The German market is declining, but investors are choosing Berlin. How come?

What has happened?

Against the background of the news about the drop in sales and construction volumes in the German market, the real estate market in Berlin seems to be quite decent: here housing prices have increased by at least 1% in 2023.

The main features that attract attracts foreign investors:

• The prospects of growing rental rates
• Relatively low cost of residential properties (compared to other European capitals)
• Constantly growing number of potential renters (only 15% of Berlin residents are homeowners)

In the case of the capital of Germany, the population is steadily increasing, and the pace of introducing new residential spaces is not keeping up (despite the attempts of politicians to stimulate developers and make loud promises). As a result, the rental rates in Berlin are the highest in the country (about €18 per sq.m.)

Are there prospects for changes in the near future?

It does not look like that. According to the German Real Estate Federation, by 2025 there will be a shortage of at least 750 thousand housing units in the country. At the same time, the government has not yet proposed any convincing measures to resolve the crisis.

Source: Bloomberg

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