Berlin Apartment Building Report
Dear Readers,
The market for residential and commercial property in Berlin feels like a new dawn, but is confronted with limiting factors.
On the one hand, demand for rental flats is higher than ever before. The constant and unstoppable population growth is causing demand and rents to rise and new construction is lagging far behind demand. Berlin's economic performance ranks third among the capital cities in the European Union, and net household incomes are in the middle range in Germany. Driven by Germany's largest university landscape, the capital is also developing into an internationally recognised centre for science and technology. Young people love Berlin fervently and visibly. There are probably no better conditions for reliable, predictable and long-term investments in residential property than in Berlin.
Nevertheless, after more than a decade of sharp rises, multiples and purchase prices have recently fallen because, in addition to regional location and economic factors, the investment climate is also influenced by macroeconomic parameters such as interest rates, climate policy and legislation, which are currently having a strong limiting effect.
For some years now, it has been apparent that the market for residential and commercial property in Berlin no longer stands alone as an up-and-coming market, but must be viewed within a larger context. Macroeconomics, geopolitics and climate policy form the broad framework within which the market value of your apartment building is influenced by its quality of location, condition, energy efficiency and other factors.
This is precisely where we have been at your side for 18 years. With the highest level of market knowledge, precise and unique data and reliable assessments and, perhaps most importantly, exactly the best match of buyers within our network for your property.
Incidentally, we not only work profitably and accurately for you, but also discreetly and off-market.
We look forward to your enquiry.
Yours, Peter Guthmann, Managing Director
Reevaluation of Locations and Construction Year Classes
The prices for residential and commercial buildings have decreased by approximately 16% from 2022 to 2023. Besides the interest rate environment, especially post-war construction years have achieved lower purchase prices than in previous years. Overall, locations are also evaluated differently. Trendy locations are examined more closely for rental potential, while established locations show more price stability. In districts with energetically challenging inventory, there is an increase in sales.
Overall Berlin: Completed sales and median purchase prices 2018-2023
| Year | No. Transactions | Average EUR/m² Living Area | Difference to Previous Year |
|---|---|---|---|
| 2018 | 990 | 2.643 | |
| 2019 | 855 | 2.861 | +8% |
| 2020 | 873 | 2.730 | -5% |
| 2021 | 914 | 3.110 | +14% |
| 2022 | 751 | 3.178 | +2% |
| 2023 | 599 | 2.673 | -16% |
Fossil Challenge: Berlin's Housing Dilemma
A look at the capital's housing stock highlights the energy issue. In Berlin, there is the largest urban housing stock in Germany with around one million residential units that are still supplied with fossil fuels. About 77 percent of the stock dates from before 1986. (Source: Office for Statistics, Results of the 2011 Census, as of 2014).
GUTHMANN® Services for Sellers & Buyers
As a boutique firm specializing in the Berlin multifamily market, we understand the unique nuances of buying and selling apartment buildings. Unlike larger, generalized brokerages, we offer a distinctive approach with a laser focus on apartment blocks.
Our expertise goes beyond simply connecting buyers and sellers. We provide a comprehensive suite of services, including:
- In-depth research & analysis: We leverage our extensive market knowledge and proprietary data to deliver insightful reports and valuations.
- Strategic marketing: We develop targeted campaigns to reach qualified investors, maximizing results of your exit.
- Professional property management: Whether you're transitioning ownership or seeking ongoing management solutions, our team is equipped to handle every aspect.
Every member of our highly-specialized, multilingual team undergoes rigorous training in real estate economics, ensuring you receive the highest level of expertise throughout the process.
Experience matters. We invite you to explore our select client portfolio showcasing a diverse range of successful multifamily transactions completed between 2015 and 2024.
With GUTHMANN® you always achieve better results.
Berlin's #1 choice for discreet, off-market sales of multifamily properties.
Pricing factors for 2024
The market value of your rental property is influenced by various key figures. Rental income and the local factor and price per square metre, as well as the quality of the location and condition, are the main considerations for buyers.
Factors (muliples)
In 2023, the factor, which represents the multiple of the annual net cold rent, fell significantly. In practice, the trend is partially offset by rent increases and is currently being spread across all districts and locations.
| District / ø Multiples | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 |
|---|---|---|---|---|---|---|
| Mitte | 42,2 | 37,1 | 36,4 | 40,7 | 38,9 | 35,3 |
| Tiergarten | 33,7 | 30,8 | 29,0 | 29,9 | 31,3 | 24,8 |
| Wedding | 33,7 | 31,9 | 27,3 | 35,4 | 27,1 | 24,1 |
| Prenzlauer Berg | 34,9 | 33,9 | 31,1 | 33,5 | 33,8 | 28,9 |
| Friedrichshain | 35,3 | 36,4 | 31,1 | 34,1 | 36,3 | 26,7 |
| Kreuzberg | 38,1 | 31,1 | 32,2 | 32,6 | 31,4 | 25,3 |
| Charlottenburg | 34,3 | 35,3 | 34,3 | 40,0 | 1247,0 | 27,1 |
| Spandau | 26,1 | 23,6 | 25,2 | 28,9 | 26,9 | 24,5 |
| Wilmersdorf | 34,7 | 36,7 | 34,7 | 39,7 | 36,6 | 23,1 |
| Zehlendorf | 32,6 | 30,0 | 0,0 | 0,0 | 30,3 | 0,0 |
| Schöneberg | 32,5 | 32,4 | 32,1 | 33,5 | 33,8 | 23,8 |
| Steglitz | 28,7 | 27,5 | 23,9 | 32,1 | 34,9 | 24,4 |
| Tempelhof | 25,8 | 28,7 | 25,6 | 29,1 | 28,9 | 24,9 |
| Neukölln | 29,4 | 31,6 | 27,9 | 29,9 | 30,4 | 24,8 |
| Treptow | 32,7 | 0,0 | 28,9 | 33,5 | 28,4 | 0,0 |
| Köpenick | 30,1 | 30,1 | 29,1 | 30,2 | 27,3 | 0,0 |
| Lichtenberg | 26,5 | 30,9 | 26,9 | 28,7 | 28,6 | 20,0 |
| Weißensee | 25,3 | 28,6 | 26,1 | 29,2 | 27,7 | 25,9 |
| Pankow | 30,2 | 27,6 | 28,2 | 31,6 | 33,9 | 23,5 |
| Reinickendorf | 25,6 | 25,0 | 26,1 | 26,1 | 28,4 | 21,5 |
| Marzahn | 21,2 | 24,9 | 0,0 | 0,0 | 26,6 | 0,0 |
| Hohenschönhausen | 22,9 | 28,8 | 29,9 | 0,0 | 0,0 | 24,7 |
| Hellersdorf | 19,2 | 24,1 | 26,8 | 29,9 | 28,1 | 0,0 |
| Gesamt Berlin | 30,2 | 30,8 | 29,4 | 32,1 | 31,1 | 25,0 |
Prices per square metre
The correlation between location, multiplier (factor) and square metre prices for apartment buildings is complex and cannot be reduced to a simple formula. The multiplier is primarily influenced by macroeconomic parameters, such as the interest rate level of financing. In contrast, the price per square metre is primarily based on the location and condition of the property. A low multiplier can be offset by higher net cold rents. Although the price per square metre is determined to a certain extent by the condition of the property, an above-average condition in a less sought-after location can have a positive impact on the sales result and exceed the typical price per square metre for this location. This applies up to the point where it becomes possible to buy in a better location at a lower price level. We offer an individual valuation of your property to determine the maximum market value and advise you on measures that can increase the value of your property. The following table provides an overview of the current prices per square metre for value-relevant floor space in the Berlin districts. This floor space corresponds more or less to the gross area (BGF).
Average Sales Prices per SQM Living Area
| District | 2022 EUR/m² | 2023 EUR/m² | Difference % |
|---|---|---|---|
| Mitte | 5308 | 3864 | -27 |
| Tiergarten | 2745 | 1709 | -38 |
| Wedding | 2660 | 2043 | -23 |
| Prenzlauer Berg | 3551 | 2481 | -30 |
| Friedrichshain | 2824 | 2448 | -13 |
| Kreuzberg | 3058 | 2455 | -20 |
| Charlottenburg | 3769 | 3379 | -10 |
| Spandau | 2943 | 2275 | -23 |
| Wilmersdorf | 3778 | 3894 | 3 |
| Schöneberg | 3133 | 2626 | -16 |
| Steglitz | 3242 | 2393 | -26 |
| Tempelhof | 3201 | 2155 | -33 |
| Neukölln | 2484 | 2275 | -8 |
| Köpenick | 3162 | 3263 | 3 |
| Lichtenberg | 3659 | 2300 | -37 |
| Weißensee | 2987 | 3224 | 8 |
| Pankow | 3284 | 2930 | -11 |
| Reinickendorf | 2771 | 2615 | -6 |
| Marzahn | 2985 | 3180 | 7 |
| Hohenschönhausen | 2213 | 2460 | 11 |
| Hellersdorf | 3266 | 2389 | -27 |
| Berlin (total) | 3178 | 2673 | -16 |
Purchase price spread
The spread or purchase price range shows the lower and upper end of the scale when determining a market-driven sales price. The spread usually depends on the year of construction and state of maintenance as well as investment requirements. Recently, residential buildings from the post-war years in particular have lost value due to their poor energy balance. The effect has been fuelled by a long period of unclear legislation and the difficulty of calculating the costs of energy-efficient redevelopment. The downturn in the construction of new buildings has recently led to a decline in modernisation and refurbishment costs, and there is now also common empirical data available for such measures. However, energy efficiency upgrades are being factored in.
| Jahr / Year | Mitte | Tiergarten | Wedding | Prenzlauer Berg | Friedrichshain | Kreuzberg | Charlottenburg | Spandau | Wilmersdorf | Zehlendorf | Schöneberg | Steglitz | Tempelhof | Neukölln | Treptow | Köpenick | Lichtenberg | Weißensee | Pankow | Reinickendorf | Marzahn | Hohenschönhausen | Hellersdorf | Jahr |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 1.267 bis 5.247 | 1.255 bis 4.447 | 950 bis 3.004 | 1.582 bis 3.510 | 888 bis 5.793 | 1.165 bis 5.655 | 1.350 bis 6.401 | 301 bis 11.919 | 1.048 bis 5.366 | 1.526 bis 7.453 | 1.068 bis 3.089 | 1.065 bis 3.687 | 983 bis 2.817 | 695 bis 4.849 | 1.062 bis 3.873 | 1.081 bis 2.066 | 844 bis 4.840 | 805 bis 2.379 | 468 bis 4.652 | 570 bis 5.695 | 1.350 bis 2.959 | 500 bis 2.097 | 857 bis 2.320 | 2018 |
| 2019 | 1.208 bis 6.168 | 1.425 bis 3.647 | 874 bis 3.154 | 1.461 bis 4.964 | 1.395 bis 3.404 | 1.082 bis 4.197 | 1.423 bis 11.340 | 606 bis 3.192 | 1.601 bis 9.143 | 2.446 bis 5.173 | 1.314 bis 3.917 | 1.164 bis 4.071 | 862 bis 5.997 | 1.032 bis 2.941 | 1.318 bis 2.656 | 1.579 bis 2.650 | 698 bis 4.630 | 1.000 bis 3.376 | 671 bis 3.090 | 396 bis 4.839 | 1.018 bis 2.339 | 1.382 bis 2.028 | 846 bis 3.858 | 2019 |
| 2020 | 1.594 bis 8.481 | 1.454 bis 2.811 | 1.003 bis 4.084 | 1.310 bis 3.280 | 1.248 bis 3.284 | 1.424 bis 4.894 | 1.364 bis 6.181 | 431 bis 5.758 | 1.151 bis 10.526 | 3.230 bis 4.837 | 1.363 bis 4.841 | 1.637 bis 3.183 | 770 bis 4.909 | 592 bis 4.392 | 986 bis 4.069 | 930 bis 5.683 | 1.230 bis 5.748 | 1.126 bis 4.594 | 895 bis 2.819 | 654 bis 5.248 | 1.589 bis 3.255 | 1.729 bis 2.307 | 1.495 bis 3.090 | 2020 |
| 2021 | 1.603 bis 8.475 | 1.106 bis 3.422 | 841 bis 5.446 | 1.436 bis 6.835 | 1.314 bis 6.696 | 1.167 bis 4.264 | 1.570 bis 16.262 | 841 bis 4.633 | 1.596 bis 7.347 | 2.560 bis 6.944 | 1.625 bis 7.047 | 1.489 bis 5.253 | 1.125 bis 4.644 | 896 bis 6.326 | 1.794 bis 5.217 | 984 bis 5.812 | 1.142 bis 4.960 | 1.390 bis 3.167 | 1.109 bis 6.111 | 601 bis 3.873 | 2.006 bis 3.012 | 1.525 bis 4.482 | 1.248 bis 3.389 | 2021 |
| 2022 | 1.489 bis 16.844 | 1.193 bis 3.702 | 1.358 bis 3.867 | 347 bis 7.736 | 458 bis 3.141 | 862 bis 5.068 | 1.707 bis 6.579 | 472 bis 6.013 | 874 bis 7.043 | 1.976 bis 3.897 | 1.735 bis 4.707 | 1.799 bis 3.821 | 1.232 bis 3.670 | 824 bis 4.515 | 1.467 bis 2.931 | 1.716 bis 3.999 | 287 bis 6.116 | 1.691 bis 3.186 | 1.421 bis 5.626 | 954 bis 5.094 | 2.195 bis 2.733 | 1.081 bis 2.150 | 1.717 bis 4.312 | 2022 |
| 2023 | 1.495 bis 5.777 | 660 bis 1.823 | 446 bis 2.594 | 994 bis 2.964 | 1.374 bis 2.844 | 911 bis 6.567 | 1.093 bis 7.927 | 800 bis 4.608 | 1.466 bis 6.024 | - | 1.339 bis 4.404 | 1.827 bis 2.082 | 1.069 bis 2.570 | 756 bis 5.590 | - | 2.302 bis 2.912 | 357 bis 3.134 | 1.247 bis 5.177 | 950 bis 4.509 | 866 bis 4.270 | 1.266 bis 4.667 | 1.138 bis 2.714 | 1.425 bis 2.523 | 2023 |
Declining inflation, falling interest rates, growing momentum
The changed interest rate scenario has led to a turning point in the market for rental properties. The high construction interest rates are the result of the war in Ukraine and the explosive rise in inflation rates. Conversely, it is unlikely that construction interest rates will fall as quickly as they have risen as inflation eases, especially as the development of government bonds and mortgage bonds sets the direction for construction interest rates.
Nevertheless, most experts expect interest rates to gradually fall to a level below 3 per cent over the course of the year. This will result in a noticeable revitalisation of the apartment block market. We have compiled the key figures for you in a compact chart that reflects the status of the ECB key interest rate and the building interest rates currently on offer with a 10-year commitment.
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Typical timing of a sale
The transaction duration for the sale of a multi-family house (MFH) in Berlin can be expedited and made more efficient and secure through professional preparation and execution.
- Consultation: Clarifying the initial situation and determining a market-appropriate price.
- Professional Documentation: Accelerating the review by clients and banks, fostering trust through transparency.
- Marketing: Discreet off-market brokerage within a solvent internal client base.
- Contract Handling: Contract review with lawyers and notaries, notarization.
- District Review Period for Preemptive Right (Read our blog post on the preemptive right).
- Completion and Payment Due.
- After Sales: Smooth transition and follow-up support.
We navigate you through every challenge
The current situation on the market for apartment blocks in Berlin is challenging. Although the market is starting to pick up again, developments vary widely from one district to another. Specific property characteristics must be in line with the market.
The key to the best possible sale is careful analysis and preparation, including transparent documentation of your property, a targeted marketing strategy and a focus on maximising your proceeds. The right preparation enables potential buyers to better understand the investment risk and to go through the due diligence process efficiently. A well-planned sales strategy can counteract trends and prevent value erosion.
Regulation: What could still come
Although there is currently less talk about regulation, there could be new measures coming for landlords/property owners, considering the rising rents.
There are several points on the political agenda:
- Tightening of rent control, e.g. a legislative proposal from Hamburg and Bremen: Federal Council try to stop furnished rental
- An expert group in the Bundestag is working on the revival of preemption rights
- The Greens and the Social Democrats are considering a rent moratorium, meaning a freeze on rent for a certain period of time
- Profit taxation. The abolition of the speculation period or extension of the holding period is being discussed repeatedly
- Reduction of the permissible rent increase from 15 to 11 percent over 3 years
- It has been decided that municipalities are obliged to create a standardized rental index
In the regulatory radar, we have summarized the proposals circulating regardless of their feasibility.
This report was last updated on 26.04.2024 .
Disclaimer
The Guthmann Market Report is a semi-automated report about the property market in Berlin. All information has been carefully researched and is given to the best of our knowledge and belief. We assume no liability for completeness, deviations, changes and errors. Our report does not represent an investment recommendation.
Sources
Amt für Statistik Berlin-Brandenburg: Einwohnerregisterstatistik (Bewegungsdaten), Fortschreibung des Wohngebäude- und Wohnungsbestandes, Ergebnisse des Haushaltegenerierungsverfahren KOSIS-HHGen, Baufertigstellungen. IMV GmbH: Rohdaten Preise und Mieten. Senatsverwaltung für Stadtentwicklung und Wohnen: Umwandlungsdaten (2018), Geoportal Berlin (FIS-Broker). Immobilienverband Deutschland IVD (2018/2019): Immobilienpreisservice 2018/2019.
Methodology
Housing deficit (Treemap): The Statistics Office updates the household data based on the 2011 micro-census. Determination of household count and statistical household size via household generation procedures (KOSIS). We calculate the real household size / housing deficits via the ratio number of inhabitants to number of apartments.
Purchase prices and rents (charts and reports): Calculation of the median on the basis of raw data, own visualization.
Migrations: Aggregation and visualization based on transaction data.