For many years, condominium prices in Berlin have been going up swiftly and steadily – which is unsurprising in the sense that pent-up demand in Germany’s first city is massive and more pronounced than elsewhere. Supply keeps trailing the keen demand, and nothing suggests that this chronic trend on Berlin’s condominium market is about to change any time soon. In fact, the latest Residential Market Report by CBRE and Berlin Hyp shows that residential property development in Berlin has experienced a further shift from condominium to rental housing construction (source: www.news.cbre.de).
For a number of years, the centre of gravity has been shifting toward rental housing construction, and the trend gained further momentum last year. In concrete terms, roughly two thirds of the new-build construction volume represent rental housing. The supply side in the condominium segment will therefore grow slower than demand would actually require. For the purposes of the report, CBRE and Berlin Hyp analysed 282 new-build construction projects, which will deliver a total of 45,000 flats.
Another interesting result is that the majority of new-build flats, around 60 percent, are being developed in the eastern part of the city. Especially Lichtenberg, Treptow-Köpenick and Pankow report an above-average number of flats under development. It appears that investors increasingly have the city’s eastern boroughs on their radar. It is understandable therefore that the steepest rise in prices was registered in Treptow-Köpenick in 2019. Condominiums in this borough on the south-east periphery sold for 15.2 percent more than the previous year, compared to a price growth of merely 4.0 percent in Mitte, second only to Marzahn-Hellersdorf with a price growth of 3.0 percent (source: www.haufe.de).
Of course, it should be noted that the price growth figures date back to the time before the coronavirus crisis. But they permit an insight into the brisk price dynamics in Berlin – and thus show that asking prices for condominiums generally increased by 10.2 percent in 2019. The average square-metre price equalled 4,630 euros. The evaluation also shows that the number of low-priced condominiums is dwindling on Berlin’s market – the median of the most affordable ten percent among the flats available for sale equalling 2,564 euros per square metre, which implies a year-on-year increase by 16.5 percent.
While the coronavirus crisis was not yet priced into the Residential Market Report of CBRE and Berlin Hyp, the rent cap announced as early as June 2019 is definitely factored in. That the price growth in the German capital maintained its brisk dynamic, undaunted by the rent cap announcement, demonstrates the robustness of Berlin’s residential property market.
In the meantime, members of the German Parliament submitted an official application for a constitutional review of the rent cap to the Federal Constitutional Court. The action is backed by a total of 284 representatives from the Christian Democrat bloc and the Liberals as well as others, adding up to around 40 percent of the Bundestag. In addition, Berlin’s Christian Democrats intend to file a law suit with the state constitutional court (source: www.tagesspiegel.de).