Land Prices in Berlin: Influencing Factors, Developments and Comparisons

For years, prices for newly built condominiums in Berlin have been rising sharply. According to a study by the analytics firm bulwiengesa published at the end of 2020, prices per square metre increased by 16 percent in the western parts of Berlin’s inner city and by as much as 18 percent in the eastern inner-city areas compared with the previous year.

In addition to an increasingly limited supply combined with consistently high demand, higher technical requirements for construction and, above all, the energy efficiency of buildings, high land prices in Berlin are a key driver of this development. The land market is also characterised by relatively limited supply and strong demand.

But which specific factors influence land prices? How has Berlin developed in comparison with the rest of Germany, and in which districts is land particularly expensive? Find out everything you need to know in this blog article.

The basis for determining the value of a plot of land, and therefore its price, is the standard land value (Bodenrichtwert). Under Section 196 of the German Building Code (Baugesetzbuch, BauGB), the standard land value indicates the average location-based value of one square metre of land within a defined area.

Standard land values are determined by the relevant local expert committee, such as the Berlin Expert Committee for Property Values. Based on actual purchases and sales of plots of land within a certain period, the committee calculates average prices per square metre for different standard land value zones within a municipality.

These zones, which may include neighbourhoods, streets and squares, comprise plots of land with similar characteristics and conditions, such as structure and location, and therefore broadly comparable price levels.

Multiplying the standard land value by the size of a plot can provide an initial indication of its value. However, standard land values are merely historical averages and do not take into account the individual characteristics of a particular property, such as soil conditions or existing development. As a result, actual market prices are often higher.

The location is one of the most important factors affecting the value of a plot. A distinction is generally made between macro-location and micro-location.

The macro-location describes the broader regional environment of a property, including factors such as economic strength and demographic development within a defined area. The micro-location, on the other hand, refers to the immediate surroundings of the property, such as the specific street and the local infrastructure. This includes transport connections as well as access to schools, shops and cultural facilities.

The individual characteristics of the plot are also important. These include, in particular, existing development, soil conditions, size, layout and orientation.

For many investors, a key consideration is whether a plot is designated as building land. Both the physical and legal requirements must be met. On the one hand, the site must be fully developed and connected to the necessary infrastructure. On the other hand, it must be legally designated as building land by the city.

Not least because of the relatively slow creation of new building land, land prices in Berlin have risen significantly in recent years. In 2009, the average price per square metre for ready-to-build land was around €200. By 2020, it had risen to €931.

Berlin also ranks among the most expensive German federal states in terms of land prices. In 2020, Berlin ranked second behind Hamburg for building land prices. Traditionally, the two city-states among Germany’s seven largest metropolitan areas occupy the top positions. In other federal states, high land prices in major cities, such as Munich, are offset by significantly lower land prices in rural areas.

Source: German Federal Statistical Office; average purchase values for ready-to-build land in 2020; prices rounded.

Source: German Federal Statistical Office; average purchase values for ready-to-build land in 2020.

Compared with other major cities, however, Berlin is still relatively affordable. In 2021, a building plot for a detached home in an average to good location cost an average of €550 per square metre. By comparison, in Munich, the clear frontrunner, the average price was €2,800 per square metre (Source: LBS, Residential Property Market 2021).

As in other cities, land prices have risen especially sharply in Berlin’s inner-city districts in recent years.

Between 2012 and 2019, the Berlin district of Friedrichshain-Kreuzberg recorded the largest increase, with prices rising by 764 percent to an average of €3,589 per square metre, according to the Berlin Expert Committee for Property Values. Prices in Mitte increased by 620 percent over the same period to €3,244.

In Charlottenburg-Wilmersdorf, the standard land value of €3,338 was also well above the €3,000 mark. However, because prices there were already relatively high, the percentage increase was somewhat lower.

High prices in districts close to the city centre, including Prenzlauer Berg and Neukölln, also contributed to significant increases in land prices across other Berlin districts. By contrast, land is often still considerably more affordable in the outer districts of Spandau, Reinickendorf and Marzahn-Hellersdorf.

Particularly in Berlin and the surrounding region, land prices can be expected to continue rising in the future. Growing demand continues to meet limited supply.

Property prices are also expected to continue increasing. For investors, this is positive news: Berlin remains an extremely attractive market with substantial growth potential.

According to a PwC study, no other property market in Europe offers better future prospects than Berlin (Source: www.pwc.com). For this reason, real estate, particularly in Berlin, continues to represent a high-growth and comparatively low-risk asset class.

Property can provide significant financial benefits not only as an investment but also as owner-occupied residential property, as ACCENTRO’s 2021 Housing Cost Report shows.

Whether you are looking for a home of your own or an investment property, ACCENTRO can help you find the property in Berlin that best suits your needs.