While the past few years saw property rents and prices soar primarily in Berlin's inner city areas, it is now the periphery of Germany's first city that is experiencing a particularly brisk price trend. This is the upshot of the latest Housing Market Report compiled by the real estate consultancy firm CBRE and the bank Berlin Hyp. In 2014, above-average rental growth was registered in northern Moabit, in Wedding as well as in Lichtenberg, Spandau, and Marzahn-Hellersdorf, among other areas. In the Borough of Lichtenberg, for instance, rent rates climbed by 12.2 percent, achieving a current average of 7.98 euros per square metre. In Marzahn-Hellersdorf, rents gained 9.1 percent, in Spandau by 7.3 percent. For the sake of comparison: The citywide rental growth averaged 6.6 percent last year, bringing the average square-metre rent up to 8.55 euros.

Berlin's Peripheral Districts are Gaining in Attractiveness

The CBRE experts explain the rapid growth of asking rents in the peripheral districts by arguing that tenants' willingness to pay high rents appears to have reached its limits in the town centre. As a result of rising residential rents and short supply, flat hunters show an increasing tendency to compromise and choose well-connected quarters outside the inner city, often in simple suburban locations.

However, rent and price hikes downtown are not the only reason for the recent popularity of Berlin's outskirts. Many residents who moved to Berlin during the past few years in order to complete a degree program or start their careers have since decided to settle in the city and to start a family. Many of them prefer to do so in a quiet neighbourhood closer to nature than the bustling hot spots downtown. So it is only plausible for them to move out into one of the greener suburbs of Berlin.

Differentiated Rent Performance Downtown

Unlike rent rates in the outskirts of Berlin, those in the city centre have clearly lost some of their momentum in recent years. In the boroughs of Charlottenburg-Wilmersdorf and Friedrichshain-Kreuzberg, rents rose by barely four percent. In Steglitz-Zehlendorf and Pankow, the rental growth slowed to between two and three percent. Moreover, rents largely flatlined in the upper market segment. Some districts actually registered a decline in rent levels lately: In the highly popular areas around Hackescher Markt the Borough of Mitte, around Kollwitzplatz in Prenzlauer Berg, around Bayerischer Platz in Schöneberg, around Savignyplatz in Charlottenburg and in the Graefekiez neighbourhood in Kreuzberg, asking rents softened by up to six percent.