Berlin Hyp and CBRE have issued a Berlin residential market report showing the twin track of rising rents in a city that people want to live in coupled with a much cooler investment market.
Asking rents rose in 2023 by 18.3% as rental supply shrunk drastically, while the institutional transaction market has collapsed. Rents of €13.60 per square metre are now the normal level.
The general wait-and-see attitude, especially among international investors, is still noticeable despite the strong fundamental data in Berlin. Institutional portfolio transactions slumped to €1.8 bn in 2023, the lowest volume since 2010.
‘Inflation, rising construction costs and high interest rates dashed many a dream of home ownership in 2023,’ the report says.
‘As a result, purchase prices have fallen, slightly in the case of condominiums and more sharply in the case of apartment buildings. Meanwhile, pressure on the rental housing market continues to increase. As a result, rental prices are continuing to rise sharply and there is a sustained trend towards moving to the surrounding area, despite prices also rising there.’
The supply of available rental apartments is so limited that, for the first time, there were more offers for owner-occupied apartments than for rental apartments, according to Michael Schlatterer, MD of CBRE in Germany.
In 2023, asking prices for condominiums fell slightly across all segments in Berlin for the first time by 1.4 percent to 5.750 euro per square metre - after many years of sometimes sharp increases.
Demand for housing remains high in the areas surrounding Berlin due to population growth as a result of migration gains, although hardly any privately financed construction projects are being started.
‘Despite this demand, prices for detached and semi-detached houses have fallen almost everywhere in the surrounding municipalities due to the uncertain economic outlook and higher interest rates on financing,’ said Schlatterer.
Sascha Klaus, chairman of the board of management of Berlin Hyp, added: ‘New construction activity urgently needs to be stimulated again. I therefore very much welcome the current draft for the Berlin Senate's “Faster Construction Act” and hope that it will come into effect quickly.’
‘A standardization of building regulations as well as a relaxation of building regulations and digital interfaces would help housing construction to pick up speed again. It is now high time to act, to simplify and speed up procedures. Energy requirements should also be standardized with a sense of proportion at a good ecological level in order to create calculable framework conditions and take social aspects into account. But I don't just want this for Berlin.’
Project developers accounted for less than €200 mln, around €502 mln less than in 2022.
