Berlin, September 13, 2017 – Berlin’s residential real estate market has experienced very dynamic growth over the past ten years. In 2016, Berlin’s residential real estate market recorded a total of 5.64 billion euros, nearly tripling its turnover compared to 2006. “Berlin is the undisputed winner of the Homeownership Report in a ten-year comparison,” says Jacopo Mingazzini, CEO of Accentro Real Estate AG. Turnover is expected to reach the six-billion-euro mark in 2018. In a ten-year comparison, Berlin shows growth across all categories, from economic fundamentals to sales and transaction figures to price levels.
Strong Sales Growth in New-Construction Properties
The new-construction segment in particular recorded very high growth rates in Berlin between 2006 and 2016. This positive trend continued steadily from 2007 onward, despite the financial crisis, and gained additional momentum starting in 2012. In 2016, 5,608 transactions in the new-construction market represented a sales volume of 2.06 billion euros, while the corresponding figures for 2006 were 363 transactions and 125 million euros. Over the past eleven years, this represents a sales increase of approximately 1.93 billion euros, or 1,548 percent. As a result, sales in Berlin’s market for newly built residential properties have increased more than fifteenfold since 2006.
Compared to the new-construction market, the trend in sales of existing properties in Berlin was more subdued, yet still very dynamic. An increase of 1.73 billion euros since 2006—or 94 percent—represents nearly a doubling. Despite minor declines in sales through 2009 and a one-time dip in 2014, the growth trend has remained stable over the past ten years. In 2016, 16,941 transactions generated total sales of 3.58 billion euros in the existing-home market.
Berlin Has Seen the Highest Price Increases Over the Past Ten Years
For years, Berlin has been the major city with the highest price increases for residential real estate. In the German capital, sales per transaction rose by 160.26 percent from 2006 to 2016. Specifically, the transaction value of the average Berlin home in 2016 was approximately 250,000 euros. In 2006, this figure was still 96,141 euros. However, Munich leads the way in terms of prices. Last year, the city recorded an average transaction value of 422,176 euros per sale. At 100 percent, however, the growth rate was significantly lower than in Berlin.
In 2016 as well, Berlin’s sustained momentum was evident when compared to the other top-7 locations and Germany’s 20 largest cities. While the increase in sales per transaction in Germany’s 20 largest cities was 8.03 percent and averaged 8.36 percent among the top 7, the federal capital recorded a rise of 16.73 percent—the largest increase in sales per transaction among the top 7 locations.
In 2016, Berlin did, however, experience a significant decline in transactions. Compared to the previous year, the number of sales fell by 7.42 percent—a consequence of a lack of listings and political overregulation. However, the capital city accounts for by far the most sales of any German metropolis, and sales revenue rose from 5.22 billion euros in 2015 to 5.64 billion euros.
Market Development Underpinned by Positive Fundamentals
Over the ten-year period since 2006, the macroeconomic and demographic framework in Berlin has developed favorably. On the one hand, unemployment fell by nearly seven percentage points—from 16 percent to 9.2 percent—a decline of more than one-third. This decline was above average for the German labor market. At the same time, per capita purchasing power in Berlin gradually converged with the national average, against the backdrop of significant net immigration. As a result of this population influx, the number of residents increased by just under 270,000—or nearly 8 percent—between 2006 and 2016. If this trend continues at a similar pace, Berlin would surpass the four-million mark as early as 2030.
“Despite increasing political restrictions on the market, Berlin is gradually living up to its potential in terms of homeownership. Our Homeownership Report clearly illustrates the impressive catch-up in sales volume and price levels compared to other major German cities over the past ten years. Especially in new-construction transactions, Berlin has approached an appropriate level given its population and purchasing power. We remain convinced of Berlin’s growth potential, both in the short and long term,” explains Mingazzini.
About the ACCENTRO Homeownership Report
This marks the tenth time that ACCENTRO Real Estate AG has published the Homeownership Report. The analysis is based on homeownership transactions from the 2016 reporting year across all 82 major German cities. By drawing on data from appraisal committees, the report differs significantly from similar publications, which are usually based on expert estimates or the analysis of listing data.
About ACCENTRO Real Estate AG
ACCENTRO Real Estate AG is a residential real estate investor and the market leader in residential privatization in Germany. As of December 31, 2020, its real estate portfolio comprised approximately 5,200 units. In addition to Berlin, its regional focus includes major East German cities and metropolitan areas, as well as the Rhine-Ruhr metropolitan region and Bavaria. ACCENTRO’s business activities encompass four core areas. These include the tenant-oriented sale of apartments to owner-occupiers and private investors, the sale of real estate portfolios to institutional investors, the development and management of its own real estate portfolio, and the marketing of apartments for property owners, investors, and project developers. The shares of ACCENTRO Real Estate AG are listed on the Prime Standard of the Frankfurt Stock Exchange (WKN: A0KFKB, ISIN: DE000A0KFKB3). investors.accentro.de
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