Monday, 18 September 2017

City Ranking in Germany for 2017 With Some Surprize Stars in The East

After 2015 the HWWI (Hamburgische Weltwirtschafts Institut) and Private Bank Berenberg have published their City Ranking 2017.



It looks at the 30 biggest German cities using a selection of indicators to determine the dynamics and direction of their development. There are quantitative indicators like demographics and an approach to qualitative indicators like the share of "high skills" jobs in the total number of jobs.
I don't want to make this too dry to read but there are some questions regarding the value of the findings: The indicators are ranked by the diversion from the statistical average for each indicator and then compiled into a summary indicator providing the overall ranking. So 100 new jobs in a city of 500,000 has the same impact as 500 new jobs in a city of 3.5 million.
It still provides an interesting insight into the general direction of the development of cities as well as their surroundings as cities have a growing importance for the development of their region.

So here is the ranking for 2017 in comparison to 2015:

The most remarkable result has to be Dresden, the capital of Saxony going up by 6 ranks and Leipzig in the same state moving up to No.2, both Ex-East-Germany.

Both cities have been the darlings of Anglo investors about 10 years ago driving up prices for investment properties.Subsequently many have abandoned the locations due to high vacancy rates which are now disappearing because of a turn-around in the job market in the region.

The full report is available here: City Ranking 2017


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Friday, 15 September 2017

Have You Recently Bought a Condominium Apartment in Berlin?

Many international investors have bought condominium apartments in Berlin during the last years. Some will have full-service packages taking care of everything, hoping that everything will be alright. Some have bought an apartment, maybe even coming personally for the handover, proudly looking at their apartment - but what now?

Photo by All Bong on Unsplash

Just a few points to be thought of, best done a few months before:
  • Who makes sure that any snagging is done right and timely while you are back home?
  • How serious will the developer be when his last payment depends on the tick in the box on snagging - do you trust him to be acting in your best interest without supervision?
  • Who holds the keys?
  • At what rent should the property be rented - or should it be rented furnished with short-term contracts?
  • If you want to go down the "Furnished Apartment" road, who takes care of this and who does the marketing for it?
  • Who manages your apartment and rent collection, including
    • Budgeting
    • rent collection incl. chasing if necessary
    • payment of contributions to the owners association
    • property tax payment (quarterly)
    • tax documentation and handover to tax consultant in Germany
    • representation at annual owners meetings

Critical Point in Your Investment

This is the point in your investment that is as important as the purchase contract. The purchase contract and all the brochures are a promise. Now it comes to the fulfilment of your expectations - don't leave it to the developer and the agent who received a healthy commission - either from you or the developer - to make sure your plans work out. Even more important if reality does not meet brochure - you want someone on your side who knows the game. It also is a critical point for reclaiming some of the money you paid for a promise that was not 100% fulfilled - the clock starts ticking on handover day.

Our recommendation

Be prepared, don't leave it until the last day. But even if your handover has already happened and you are in the midst of having to make decisions by the minute - get some professional support with local experience. Someone with broad knowledge, experience and solutions. Everybody can point out problems, the next step is much more important - what to do? You don't need a lawyer, an architect and a rental agent to identify your next steps, you need someone who "owns" and "lives" your property and then proposes other specialists when needed and with specific tasks. Otherwise, you are likely to receive long documents with lots of possible or even real issues attached to a big fee account and still no solution.

We don't offer off the shelf solutions because every investor has a personal view about the degree of their own involvement. We can go from one-stop-shop including the management of the investment to just the production of a checklist based on the contract and its documentation. We are happy to engage in a conversation to find out what you feel is best for you.


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Wednesday, 13 September 2017

Global Real Estate Market Perspective August 2017 As Seen by JLL

Renewed momentum extends real estate cycle


Global economic growth has invigorated real estate markets worldwide. Leasing demand remains steady, while investors continue to allocate a larger portion of their capital to real estate. Deal flows so far are in line with what we saw in 2016.

2017 Prospects
Capital Values Capital Values 6% Increasing
Rents Rents 3% Increasing
Develoitpment Development 28% Peaking
Vacancy Rate Vacancy Rate 12.1% Rising
Leasing Leasing 39 m sqm Stable
Investment Investment US$ 650bn Firm

Leasing, vacancy, development, rents and capital values relate to the office sector. Full-year 2017 forecast values. Capital values, rents and development figures refer to percentage change. Global vacancy rate - percentage value, leasing volumes in million square metres, investment volumes in US$ billions. Source: JLL, August 2017

There is a wealth of analytic information in the most recent report and we will look at it especially as it applies to Germany and compares to other reports. One item that sticks out when looking at residential investment in Europe is the JLL clock:
After all the persistent talk about aproperty bubble in Germany JLL research does not seem to confirm this for Berlin.

Some more headlines from the report:
  • Office rental growth quickens
  • Western Europe leads as most dynamic leasing market (office)
  • Global retail markets facing unprecedented structural changes
  • Logistics rents surging
Here is the linkk to the full report: https://goo.gl/RERdk6


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Thursday, 7 September 2017

What is the best Property Location (In Berlin)?

In my career as a property professional I have heard plenty of advice about property investment and to come to the conclusion right up front -  there just is no lid that fits all pots.

There are investors with various investment philosophies, one that will go for prime locations for investment, put the lid on the pot and see what happened after 10 years. You know what, if it was not a major natural disaster area (take your pick) or politically unwise like Crimea, they will most likely be delighted about the value appreciation.
Now turning that theoretical value appreciation into cash through a sale to someone who believes in this new value is another story. This is an investment philosophy for someone who wants to park their money in a safe and useful way but does not need it for income purposes - this comes from somewhere else. They say that only poor investors look for income from property.

A different weathered property investor in the GERMAN rental market, the emphasis is on purpose, told me once that he would always invest in blue collar areas, anywhere in the world, because these are straight forward people who would do anything to pay their rent and stay out of trouble (eviction) as opposed to white collars who would rather pay a lawyer than their rent.

Let's take another angle:
If you invest 500k in a rented apartment(s) and buy a top tier apartment in Berlin-Mitte it would buy you 1 with about 60 m². How are you going to monetize it? Lock it up, air it once a month and run the taps and hope the authorities will not catch up on you for "housing speculation"? Rent it - furnished or not furnished? What will be the extra cost for furnishing and upkeep and frequent change of tenancy? How big will the gaps be? Did you choose the right location for furnished rentals? What is the cost of vacancy - 100% plus. You don't only not get the rent but you have to pay all utilities charges etc. (Betriebskosten) throughout the vacancy.
If you bought 3 apartments at the same price in a blue collar area you were hedging your bets: How likely is it that all three tenants would default at the same time? Given the current housing market, it is very unlikely that you would be facing a vacancy of more than one month on any of those three units. I think going into more details at this point would be insulting your intelligence ...




Now here comes what you have been waiting for while you were reading: My proposal for the income orientated investor. At this point, I have managed to source two offers for multi family properties that are a fair offer in the current market scenario and have room for improvement in the mid-term. Have a look at some of these locations and maybe you will get interested. ... https://propertylocations.blogspot.de/



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Wednesday, 6 September 2017

Deutsche Bundesbank: There is no property bubble in Germany

There are always those predicting doom and if they just keep doing so long enough they might be right one day and nobody counts the false alarms - they hope. The Deutsche Bundesbank (German Central Bank) does not belong in this category but is known for being very cautious about price developments, especially when they have an impact in banks lending policies for properties.

Only in May of this year Dr. Andreas Dombre, a board of directors member at the Deutsche Bundesbank warned about a price bubble building up in the German property market and the fact that you can't predict the actual "pop" only acknowledge when it happened.
Speech transcript in German:  https://www.bundesbank.de/Redaktion/DE/Reden/2017/2017_05_04_dombret.html#doc398274bodyText2

Photo by Markus Spiske on Unsplash

Asked about the topic at a press conference on 30.08.2017 introducing "Results of the 2017 low-interest-rate survey" Dombre stated that the Deutsche Bundesbank currently does not see a property bubble but fears a tendency that financial institutions are considering taking higher risks in residential property financing. Press release: https://www.bundesbank.de/Redaktion/EN/Pressemitteilungen/BBK/2017/2017_08_30_joint_press_release.html
 
Especially in the Berlin housing market, we are successfully sourcing off-market investment opportunities for private investors in the popular segment between 1 and 2 million Euros as well as high-end private homes and villas. For more information please contact us at: http://www.berlin-portfolio.com/feedback.html
 

 


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Tuesday, 5 September 2017

Sharp price rises continue for condominium apartments in #Berlin - JLL Report First Half 2017

The sharp rise in purchase prices for condominium apartments continued in the first six months of 2017. Compared to the same period last year, asking prices for condominium
apartments rose by around 12.5% to €3,730 per sqm.

Source: JLL Residential City Profile Berlin 1st Half 2017


The trend of higher price rises observed over the past six months is therefore ongoing, and prices are continuing to grow at a similar rate as in the period between 2011 and 2014. The average growth rate since the onset of the current upswing which started in 2009, is 10.9% per annum. Purchase prices have risen by an average of 6.5% per annum, or by a total of around €2,130 per sqm since records began in 2004. If prices continue to rise, which appears likely at present, it is possible that the average purchase price will break through the €4,000 per sqm barrier, bringing Berlin up to the price level of Stuttgart.

Download the full report with details on all Berlin districts:

Residential City Profile Berlin - 1st half-year 2017

We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.

Contact: http://www.berlin-portfolio.com/feedback.html


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Monday, 4 September 2017

Sharp Rise in Rents in #Berlin - JLL Report First Half 2017

Asking rents in Berlin increased to €10.80/sqm/month in the first six months of 2017, approaching the €11.00/sqm/month mark. The last time rents increased as sharply was in the first half of 2012. Then, the annual increase was 13.1%, compared to the current 12.8%. Since 2016, the housing market has returned to a phase of strongly rising rents. The upswing in the Berlin housing market began in the second half of 2006, initially with moderate increases (+3.0% per annum) until 2011, and then with significantly stronger momentum (+8.0% per annum).

Overall, rents have risen by an average of 6.1% since the beginning of the cycle in 2006, and have almost doubled over that period. Given the high demand and lack of supply, rents can be expected to increase further over the next six months.

Source: JLL Residential City Profile Berlin 1st Half 2017
 Download the full report with details on all Berlin districts:

Residential City Profile Berlin - 1st half-year 2017

We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.

Contact: http://www.berlin-portfolio.com/feedback.html


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Sunday, 3 September 2017

Chinese investors seize on cheap #Berlin properties

Photo by Artem Sapegin on Unsplash

Investors 'unaware' that tough tenancy laws limit potential for rental growth

JENS KASTNER, Contributing writer at NIKKEI ASIAN REVIEW





This article provides different views of the situation in the Berlin Housing Market and how long distance and lack of local knowledge are exploited by some selling to Chinese Investors. But the treatment was no better when Irish Investors invaded the Berlin property market 10 years ago.

Read the full article here: NIKKEI ASIAN REVIEW

We provide support for finding the right property investment in Berlin - but we are not agents, or only in very few cases. Investors can rely on our impartial professionality. We don't only know about the sales process but also a lot about running a property to make it perform at its best potential.

Contact: http://www.berlin-portfolio.com/feedback.html


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Saturday, 2 September 2017

Surprize Results In The Top 50 House Price Index: #Berlin at No.18 and Waterford, Ireland at 9

The Hurun Research Institute released the Hurun Global House Price Index 2017 Half-Year, listing the 50 cities with the highest house price changes in the twelve months to 30 June 2017.

China housing prices growing fastest in world

 6 Chinese cities in Top 10 & 21 in the Top 50

Toronto jumped 26% yoy, Number One in world

Hong Kong Top 5, with house prices rising 20.8% yoy

Wuxi fastest growing city in mainland China; Zhengzhou, Changsha, Guangzhou and Shijiazhuang in Top 10

USA, with 15 cities, led way for highest global property ROI (housing price change + RMB change + rental yield), followed by Germany (5), Australia (4) and Canada (4)


 The ranking for individual cities shows some surprizes:

Hurun Report 1-2017
Source: hurun.net
There are only 7 non-Chinese cities in the top 20 (blue frame) out of which 3 are European.

The report also looks at the ROI where Berlin ranks at No. 16. You can download the press release including the ROI ranking here ⇒ Hurun Report 1 - 2017 Press Release.


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Sunday, 19 March 2017

EMEA Investors Intentions Survey by CBRE: Germany at No.1 again with Berlin moving up to No.2 city


INVESTOR INTENTIONS SURVEY 2017

Berlin moved up to No.2
 The CBRE has arrived at these conclusions:
  • Economic conditions are positive and investors have ample capital to deploy in real estate
  • In EMEA, investors are planning for $475 billion in real estate investments in 2017
  • For 2017, 85% of investors intend to spend at least as much as in 2016, and 40% expect to spend more
  • Germany is ahead of the UK as the most attractive place to invest, as was the case in 2016, but investors are showing an increasing tendency to invest in the UK despite uncertainty over Brexit
  • The Nordics enters the top three with a significant jump compared to 2016
  • London retains the top spot as most popular city to invest in with an increased share, but Berlin shows the biggest increase, moving into second place
  • ‘Pricing’ and ‘Availability of product’ are the biggest obstacles to investing in EMEA real estate
  • Office is the most popular sector: interest in logistics has increased
  • Risk appetite has increased slightly
  • Income related factors such as ‘Yield relative to other asset classes’ are investor’s key motivations for investing in real estate
  The full report is available: https://researchgateway.cbre.com/PublicationListing.aspx?PUBID=6e0d802a-c164-48fd-acb3-1057547a0312 

Another interesting result is the preferred property type:



For support in property search and optimisation of property operation please visit our website http://www.berlin-portfolio.com



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Sunday, 12 March 2017

How secure are you when buying off-plan property in Germany?

Buying Off-Plan Properties, i.e. properties that are not yet as they are supposed to be according to the purchase contract, can be seen as risky. This could be a family house or a condo yet to be built or renovated. There is a building specification and some material samples trying to describe what the property should look like when it is finished.
In an ideal world for the buyer, no money changes hands before the project is finished and the result is satisfactory. For the developer, there is the worry if the buyer can and will pay once the project is finished.
In the German legal system, there is a regulation with a monstrosity of a name: Makler- und Bauträger Verordnung (MaBV),  which can be translated as Agent and Developer Ordinance - not much better. I will ignore the part dealing with agents for this purpose.
This ordinance regulates when and under which conditions a developer is allowed to take money from a buyer or the buyer's bank. Yes, this is right, he can not only not ask for the money if the conditions are not fulfilled, he is not even allowed to take it if you offered it - who would?
The regulation defines 13 instalments of the purchase price related to the building progress. Only up to 7 instalments are allowed, meaning that the developer will provide a payment plan which will bundle some of these instalments.

Here is an infographic about the 13 instalments:


Instalments according to MaBV

To receive the full-size infographic and detailed information about all aspects of the security system for Off-Plan Property buyers in Germany including a translation of part of the actual regulation regarding the payments please leave your information below. After the usual confirmation email, you will receive an email with the download link and an extensive report.


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Friday, 24 February 2017

Furnished Apartments in Berlin, the Answer to Growing Demand and Tighter Regulations



The Demand for Furnished Apartments

In the ever-changing world of work, often involving flexible locations, it is becoming more and more important that we can easily find a fully-equipped living space, ready to move into and easy to call home. Furnished living concepts are a response to this growing trend. Providers of this concept say that in 2016, every 5th space was occupied by a ‘commuter’ – someone who might only live in Berlin during the working week. In addition, fixed term contract jobs have significantly increased with this defined time span a matching comfortable living space in a given location is needed. Who wants to go find an apartment, furnish it, only to dismantle everything after 6 or 12 months? Providers of such accommodation are flexible regarding the rental period from 1 month to a year or more, and some contracts can be open ended. There is a growing preference for a furnished apartment solution over serviced apartments or hotels.

 Recent projects were developed in the light of the fact that there is an urgent need for affordable living space in Berlin. It is expected that around 250,000 people will be relocating to the city by 2030. Already, 83 percent of New Berliners live alone or in pairs. The rise in single households is twice as large as in comparable large cities.

Request more detailed information here.

The Ideal Location for Furnished Apartments

For the concept to be successful avoiding longer vacancies the location is a key factor:


  • Close proximity to professional clusters with sufficient demand
  • Well connected by public transport;
  • Shops, restaurants at least for daily needs.


The Best Planning Concept

To achieve the best cost/benefit ratio for the users as well as for the owner these planning parameters should be adhered to:


  • Compact, affordable living space with a choice of apartment size of 1.5 to 2 rooms
  • Apartment sizes from 30m² to 60m²
  • Fully equipped kitchen
  • Modern “clean” furniture and decorations
  • Smart TV, Wifi and smart metering.

Recommended Operational Concept

For an investor, it could turn into a long and in parts painful experience to try to achieve a smooth set-up and operation of a furnished apartment unless he lives “around the corner” and is flexible regarding availability. A service concept from the outset is important. It should cover these items:
  • Furniture concept, delivery, and installation
  • Service for rental, management during the occupation and most important handover from the tenant
  • Maintenance and replacement of furniture and equipment.

In order for a service provider to be efficient and successful, they should have a number of managed apartments in the vicinity.

Example for a Suitable Location for Furnished Apartments

One such area ideally suited to furnished apartments is the vicinity of the Science and Technology Hub Berlin Aldershof, an important science, business and media centre in Berlin. It includes ten non-university research institutes, six institutes of the Humboldt University. and some 1,000 additional companies, where ca. 16,500 people are employed and more than 8,000 students are registered.

In addition, the area has attracted 146 companies in the media sector, employing another 1,763 people.

For detailed project information and price list of such a project you can sign up here:


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Friday, 17 February 2017

What are your personal information requirements regarding the German Property Market 2017?

Tell us your needs!


There was a flood of reports and surveys about the outlook on the German Property Market 2017, "Quo Vadis..." and whatever the titles might be. We are guilty, we have tried to cover as many as possible, mea culpa ...


More important to us is what is YOUR view and what do you need to make the right decisions.

Grant us 2 Minutes of Your Time for better information


We would like to ask you to participate in a short survey to clarify your current interests. It will help us to tailor the information we provide to you and be more helpful supporting your information needs.



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Wednesday, 15 February 2017

German Housing Market Study Spring 2017



Investors have to expect a further rise in rent levels, as otherwise an acceptable yield could not be expected despite the low interest rates.

Berlin is currently losing its swarm town position

The immigration from inside Germany to Berlin, Hamburg and Munich has weakened considerably and is no longer enough to compensate for the increasing suburbanization. This is not the end of the swarm behavior, but the swarm continues to move into relatively more favorable cities such as Leipzig, Rostock, Erlangen or Regensburg.

"Lucky" sequence of different immigration waves

The cause for Berlin, Hamburg and Munich nevertheless experiencing almost constant immigration, is due to a "lucky" succession of different immigration waves from abroad. These, however, have reached their climax. If there is no further immigration wave from abroad, the three cities are expected to experience a sharp slump in the growth of housing demand.

Falling demand with increasing supply.

At the same time, as the "housing construction machine", especially in Berlin, is increasingly taking off and larger and larger projects are being planned, under construction or near completion, the housing supply will be expanded strongly in the near future. As a result, the rise in the new contract rents will soon come to a halt.

A free summary version of the study is available at this link:

For support in property search and optimization of property operation please visit our website http://www.berlin-portfolio.com


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Friday, 3 February 2017

Trend Barometer for the Property Investment Market in Germany 2017

The EY Trend Barometer for the Property Investment Market in Germany 2017 predicts a moderate decline for the second year in a row due to lack of offers:
Demand for German real estate will remain high through 2017, led by the search for good office space in Berlin, Stuttgart, Hamburg and Munich – while in the residential sector, Frankfurt will see the strongest demand, according to the latest Real Estate Trend Barometer published at the beginning of the year by EY Real Estate.
EY partner Christian Schulz-Wulkow comments in the survey that "all the lights are still showing green in Germany", with real estate valued at between €60bn and €65 billion expected to change hands this year, still well ahead of the average of the last 10 years (€44.3 billion), but down on the €79bn seen in the peak year of 2015 and down marginally on last year.
However, the EY researchers add the proviso that much of this is dependent on the political climate, both in an election-filled year in Europe, and in the United States after the advent of Trump.
For one thing, interest rates in the US are expected to rise faster than in Europe making the US more attractive – important for Germany, given that 43% of all commercial real estate transactions last year were made by foreign investors. The EY consultants are recommending to their clients to boost their liquidity reserves, in case interest rates rise faster than expected, resources are withdrawn from the market, or tenants experience problems.
The Brexit effect is most clearly to be seen in Frankfurt, where the residential market shows little sign of cooling down. Schulz-Wulkow comments in the report that this has to do with the narrowness of the market, with the office market not quite as sensitive, given both available vacancy and the attraction of alternative centers such as Paris or Dublin.
Co-author of the study Paul von Drygalski comments that despite the danger of overheating in certain segments, the German market has lost little of its attraction for international investors. If anything, Germany is still seen as economically and politically stable, with real estate benefiting from the low interest-rate environment, which 98% of respondents viewed as unlikely to change noticeably in 2017.
Another factor causing optimism among German investors is the likely smaller transactional size expected in 2017. Here, 91% of respondents agreed this could be an advantage for German investors, as the big Asian competitors tended to focus on very large transactions – for example, the purchase of the Commerzbank Tower in Frankfurt by Samsung in 2016 for €660 million and the takeover of the BGP residential portfolio from the biggest Chinese sovereign fund CIC for €1.118 million.
Leading the drive among investors are the insurance companies and pension funds, among whom the survey found that 96% rated the German market 'attractive' or 'very attractive'. However, high demand is being met with constrained supply, meaning deal size is getting smaller. The most sought after assets are parking houses, healthcare properties, student apartments and micro apartments, in addition to the classical hotels, retail properties, offices and residential apartments. Offices and residential in the better locations are expected to get even more expensive particularly in cities like Berlin, which is still benefiting from the dynamism of its startup sector.
Germany's recent real estate boom reached its zenith in 2015, when real estate volume of €79 billion was transacted. This compares with the €13.4 billion transacted in 2009, after the onset of the financial crisis, and the €65.7 billion transacted in 2016, where the figures were flattered slightly by giant takeovers such as Blackstone's taeover of OfficeFirst and Vonovia's takeover of Convert.
In the German residential and office sector in 2016, German buyers were the dominant force. Of survey respondents, 80% expect rising prices in residential, as well as in logistics and hotels. Yields in the office segment have fallen to 3.3% in Berlin and Munich. Banks are becoming more generous in providing financing, with loans of 80 to 90% of the purchase price no longer an exception – well up from the 60% of only fairly recently.
The EY survey shows that 90% of respondents view project developers to be the likely main winners from the current market situation. Likewise, 90% believe that investors are increasingly likely in the future to secure properties via forward deals – in contrast to three or four years ago, where German institutional investors such as insurance companies shunned any involvement with project developments. Now, given the shortage of available product, investors are prepared to take on higher risk and to expand into other geographical territories that offer higher yields.
When questioned which investor groups were most likely to be on the selling side in 2017 respondents were of the majority opinion that opportunity and private equity funds along with other international funds would be among the most active sellers. They are selling for profit-taking and for portfolio optimization. According to Schulz-Wulkow, "it is now a market for exiting, with many opportunity funds having already sold."
However, with 1/3 of all respondents saying they plan no exit this year, even from individual assets, supply is likely to remain very tight for primarily insurance companies and pension funds as well as open-ended funds and family offices most looking to buy.
Adding to the shortage of supply, unrealistic price expectations and the reassessment of risk exposure are acting as brakes on transactions. EY cite the example of asbestos, which in the past would have led to the immediate break-off of discussions, but now it might be accepted at an appropriate discount. A further example of how sellers at the moment have the upper hand, the report suggests.
Respondents expect retail properties to show a sideways price tendency at best, even in fairly prime locations. 62% of respondents believe that office property will be the hottest segment and the preferred asset class, up from 49% believing that last year. Berlin property is particularly in demand, while overall residential is falling out of favor with investors, down to 28% from last year's 65%. The key reason for this is what is viewed as excessive political regulation, with 94% of respondents expecting even tighter rental constraints.
The report is in German and available at this link.

For our local support services in Germany please refer to our website www.berlin-portfolio.com


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Monday, 30 January 2017

City Comparison Berlin and The Rest of The Top 7 in Germany




One of the results of this year's annual Housing Market Report Berlin 2017, published jointly by Berlin Hyp AG and CBRE. The report is available for download.

http://germanproperties.blogspot.de/2017/01/housing-market-report-berlin-2017.html

The housing market is catching up but purchasing power not yet. In 2015, Berlin gained almost 48,000 new inhabitants due to its positive economic development and attractive quality of life, thereby continuing the development of the past few years. Since 2005, the population of the city has grown by about 270,000 inhabitants. This increase entails a growing demand in the housing market, even if the purchasing power of other large cities in Germany is still well above the Berlin average (Cologne: plus 14.6 percent, Hamburg: plus 18.6 percent, Frankfurt: plus 23.7 percent, Munich: plus 42.5 percent). Despite increased new building activity, the vacancy rate in Berlin is now 1.2 percent, which is only slightly above the Cologne (1.1 percent) and Stuttgart (0.8 percent) but already below the vacancy rate of Düsseldorf with 1.5 Percent. Accordingly, the average supply rent in 2016 rose to € 9.00 per square meter per month but is still below the supply levels of the other Top 7 cities, of which Munich is the highest value at € 15.11 per square meter per month.

"The continued development of Berlin is impressive and offers a dynamism that is unique in Germany, both at the rental and new market as well as at the purchase prices," says Henrik Baumunk, Head of Residential Services at CBRE in Germany. "Nevertheless, there is still room for improvement in Berlin with regard to rents and purchase prices, due to the progressive growth in population, while at the same time moderate new construction and due to the increasing economic power of the city", explains Baumunk.


Offer rents are twice as strong as in 2015. In 2016, the supply rents rose by an average of 5.6 percent and thus reached a dynamic level comparable to 2014, when an increase in the supply rents of 5.8 percent was observed. In contrast, in 2015 the increase was 2.3% much lower. "Growing population numbers and economic growth are putting more tension into the market," says Gero Bergmann, a member of the board of directors of Berlin Hyp. "The offer is becoming ever lower because, in the case of scarcity and price increases, the willingness to move is always decreasing."

Not only the median values of all offer rents but also the mean values of the lower and upper market segments (the cheapest and most expensive ten percent of the offers) show marked differences in the growth rates between the districts. Across all market segments, the rents offered rose most clearly in Neukölln with 17.1 percent. Marzahn-Hellersdorf recorded as the only other district a double-digit growth with 10.2 percent. At 6.70 euros per square meter and month in the median, Marzahn-Hellersdorf was still the district with the most favourable offer rents - in the lowest market segment, there were even offer rents of 5.20 euros per square meter. At EUR 11.04 per square meter, Friedrichshain-Kreuzberg showed the highest average offer with a 7.5% increase. The district with the lowest increase was Charlottenburg-Wilmersdorf with 2.7 percent. In the upper market segment, 17.46 Euro per square meter was the rent advertised in Berlin-Mitte.

These rents result in very different housing costs quotas, the ratio of the purchasing power of residents to the average warm rent of an apartment offered. The housing costs range from just over 17 percent in some quarters in Marzahn-Hellersdorf to almost 47 percent at the Hackescher Markt in the district of Mitte.

The details about the districts will be analyzed and published in our blog http://propertylocations.blogspot.de/ over the next weeks. You might want to subscribe to the blog to receive updates.

For property search, assessment and management please refer to our website www.berlin-portfolio.com.


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