Housing Market Report Berlin 2017 with Housing Cost Atlas Gero Bergmann, Dr. Henrik Baumunk Housing Market Report | 2017 | Berlin Berlin: Strong growth, continued diversity, more development projects Berlin is still growing rapidly, while its housing markets are developing just as dynamically. Rents and prices are rising and there are ever-increasing numbers of ever-larger new development projects. The development scene in Berlin has become very diverse. It ranges from major projects by public housing corporations and private developers through privately initiated cooperative pro- jects, to exclusive offers in the centre for more international buyers. Geographically, development activity is concentrated in the administrative districts in the city centre and to the east, includ- ing Fried richs hain and Lich ten berg. New development therefore forms a central element of the 2017 Berlin Housing Market Report. Around 250 projects, with over 32,000 residential units, were analysed – to this extent, it is a unique survey. Two acknowledged experts in the real estate sector give their views on the development activity and many other topics relating to the local housing market. They are Jörg Franzen, Chairman of the Board of Management of the state-owned housing corporation GESOBAU AG, and Andreas Segal, CFO and deputy CEO of the BUWOG Group, one of the largest private developers in Berlin. The report also examines the market for furnished housing. The extent to which this segment is present in the housing market was investigated, as well as its development over a three-year period. Can any conclusions about the introduction of the Mietpreisbremse (capping of rents on re-letting) be drawn from this? The report shows that many of the stereotypes about the Berlin housing market are incorrect. The only direction for asking rents is not upwards, nor are they consistently high in the inner city. Even here, there are still many areas, even in Prenz lauer Berg, in which households have low to middling purchasing power. And here as well, there are still segments of the market with low asking rents that such households can afford. This can be seen from the detailed analysis of the 190 Berlin postcodes in the Housing Market Report Berlin 2017. Assessments of the investment and financing markets, as well as the future trend of the housing markets in the city, by Dr. Ahlfeldt of the London School of Economics and Political Science, complete the picture. This report presents a varied and detailed view of the Berlin housing market. It should provide you with support in obtaining a differentiated view of the relevant markets and locations. With this in mind, we hope that you will find it interesting and informative reading. Gero Bergmann Dr. Henrik Baumunk Director Managing Director Berlin Hyp AG CBRE GmbH Housing Market Report | 2017 | Berlin 01 City comparison The city: Expert interviews Explanatory notes on the rental map 03 | The unemployment rate and volume 16 | Andreas Segal (BUWOG Group) and 72 | Inner city and city centre locations, of completions in Berlin are approaching Jörg Franzen (GESOBAU AG) give their trendy areas, suburban centres, leafy the levels in the other Top 7 cities. However, opinions on the major topic of new housing peripheral areas and major estates. Many purchasing power and asking rents in the construction. They also debate the statutory neighbourhoods of Berlin have similar capital are still much lower framework, including the Mietpreisbremse characteristics and can be ascribed to (capping of rents on re-letting) and the particular types of areas The city of Berlin availability of land in the city 04 | The demographic and socioeconomic Rental map covering the whole of Berlin trends in Berlin are still positive, residential How cities and markets will develop Cover | Overview of the categories of the demand is high. While asking rents in the by 2030 – and beyond areas of Berlin into price classes. Many city’s most expensive areas are stagnating, 19 | A commentary by Dr. Gabriel Ahlfeldt formerly lower-priced areas have increased in some edge-of-inner-city locations they of the London School of Economics and to medium price levels; the number of ex- are rapidly increasing. There is also growth Political Science on the future design of pensive inner-city areas is also increasing in lower-priced areas in the periphery cities and their development Special residential areas Rents, sale prices, investments, Housing Cost Atlas: Introduction Cover | The cheapest and dearest, largest transactions and financing 20 | Small-scale trends in the capital. and smallest properties to let in the city. 06 | Rents are still rising. Condominium Detailed analysis of rents, purchasing High and low purchasing power and hous- apartments are undergoing a sharp up- power and housing costs in the 190 Berlin ing cost ratios surge in prices as are the sought-after postcode areas apartment buildings, where the supply is particularly short. Berlin accounts for Housing Cost Map covering the about a quarter of all the transactions in whole of Berlin development projects in Germany 22 | At a glance: Where are asking rents particularly high in relation to local pur- Furnished housing chasing power? And where are they low? 12 | The proportion of furnished apartments in the Top 7 cities ranges between around Berlin’s 12 districts and their 25 and almost 50 per cent. In Berlin, their 190 postcode areas numbers are particularly high in the inner- 24 | Charlottenburg-Wil mers dorf city districts 28 | Fried richs hain-Kreuzberg 32 | Lich ten berg New Construction 36 | Mar zahn- Hel lers dorf 14 | The number of apartments planned 40 | Mitte or under construction is growing. For the 44 | Neukölln first time, more rental apartments than 48 | Pankow condominiums were registered 52 | Reinickendorf 56 | Spandau 60 | Steglitz-Zehlendorf 64 | Tempelhof-Schöneberg 68 | Treptow-Köpenick Disclaimer Berlin Hyp AG /CBRE GmbH Information herein has been obtained from sources which are accessible to the public, (or, in certain cases, in exchange for a fee) and believed reliable. While we do not doubt its accuracy, we have not verified each piece of information and cannot make any guarantees about it, barring willful intent and gross negligence. It is your responsibility to independently confirm its accuracy and completeness. The information contained in this market report may not be used, reproduced or published without prior written permission of Berlin Hyp AG and CBRE GmbH. 02 Housing Market Report | 2017 | Berlin City comparison: Housing market catching up, purchasing power lagging Only a few years ago, by almost all economic and erage rent also includes apartments that would socio-economic indices, Berlin was well below the be ascribed to suburbs, not the urban core, in other six top locations in Germany. However, the other cities. Their rents are generally lower. All capital is catching up. The number of employees the central districts of Berlin, i.e. Charlottenburg- subject to social security contributions increased Wil mers dorf, Fried richs hain-Kreuzberg and Mitte, by around 29 per cent between 2005 and 2015. In which have a combined population of 972,000, the same period, the unemployment rate has sig- have median asking rents well above €10 per nificantly declined. Since 2010, the GDP has been square metre per month. significantly rising. Undeniably, purchasing power is still lower than The largest residential floor area in relation in the other major cities. Compared with Berlin, to purchasing power in 2016 it was 14.6 per cent higher in Cologne, The average size of the apartments on offer in the 18.6 per cent in Hamburg, 23.7 per cent in Frank- Top 7 cities varies relatively little. It is noteworthy furt and as much as 42.5 per cent more in the that Berlin is in the middle of the range, despite frontrunner, Munich. Nevertheless, not just the still having by far the lowest purchasing power economic strength but also the population of Ber- among the cities. In previous years, the state lin is increasing, bringing with it demand for more compensated for a good proportion of the short- and better housing. fall in purchasing power with public subsidies and rent control. Spacious period apartments from Lower average rents in larger cities the pre-1914 era are still available. Another fac- The residential vacancy rate in Berlin, which for tor is that, compared with the other cities, a larger a while exceeded 5 per cent, has fallen consider- proportion of the population, including families ably. It is moving toward the figures in the other with children, live in rental apartments. More Top 7 locations. For years, asking rents have rental apartments are therefore needed than in been rising more rapidly than in the other six municipalities where most families move into in- cities. Despite steadily converging, at present dividual houses. rents are still 7.4 per cent higher in Dusseldorf, Berlin is overcoming its long-standing shortcom- 16.2 per cent in Hamburg, 37.9 per cent in Frank- ing in terms of new housing construction. The furt and in Munich – once again the frontrunner – ratio of completions to population has overtaken 67.8 per cent more. the level seen in Dusseldorf and is approaching In comparing these figures, however, a particular that of Cologne. The Berlin Senate is aiming to structural feature, which affects only Berlin and almost triple the latest rate of new build comple- Hamburg among the major cities, must be taken tions, which amounted to 7,030 units in 2015. into account. The municipal boundaries of these If the envisaged 20,000 completions each year two cities are very far-flung and include much comes to fruition, the proportion of new construc- larger proportions of the surrounding conurba- tion would be higher than at present in the other tions than the other cities.