Berlin: Demand for residential property remains high

Buoyed by its status as the cultural and political centre of Germany, the capital city of Berlin is in high demand among property buyers. According to the statistical institutes at federal and state level, Berlin’s population is set to grow by 185,000 by 2030. The ramifications for the real estate market are prices at a stable high coupled with a limited availability of housing. Even during the Covid-19 pandemic and with a legislated and newly introduced rent cap, the strong demand for living space continues unabated, with prices still on the rise. “Berlin remains extremely attractive to property buyers and, in these uncertain times we live in, we are seeing that real estate as an asset is in greater demand than ever before,” says Günter Th. Fischer, Managing Director of the Engel & Völkers Market Center Berlin-Mitte. “We are currently registering increased interest in detached family properties both in Berlin’s various boroughs and on its immediate outskirts,” adds Christian von Gottberg, Managing Director of the Engel & Völkers Market Center Berlin Hohenzollerndamm.

Berlin sees rising transaction volume for residential property

The high demand and rising prices for residential property in Berlin are also reflected in the transaction volume. This increased despite slightly lower sales figures than in the previous year, as a result of the Covid-19 pandemic. The preliminary transaction data gathered by the advisory committee spell out a positive trend for the capital: In the freehold apartment segment, Berlin witnessed a transaction volume of 5.6 billion euros in 2020. This marks a slight increase of 1 percent over the previous year. The transaction volume for detached properties was 1.6 billion euros – representing a 7 percent increase compared to the previous year. The number of transactions is forecast to remain stable or even increase slightly over the course of 2021.

Top prices of up to 20 million euros for detached properties

There are many different sides to Berlin: from the trendy district of Prenzlauer Berg with its vibrant cultural scene and historic old buildings dating from the Wilhelminian era, to the former royal seat of Charlottenburg, and the tranquil greenery of Zehlendorf with its magnificent mansions set on sprawling plots. The capital is regarded as one of the most liveable cities in the world. This is reflected in the average asking price for freehold apartments. In the fourth quarter of 2020, existing properties were being offered on the market for an average price per square metre of 5,097 euros. This represents a 7.2 percent increase compared to the same period in the previous year. Meanwhile, newly built freehold apartments fetched an average asking price of 6,975 euros per square metre in the fourth quarter of 2020 – marking an 9.8 percent increase over Q4 2019. The highest priced districts in terms of freehold apartments are Grunewald, Dahlem, Tiergarten and Mitte. These areas of the city command prices per square metre of up to 20,300 euros. In the segment for detached properties, the districts of Grunewald, Dahlem and Schmargendorf saw top prices of up to 20.2 million euros for truly exceptional residences.

City outskirts and surrounding areas becoming more attractive

Due to the excess demand, Engel & Völkers is anticipating a further rise in prices in 2021. Such rises mean that families in particular looking for real estate at more moderate prices are turning their attention to peaceful locations on the outskirts of the city or in the surrounding region. Districts also registering high demand again this year include Pankow and Köpenick. Although a large number of buyers still come from Germany, the level of international interest also remains high. The popularity of Berlin’s green belt and the increase in demand has recently been felt in the form of sharp price rises.

Other trends relating to purchase power and property prices in German cities can be found (in German) in the “Engel & Völkers Market Report on Residential Property in Germany 2020/2021”.