Average rental prices increase by 5.6% in Berlin during 2016, indicating a string price rise despite rent cap being introduced in 2015.
A housing market report by Berlin Hyp and real estate advisor CBRE explained that the growth was led by apartments, for which rents increased by up to 15.7%, depending on their location.
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Reasons for the drastic increase in rents is the city’s rising population. In 2015 alone, Berlin’s population increased by 48,000 and since 2005 the city has grown by 270,000 residents.
Thanks to the rent cap (forbidding landlords to increase rents by more than 10% the local average), however, rents in the capital stayed below those of other German cities like Cologne, Hamburg, Frankfurt, Munich and Dusseldorf. Average asking rents in Berlin went up to €9 per square meter per month, which is still considerably lower than Munich’s average of €15.11.
“The ongoing development of Berlin is stunning. The dynamics on the market for rental apartments and new construction projects as well as the acceleration of purchasing prices are unique in Germany,” says Henrik Baumunk, head of residential services at CBRE in Germany.
“However, in terms of rents and purchasing prices there is still a lot of potential in Berlin, particularly due to the ongoing population growth and at the same time moderate construction activity as well as the rising economic strength of the city.”
Gero Bergmann, a member of the board of management at Berlin Hyp, adds: “The supply is getting smaller because tenants are less willing to move in view of the decreasing supply and higher asking prices.”
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“One of the key highlights of this report is the sustained growth of Berlin’s residential sector. Over the past few years investors have been shifting capital in increasing amounts into Europe’s most undervalued capital city,” said Ian Sigmund, investment associate at IP Global.
For those looking to invest in Berlin’s booming property, it may be worthwhile considering properties that are new build or completely refurbished as these are exempt from the rental capping law.
