Saturday, 10 March 2018

The Can Do and Can't Do Renovating Apartments in Certain Areas of Berlin

Preservation Statute Areas -. “Mileuschutzgebiete” in Berlin. What can I do, what can’t I do with my property.

The prevention of so-called “gentrification“ is a central issue for the Berlin city government. The term “gentrification” is describing the process of displacing parts of the current population of inner-city areas through rent increases beyond their reach. This development completely changes the social structure of entire boroughs and destroys social networks and the associated support functions for its members.
The Federal Building Code (Baugesetzbuch, BauGB) includes a regulation that provides local authorities with a tool that is intended to avoid such a development. More details about the split of apartment blocks into individual condos and the English version of the building code can be found here:

Section 172 of the code allows for the definition of protected areas under certain statistical conditions and for a specific time period of up to 5 years. There is a widespread consensus that after 5 years another 5 year period can be proclaimed and so on. It would be highly speculative and dependent on political significant changes to expect a change after 5 years.

There are two different criteria for protection which can be applied separately or in combination,
Social Preservation area § 172 (1) Nr. 2 BauGB and/or Erhaltungsgebiete with unique urban character § 172 (1) Nr. 1 BauGB

The map below shows the Berlin areas that are currently covered by individual Preservation Statutes (Milieuschutzverordnungen)

Source: Senatsverwaltung für Stadtentwicklung und Wohnen
For detailed information about the individual districts please visit our Blog:

Social Preservation area § 172 (1) Nr. 2 BauGB

Examples of renovations or modernizations that are not allowed (examples)

  • Floor plan changes
  • Merging or splitting apartments
  • Extension of balconies, conservatories, loggias or terraces with more than 4 m² of floor space
  • Extension of second balconies, conservatories, loggias or terraces
  • Fitted kitchens
  • Installation of a second toilet, complex bathroom renovations

Examples of renovations or modernizations that are allowed (examples)

Refurbishments that only produce the "state-of-the-art" equipment of an average apartment must be approved. The resulting rent increases must be borne by the tenants in most cases.
To be approved by authorities (among others):

  • Initial construction of a central heating with hot water supply
  • Initial construction of a bathroom
  • Upgrade of an existing bathroom with modern equipment
  • Basic equipment with plumbing, water and electrical installations, antenna, cable TV and intercom systems
  • Replacement of existing windows according to the Energy Saving Ordinance (Energieeinsparverordnung EnEV)
  • Obligatory energy conservation renovations
  • Attic conversion and new construction
A post like this one is always restricted to general examples and can never provide an all-inclusive overview of all aspects. Before any action is taken and money spent we recommend a consultation with the local authorities.
We provide advice and guidance for these types of projects for our clients from the first steps of a feasibility study through to a business plan and completion of the project. For inquiries about our services please use our contact page .


Sunday, 4 March 2018

Thinking About Dividing an Apartment Block into Condos in Berlin? What Could Possibly Go Wrong?

A growing number of owners of apartment blocks in Berlin are contemplating selling their property to take advantage of the high demand and increased prices. Instead of selling an apartment block in its entirety in one go, the sale of single condos is seen as a way to achieve higher prices per sqm and ultimately for the building in total.

The main issue I want to discuss here is the subdivision of an apartment block into single apartments in inner-city areas in order to be able to sell them individually.

Certain district administrations of Berlin, which are the local government in this context, have declared certain regions of their district “Milieuschutzgebiet”. These are areas where a Preservation Statute applies. Every area has a specific boundary and will quote specific regulations from Section 172 of the Federal Building Code (Baugesetzbuch).

These are the districts that already have preservation areas in place or are in the process of raising the empirical data needed to declare such an area:
  • Charlottenburg-Wilmersdorf
  • Friedrichshain-Kreuzberg
  • Lichtenberg
  • Mitte
  • Neukölln
  • Pankow
  • Tempelhof-Schöneberg
  • Treptow-Köpenick 

What is the impact on the owner?

In order to convert an apartment block into condos or individual freeholds (Eigentumswohnung) a permit from the district is required. In March 2015 the Berlin city government has released a regulation called “Umwandlungsverordnung” which allows the district to refuse the permit to divide (Teilungsgenehmigung) in areas under the Preservation Statute. Since preventing the “gentrification” of these areas through conversions is one of the purposes of declaring these areas “under protection”, the permit will be denied.

However there is another aspect to the story of the Preservation Statute which is not related to the division: The owner will not get a permit for what is seen a luxury modernization, e.g. new balconies bigger than 5 m², luxury bathrooms (definition in the regulation), join small apartments into big apartments, lifts and many other major works usually leading to rent increases.

What should I do?

If you are happy with your building and don’t plan to sell it in the near future you just need to keep your building in good shape and well managed, there is nothing you need to worry about.

However, if you are considering selling your property I recommend getting experienced local advice. There are different aspects of the business plan that might lead to different decisions when looked at in isolation as opposed to the total picture. Just to name some of these aspects, permits, tax, cost of marketing, timeline, first refusal rights of city and tenants (condos only) etc.. And it’s worth mentioning that sold individually you might not sell some units for years, at least not for the price envisaged.

Call me. We are specialized in guiding international investors through the ever-changing picture of market developments and regulations. Phone number

Academic / para-legal background.

The Federal Building Code allows local authorities to define specific areas for protection. This is done by means of local government procedures within the framework of the Federal Building Code. The regulations are spelt out in Section 172 of the code. All specific regulations will have to relate to this section.
Section 172 The Preservation of Physical Structures and of the Specific Urban Character of an Area (The Preservation Statute)

You will find an English version of the code here


Tuesday, 13 February 2018

The price boost on the German real estate market has further accelerated 2017

VDP-Real Estate price indices: The price boost on the German real estate market has further accelerated slightly 2017. With the results for 2017 The VDP also publishes the development of purchase prices n the top 7 cities for the first time.

The Association of German Pfandbrief Banks (vdp) represents the interests of the Pfandbrief banks in dealings with national and European decision-making bodies, and of a wider expert public.

Main findings of the report:

  • Residential real estate prices rise 6.9% year on year
  • Commercial property prices increase by 6.5% compared to the previous year
  • Expansion of the vdp real estate price indices with information on the housing markets of the TOP 7 cities in Germany
  • Housing markets in metropolitan areas remain strained: TOP 7 index rises 13.7% over the previous year
The full report in German is available here:


Saturday, 27 January 2018

The German housing market in 2018

Price and rent outlook for Berlin, Düsseldorf, Frankfurt, Hamburg, Munich and Stuttgart

The following information was provided by Deutsche Bank Research in their Germany Monitor.

Metropolitan areas in Germany are booming. The current real-estate cycle started in 2009 and has led to significant price increases for residential property in many cities. Prices for apartments have as much as doubled in some cities. Strong population and employment growth and declining unemployment rates are driving demand, and supply elasticity is low. New construction is slow to pick up, and vacancy rates are declining. As a result, rent growth is accelerating. Regulatory measures are unlikely to provide sufficient relief. House prices and rents look set to rise markedly in 2018.

Data from a number of cities confirm that demand is high and supply insufficient. In Munich, the vacancy rate is near zero. In Berlin, employment increased by c. 4% in 2017. Frankfurt was already 40,000 residential units short in 2015 – which suggests that 2017’s 15% yoy apartment price increase was not just Brexit-related. Stuttgart’s location in a basin restricts construction activity, contributing to the doubling of apartment prices during the current cycle.
Prices in Hamburg and Düsseldorf have risen strongly as well, even though demand growth has been slower in these two cities than in other metropolitan areas. The local housing-markets might therefore be more sensitive to interest-rate changes than their peers. Still, as our baseline scenario foresees only marginal interest rate increases during 2018, Hamburg and Düsseldorf should experience
price and rent uptrends, too.
Overvaluations are rising, and the risk of a price bubble in the German housing market is increasing. The price uptrend is likely to continue for several years, at least in most major cities in Germany.

The full report is available for download here: >>> The German housing market 2018 - DB Research


Wednesday, 24 January 2018

CBRE: Berlin Office MarketView Q4 2017

Berlin Office MarketView Q4 2017


Berlin Office Market
Foto: Uwe Falkenberg

• Year-earlier take-up record exceeded by 4%

• Prime rent at the €30 mark, up 9% y-o-y

• Weighted average rent rises 22% to €19.31/sq m/month

• Vacancy rate declines steadily to 3.1% – full occupancy in central locations

• Only one quarter of office space to be completed in 2018 still free

The full report is available for download at


Tuesday, 23 January 2018

Berlin Housing Market Report 2018

The Berlin Housing Market Report has developed into a tool widely accepted in the Berlin Housing Market. Initiated by GSW an originally City-owned but now privatised property company it has experienced a change in sponsorship over the years and is now published by Berlin Hyp and CBRE. The report for 2018 is being published on 25.01.2018 and will be available for download for our clients and readers at the bottom of this page. If you have signed up before, you will receive the newest version automatically.

The report covers these areas:

  • City comparison
  • The city of Berlin
  • Rents, sale prices, investments, transactions and financing
  • Furnished housing
  • New Construction
  • The city: Expert interviews
  • How cities and markets will develop by 2030 – and beyond
  • Housing Cost Atlas: Introduction
  • Housing Cost Map covering the whole of Berlin
  • Berlin's 12 districts and their 190 postcode areas
  • Explanatory notes on the rental map
  • Rental map covering the whole of Berlin
  • Special residential areas


Friday, 12 January 2018

What does it say about Berlin? Avison Young releases 2018 North America and Europe commercial real estate forecast.

Change and opportunity will abound in 2018

TORONTO, Jan. 11, 2018 /CNW/ - Rapid change is underway in the world's commercial real estate industry, and the dynamics are in flux as the current investment cycle enters its latter stage. The industry continues to contend with differing property fundamentals across asset types, markets and regions, with occupier behaviour, innovation and technology acting as key sources of change that are taxing the sector. The current interest-rate environment is another contributor to this change – albeit a somewhat limited factor.

These are some of the key trends noted in Avison Young's 2018 North America and Europe Commercial Real Estate Forecast.


German capital remains on its remarkable growth path.


Demand from national and foreign investors for investment product will remain high in 2018. As major assets, such as the Sony Center and the Upper West, were sold in 2017 and availability of product is expected to decrease, investment volumes could fall short in 2018. As in most German markets, investors continued to move up the risk curve in 2017 and showed great interest in value-add product and forward-sale deals. Strong interest and high investment volumes for development land underscore this trend. Accelerated yield compression was recorded between 2015 and 2017 –
especially in the office segment, where Berlin now represents the country’s prime yield. However, prime yields are likely to have reached their low and all signs point to a gradual stabilization at this level.

Avison Young's 2018 North America and Europe Commercial Real Estate Forecast

The Full report is availabel on

For local support in Berlin during all phases of the investment cycle please contact us through our website or directly