Purchase prices in Berlin’s property market are rising faster than expected, according to Black Label Properties.
The Berlin-based international agency recently published its 2019 Price Map and Rental Map showing current prices and trends on the German capital’s property market, with purchase prices increasing by 10-15% rather than the expected 5-8%.
The price per square metre within the popular S-Bahn ring, meanwhile, has almost equalled last year, with buyers now struggling to find an average apartment for sale in the centre of Berlin for less than €4,000 per square metre.
The purchase price for new builds has also exploded, with medium quality new builds at over €6,000 per square metre, while renovated vacant apartments now have a value of more than €4,500. This is an increase of between 10-15%, despite there being fewer buyers competing for homes.
A similar upward trend can be seen in the Rental Price Map 2019. Although rents are not rising as quickly as purchase prices, rents within the S-Bahn belt continue to increase at an impressive rate. Renters will now struggle to find an apartment for less than €15 per square metre on the open market.
Achim Amann, chief executive and co-founder of Black Label Properties, said investors should be investing in a rented apartment for the biggest gains.
“There is a significant difference in price of around 30% between vacant and rented flats, which are much cheaper to invest in,” he advised. “They are leased to long-term tenants who have up to 10 years’ self-employment protection so this is a good option for those looking to invest in Berlin.”
The reason for the big price gap between vacant and occupied apartments, Amann said, is because there are significantly fewer vacant apartments to purchase than last year. As a result, prices for vacant apartments continue to rise.
“Apartments, which are subject to a re-letting of the rental price brake, rarely come onto the open market,” Amann continued. “Either they are sold for profit or rented out as a shared flat and/or furnished, or traded on the ‘black market’. The negative effects of the rental price brake have made the search for an affordable rental apartment much harder.”
Amann also offered his predictions for the Berlin property market moving forward. “Rents will continue to rise – especially in the southwest districts like Steglitz, Tempelhof, Mariendorf, Britz, and Zehlendorf – there is still a lot of movement on the market,” he said.
“We expect to see price increases of 8-10% for this year. One striking trend is that young families are turning their backs on Berlin by selling their properties or giving up rented apartments. They can live more cheaply in the surrounding areas and find more suitable properties.”
He said Black Label has also noted with regret ‘that many good developers and construction companies who have supplied affordable apartments in the past are turning away from Berlin and choosing to build in other areas’.
“What’s driving this, in our view, is the enforced rent brake, the politically heated situation in Berlin and, in particular, the hostile mood of the building authorities towards most property developers and landlords,” he concluded.