Thousands of people move to Berlin each year, with the buy to let hotspot becoming a hub for overseas property investors.
Berlin’s historically cheap housing market is a thing of the past. Several new developments are selling properties at high prices.
Europacty, a mixed-use quarter created from wasteland north of Berlin’s main train station is due to be completed in 2023. The 61-hectare tract will be home to 3,000 apartments and businesses. It will also create 16,500 jobs in what was previously the death strip between East and West Berlin.
However, the buildings do not pay homage to the area’s cheap legacy – Kunstcampus, a hive of 120 apartments overlooking the canal, is aimed at short-term executive leases. Fritz Tower has 266 serviced microapartments aimed at a similar clientele. However, the growing prices have not deterred either overseas property investors or Germans looking for a second home in Berlin. Brokers argue that the costs are minimal compared to London or New York.
RBB, a Berlin regional broadcaster, worked out that prices of inner-city building plots are as much as 10 times higher than ten years earlier. In Prenzlauer Berg, part of the Pankow district, building land on a particularly popular street soared from €460 per square metre in 2008 to €5,500 in 2018.
Prices for condos in the city rose by nearly 16 percent to an average €3,400 per square metre last year. There is thus not much contrast between these prices and Munich or Suttgart where condominiums can command €4,000 per square metre.
An average of 45,000 people a year have moved to Berlin since 2011. This places huge pressure on real estate prices, with supply scarcely able to keep up with demand. Last year, 12,814 new apartments were built in Berlin’s 12 districts. This is nearly 10 per cent more than in 2016. However, City planners estimate that 20,000 new apartments would have to be built each year to meet escalating demand, at least until 2021.
While rents are not rising at the speed of property prices, the increase is still sizeable. In the past decade, the average rent on new leases has risen by 75 per cent. Berlin is Germany’s fourth-most-expensive big city for tenants, at €11.97 per square metre, behind Stuttgart at €13.77, Frankfurt at €14.03 and Munich at 17.66, according to second-quarter 2018 figures from Empirica.
Boss of real-estate firm Accentr, Jacopo Mingazzini, said: ‘In contrast to Munich or Frankfurt, Berlin is one big playground for building contractors and investors. You only have to get planning approval.’
Just a decade earlier, officials in Berlin were considering tearing down apartments to stem an overload of rentals.
Mingazzini explains: ‘Since then, everything has been turned upside-down.’
British overseas property investors may want to join the Berlin party while they still can.