Berlin Real Estate

The German real estate market has been slow for a long time but lately things have started to changes. Berlin used to be cheap but since 2009 both rents and property prices have increased much more than in other large German cities. Berlin is still far behind Munich, which has the most expensive real estate in Germany, but Berlin is moving closer to the top.

First it is important to point out that Berlin is not like London or Paris. Actually, it used to be a little bit of backwater. But the last couple of years Berlin has started to grow. After that Berlin became the capital of the reunited Germany, developers got ahead of themselves and built far too much. Prices were cheap but few were interested in buying. Things have changed and now Berlin has become a German property hotspot. Due to the oversupply, few property developments were started. At the same time, Berlin started to grow.

It is important to remember that compared with many other countries, the German property market is slow. The boom and bust cycles seen in many other countries haven’t happened in Germany. Even if the Berlin real estate market has become hot, this means increases of ten percent or less. For Germany, this is boiling hot and a lot of people believe that the boom will soon end.

Another important thing is that in Germany, the price of an apartment depends on the size of the apartment, not the number of bedrooms. You often see prices given per square meter. Germans don’t like small apartments. In many cities all over the world, you can find plenty of very small one and two bedroom units. In Germany, such small units will be difficult to rent or sell. It is also good to remember that the legal system in many ways favors tenants.

As mentioned, the Berlin real estate market has become hot. So hot that many old Berlin property investors are staying on the sidelines. But others believe that the boom will last another couple of years. The city is growing and since 2009 property prices have gone up with almost ten percent per year. In Germany, such a growth is almost unbelievable. But the mainstream view is that Berlin will continue to prosper, at least the next few years, and so will the property market.

This does not mean that it is a good idea to buy whatever you can get in Berlin. As usual, some parts of the city have done much better than others. Also, while many believe that prices will continue upwards, most experts believe that price growth will slow down significantly. Politicians have also noticed that Berlin has become much more expensive and they want to keep Berlin affordable. New developments are being started which will boost the supply. In other words, Berlin is still a good place for real estate investments but now you need to make sure that you buy the right property, in the right location at the right price.

The old West Berlin is still more expensive than the parts that belonged to East Berlin. The exception is the city center with Berlin Mitte and Prenzlauer Berg. Most experts believe that this pattern will not change. The safe bets are central Berlin and the western parts of the city. It is also worth pointing out that there is still plenty of free space in Berlin. So buying in a cheap part, waiting for prices to go up can be a risky strategy. As mentioned, developers in Berlin have started to build again. Previously, due the low property prices and rents in Berlin it didn’t make sense financially to build. But that has changed, now developers can make handsome profits and they want to take advantage of this opportunity.

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