartments are particularly in demand in the capital. This development is due to the steady increase in single households in the city. Their share now stands at over 52 percent. Some districts stand out: Berlin Mitte, for example, has an unusually high proportion of single-person households at around 62 percent. The reasons for this are obvious: With the Beuth University of Applied Sciences, the Charité and the Humboldt University, the district is particularly attractive for students.
On the other hand, there are many renowned companies (such as Siemens, Bayer, or Deutsche Bahn) based here. Therefore, many commuters also need a compact living space in Mitte. Here the purchase of a (possibly furnished) micro-apartment is particularly worthwhile.
In recent years, Berlin has seen a sharp rise in rents. According to the current housing market report of Investitionsbank Berlin, their increase in 2019 was not as high as in previous years. Still, the trend is nevertheless continuing at 1.3 percent. Currently, the average supply rents in the capital are € 10.45 per square meter. By the age of construction, the youngest apartments built from 2011 achieve the highest rents. There are also some significant differences between the individual districts.
Districts with the highest offered rents:
The district with the lowest offered rent:
The amendment to the German Tenancy Act, or the so-called “rental brake”, has been in force in Berlin since 2015. It states that rents for new leases in sought-after areas may only be a maximum of ten percent above the local comparative rent.
Exceptions to this rule include new buildings used and rented for the first time after 2014 so buying a new property gives you more freedom of choice.
Additionally since february in 2020 the „rent freeze“ has frozen rents in Berlin for five years, state of 18th June 2019. The law implied upper limits of rent and rent reductions, too. In April 2021 the Federal Constitutional Court declared the „rent freeze“ as unconstitutional. Now lessors can increase the rent on the same level before the „rent freeze“ has started.
Buying an apartment or house in Berlin as a capital investment pays off in the long run. According to current forecasts, the capital city is on a growth course not only at present but also in the coming years. The metropolis attracts more and more young people who are potential long-term tenants.
Quality of life
Berlin is characterised by its international flair, vibrant neighbourhood life and innovative spirit, which brings a touch of Silicon Valley to Germany. Currently ranked 13th overall, Berlin has been among the 20 top ranking cities for many years, according to Mercer’s international “Quality of Living” survey.
1st place: Vienna 10th place: Sydney 13th place: Berlin 45th place: New York 57th place: Rome 74th place: Dubai 103rd place: Shanghai 167th place: Moskow 231st place: Baghdad
Supply and demand
Rental price development