The annual CBRE Berlin Hyp Housing Market Report is out, and as always for investors, it is an interesting read. Here we highlight the key takeaways from the report.
The overall sentiment is that the Berlin residential market is on an upward curve both in terms of rent & capital growth, which is fantastic news for investors.
Overall Outlook -
Berlin has bounced back strongly post pandemic with the city's population and job growth back to its usual upward trajectory. The latest upheaval Europe is facing, the Ukraine war, is only serving the dramatic rental growth of the city. This is further exacerbated by Berlin’s continuing development crisis - the city failed to meet targets and therefore is still grappling with a severe apartment shortage.
-The number of jobs between 2015 and 2021 increased by 20%, more than any other city in Germany. Between 2021 & 2022 the number of people employed increased by 71,600.
-The Tech sector continues to dominate with a 35% increase in jobs
-Migration has returned post pandemic with 76,000 people moving to Berlin in 2022
-Berlin had the highest migration of students than any other German city. In 2020 Berlin housed 200,000 students, and of those 27% were international students.
-The city's goal of building 20,000 apartments per year was not met with only 14,100 residential units built in 2021
-Of the housing that was built, only 17.2% was built in the popular ‘within the S-Bahn ring’ districts.
“The shortage of available housing can be expected to continue and worsen due to the
declining level of construction completions, the resumption of the regular population influx
and an increase in the number of refugees. As a result, liquidity is generally high and interest in investing is extensive”
Capital Growth -
Every year we see capital growth in Berlin and this year was no exception. In the top market segment double-digit increases were recorded with Friedrichsain-Kreuzberg recording the third highest pricing out of Berlin's 12 districts.
-Capital growth is currently at 9.9%
-Top market segment units are selling for an average of €10,988 PSM in Berlin
-Fredrichshain recorded the highest growth last year at 19.6%
-The average sales price in Friedrichsain was €12,108 PSM.
Rental Growth -
“Berlin asking rents continue their upward trend unabated”
-Rents were up by 13.9% last year
-Friedrichain saw an increase of 15.2% in the new build segment which is the top growth seen in Germany
-Vacancy Rate dropped to 0.8% making Berlin the only Tier 1 city in Germany where vacancy rates fell.
In conclusion, our takeaway from this report is that Berlin is still an incredibly strong investment market. The city continues to go from strength to strength and the strategy will be to buy now whilst the city still flies slightly under the radar.