Record year for residential and commercial properties in Berlin: 7.5 billion euros in transaction volume achieved

Berlin, February 18, 2022 | The Berlin market for residential and commercial properties had a record year despite debates on housing policy and the ongoing corona pandemic. Engel & Völkers Commercial Berlin provides a market insight, based on preliminary data from the Berlin Property Valuation Committee.

• Sales volume up 45 percent year-on-year
• Berlin's old district of Schöneberg recorded highest sales volume
• Average purchase price per property increased by approx. 18 percent to approx. €6.6 million

The transaction volume in Berlin's residential and commercial property market rose by 45 percent year-on-year to around €7.5 billion in 2021 (2020: €5.15 billion). The number of transactions also showed a positive trend. This rose year-on-year by 41 properties (up 4.0 percent). A total of 979 residential and commercial properties were traded in Berlin last year (2020: 938 sales). 69 properties of these were traded in packages (2020: 68 properties). The share deal from last year, which included the takeover of Deutsche Wohnen SE by Vonovia, and the large-volume acquisition of residential units by the Heimstaden housing company are not usually included in the data from the Valuation Committee.

The average purchase price of residential and commercial properties also increased last year. This rose by 18 percent in individual transactions to €6.6 million (2020: €5.6 million).

"The Berlin investment market for residential and commercial properties achieved an incredible record result last year and shows how much in demand the German capital is as an investment location - despite political debates about expropriation and pre-emption rights," says Philip C. Hetzer, Head of Investment Residential and Commercial Properties at Engel & Völkers Commercial Berlin.

Berlin-Neukölln again recorded the most purchase cases

With 77 transactions (2020: 90 purchase cases), Berlin-Neukölln remains the old district with the highest number of traded properties this year. The old districts of Spandau, with 70 traded properties (up 43 percent), Schöneberg, with 60 properties (up 62 percent), and Friedrichshain, with 41 properties (up 71 percent), performed particularly well compared with the previous year.

As in previous years, Marzahn (4 transactions) and Hohenschönhausen (8 transactions) recorded the fewest transaction cases. The old district of Schöneberg achieved the highest sales volume year-on-year, with an increase of 381 percent and a total of 807 million euros. "The reason for the strong growth is, among other things, the large-volume property sales of the 'Friedenauer Höhe' district and the 'Stadtquartier am Südkreuz' district, which naturally have an influence on the calculation of average prices," explains Philip C. Hetzer. They are closely followed by Charlottenburg (€649 million) and Berlin-Mitte (€602 million).

Prices in prime locations continue to rise

The highest average purchase prices were again paid in Berlin-Mitte in 2021. Investors had to invest 5.0 percent more for residential and commercial properties than in the previous year, spending an average of €18.8 million for a property. "Demand for properties in good locations continues unabated, which also caused purchase prices to rise last year. The residential and commercial building as an asset class illustrates once again: investors are more interested in a long-term investment to secure capital than in short-term yield opportunities," says Philip C. Hetzer, describing the motivation of the customers served by Engel & Völkers.

Prices for residential and commercial properties in Berlin have been rising for years. According to current surveys, only in Hellersdorf, Reinickendorf and Steglitz is the average purchase price for residential and commercial properties below 3.0 million euros. The largest jumps in purchase prices were recorded in the old district of Schöneberg. There, the average purchase price was €13.5 million (up 197 percent). Average purchase prices for traded properties in Charlottenburg and Treptow also rose sharply in 2021 to €13.5 million (up 113 percent) and €10.8 million (up 109 percent) respectively.

Forecast 2022: stable market, but hardly any further price increases

The experts at Engel & Völkers Commercial Berlin expect the market to remain stable, albeit with only marginal price increases. "Interest rates will continue to rise, which in turn will have an impact on financing. Nevertheless, we do not expect this to have an immense impact on the buying mood. Right now, we are seeing strong buyer power with high equity that has been held back in recent years due to the uncertainties," Hetzer explains. "For owners considering selling their property, the situation is currently still good.

This outlook could dim as the year progresses, as rising interest rates could be offset by a lower purchase price. We are also watching with interest to see what happens on the regional and national political stage. Any market-wide measure to regulate rents represents a change in the general conditions and could have an impact on sales prices in the long term."

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Information on the data basis: The figures are based on provisional data from the Berlin Property Valuation Committee as of February 1, 2022. The figures for the previous year's data have February 8, 2021 as their cut-off date. The old districts are based on the boundaries prior to the district reform on January 1, 2001.

Source: Expert Committee for Property Values in Berlin, Engel & Völkers Commercial Berlin.