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

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This fact seems to be a paradox. But there is a completely reasonable explanation for it.

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.

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Apartment for 265 150 euro in Berlin, Germany
265 150 €
Apartment in Berlin, Germany
36 sq.m
ID:14648 A new residential complex in the heart of Berlin, in one of the greenest areas of the city - Wilmersdorf. The Kurfürstendamm Embankment with numerous shops is less than ten minutes away. The nearest metro station is Blissestrasse (U7), Detmolderstrasse motorway is a 3-minute drive away. The plot area is 1843 sq. m., a residential...
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Apartment in Berlin, Germany (price on request)
Price on request
Apartment in Berlin, Germany
35 sq.m
ID 14067 Beautiful apartments in the west Berlin Charlottenburg district FROM €291,000. 80 apartments from 1 to 4 rooms, living area from 30 to 125 m2. Designer finishes, parquet floors, high-quality plumbing. The perfect location for your investment. Excellent infrastructure of the area with two metro lines: U2 and U7, 10 minutes to Tegel...
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Apartment for 449 000 euro in Berlin, Germany
449 000 €
Apartment in Berlin, Germany
59 sq.m
ID 14066 Apartment complex in the Luisenpark quarter, Berlin Apartment size area: 46-112 sq. m. High-quality interior and exterior design by Gruntuh Ernst Underground parking with equipped stations for charging electric vehicles Central Concierge Service Sports courts, playgrounds City Gardens
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Apartment for 354 000 euro in Berlin, Germany
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Apartment in Berlin, Germany
41 sq.m
ID 14061 A new residential complex near the Cologne Park. - 133 comfortable apartments - Excellent location in the heart of the city near the Cologne Park - Various: from 1 to 5 rooms, with an area of 33 to 160 m2, from studios to penthouses. - Several options for the final design finish - High quality: luxurious lobby and elevators, classic oak...
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Source: Bloomberg

Photo by Florian Wehde on Unsplash

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