The Housing Market in Berlin: Recent developments, legal framework and investment opportunities
By Tilo Drebes, AIOS GmbH
Since the fall of the Berlin Wall in 1989,the city and its housing market have experienced quite a volatile development. The years up to the middle of the 1990s were euphoric, followed by a slump and stagnation until around 2010. Since then, prices have gone up again due to low interest rates, money inflow from other countries and the increased attractiveness of Berlin in general. Berlin currently has 3.5 million inhabitants. Projections of the population in the year 2030 vary between 3.6 million and 3.9 million.
Demand for housing was much higher in recent years, which has driven prices up. New apartments vary between EUR 3,600 to EUR 5,700 per m2 in price, an increase of 57.8 per cent compared with 2007. Prices of used apartments even increased by 79.0 per cent in the same period. Rents for used apartments have increased by 46.6 per cent since 2007. According to the last rent survey dated September 2014, they lie between EUR 4.54 and EUR 10.88 per m2.
Legislation in Berlin is rather tenant friendly. As a landlord, you are not allowed to increase the rent by more than 15 per cent over three years. Moreover, rental agreements concluded after 31st May 2015 may only contain a rent increase of a maximum of 10 per cent in comparison with the rent according to the survey. For example, if the comparable rent is EUR 6.00 per m2, the maximum rent may not exceed EUR 6.60 per m2. This rule does not apply for new apartments. Investors are therefore facing increased prices with limitations to potential rent increases. However, it should be noted that there still seems to be potential for both prices and rents in the future. In other German cities such as Hamburg, Frankfurt and Munich, both prices and rents are even higher, not to mention the metropolitan areas of London and Paris.
AIOS GmbH, Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft, Berlin, Germany
T: +49 30 2849 87 214
Tilo Drebes is a partner in the Berlin Office where he works. His focus is on audit as well as technical and financial due diligence services for real estate investors.
AIOS provides audit and auditrelated services as well as tax, IT and real estate consultancy services. AIOS has around 40 employees.
published: October 2015