Berlin is the first in terms of population and one of the largest cities in the European Union, which is a world cultural and tourist center; It surprisingly combines traditional German rigor with tolerance and sympathy for any manifestations of creative freedom; Prices for houses and apartments here are growing every year, but so far they remain more affordable than in France Read about the peculiarities of Berlin, housing prices, opportunities and problematic aspects of the real estate market, as well as the investment prospects of the city in our material.
The historical path
Berlin is located on the banks of the rivers Spree and Havel. It itself has the status of a federal state and is surrounded by the land of Brandenburg. Berlin was formed at the beginning of the XIII century and has passed a long historical path from a small German settlement to the capital of the state and an important center of European politics, culture and science. He has always played a key role for the German lands. The city was the capital of Prussia, then the German Empire, and later the Weimar Republic. In the twentieth century, Berlin became a symbol of political conflicts and social change. During the fighting, some of its areas were practically wiped off the face of the earth, and then carefully restored according to preserved photographs and drawings. The city has survived two world Wars, the division into Eastern and Western parts, as well as reunification after the fall of the Berlin Wall in 1989. These historical changes have left a unique imprint on its architecture, culture and society.
Today, Berlin is the capital of Germany with a population of almost 3.7 million people, a major transport hub, cultural, political and economic center of the German state and the European Union as a whole. People from all over the world come here with completely different goals – tourism, work, study, research, starting a business, creative self-realization. In this regard, the demand for residential and commercial real estate is constantly growing in the city. This contributes to the growth of the attractiveness of both residential and commercial areas, which guarantees investors the liquidity of facilities and gives them confidence in the future.
The characteristic features of Berlin
- A variety of architectural styles – here you can find structures representing different historical eras – from classical architecture and Soviet buildings to modern energy-efficient buildings.
- Cosmopolitanism – Berlin is home to people from all over the world, which is reflected in the diversity of languages, traditions, cultural events, culinary delights. German can be heard on the streets of the city along with other languages of the world.
- The high level of development of the economy and the IT industry – a large number of startups and technology companies flock to the German capital, which turns it into one of the leading European hubs of innovation and entrepreneurship.
- Well–developed transport infrastructure – Berlin has built one of the most extensive public transport systems in the world, which includes the metro (U-Bahn), city trains (S-Bahn), buses and trams. Despite the large size of the city, it is quite easy to get to the right point here.
- Cultural diversity – the city has 3 opera houses, about 150 art theaters, almost two dozen museums, and many galleries. Concerts, festivals, exhibitions, and theatrical productions are constantly held here. The German capital is also famous for its rich nightlife and alternative cultural spaces.
- Attention to ecology – the city is actively developing cycling infrastructure, showing interest in energy-efficient construction technologies, investing in the development of parks, green areas and environmentally friendly transport. Berlin aims to become one of the most environmentally sustainable cities in Europe.
Who is interested in real estate in Berlin?
Along with Munich and Frankfurt am Main, Berlin is one of the three most attractive German cities for investors. This is primarily due to the cost of housing. The lower bar for investors is more accessible here than in London, Paris and other European capitals.
Each category of buyers pursues its own interests. International investors come to the market for profitable investments, as Berlin is considered a promising segment with the potential for value growth. People who purchase houses and apartments for permanent residence do so for the sake of the high quality of life that the German capital offers. There are high-class medical institutions, more than 40 universities that provide high-quality education, there is a developed cultural environment and excellent infrastructure that create excellent living conditions.
Berlin real estate is interesting not only to Germans, but also to foreigners – in particular, Russians, Belarusians, Ukrainians. Historically, Berlin has one of the largest Russian-speaking communities in Germany. Therefore, Russian-speaking citizens have always been actively interested in real estate in Berlin. Most often, they invest in retail facilities and profitable housing, concluding transactions in the range from 250,000 to 1 million euros.
The most common reasons for foreigners to buy Berlin real estate:
- subsequent rental to obtain a stable income;
- finding an option for temporary accommodation during medical tourism, vacations, family trips or business affairs in Germany;
- protection of capital from economic instability in the country of origin.
All foreigners are allowed to purchase real estate in Germany, regardless of whether they are residents of the state. Having entered into ownership, the owner of the property can freely dispose of it – rent, resell, live in it independently.
What is the Berlin real estate market?
Berlin still remains one of the most inexpensive European capitals, not only in terms of real estate, but also in terms of living expenses. In addition, there is a large selection of objects of different types in the city: apartments and houses, new buildings and secondary housing, luxury apartments and simpler facilities – for every taste and budget.
The country pays great attention to the preservation, restoration and modernization of existing buildings. New buildings are rare here, most of the market is represented by secondary housing. Many old buildings are undergoing reconstruction, especially in central areas. Residential renovation projects are popular. They are housing that meets modern standards, located in a residential area with developed infrastructure. There are also combined projects, when part of the house is undergoing renovation, and part is being completed from scratch.
The pitfalls that real estate buyers should know about:
- The districts of Berlin are very diverse in terms of atmosphere, social and national composition. There are quite unsafe areas in the city with a large number of migrants, so it is important for investors to pay attention to infrastructure and be able to predict the development trends of the area.
- The German capital is characterized by high maintenance costs for secondary real estate – communications in old houses may not meet modern standards, so gas and electricity costs may be unreasonably high. In the old fund, the operating expenses of homeowners can reach up to 30% of the rental price.
- Due to the constant influx of population and a large tourist flow in the city, there are problems with traffic jams and a shortage of parking spaces.
To date, there is a shortage of residential facilities in Berlin, especially in the central areas. There is a shortage of qualified labor in the labor market, the cost of construction is growing, so it is difficult to increase the volume of new construction now. The construction of new residential complexes does not keep pace with the growing needs of the population, which also contributes to price increases.
Real estate prices and their dynamics
Real estate prices in Berlin vary significantly depending on the location. Areas closer to the city center are more popular and expensive, which in turn increases demand in some peripheral areas. The most expensive areas with a good location include Friedrichshain-Kreuzberg, Charlottenburg-Wilmersdorf and Mitte. Here, the price per square meter of an apartment is on average 5,300 euros, at home – 6,100 euros. Steglitz-Zehlendorf, Tempelhof-Schoeneberg and Pankow are among the areas with an average price level. Apartments here cost 4100-4700 euros per square meter, houses – 4800-5400 euros per square meter.
Relatively inexpensive objects can be found in the districts of Neukeln, Treptow-Koepenik, Spandau, Lichtenberg and Reinickendorf. Here the price per sq. m of an apartment is on average 3,700 euros, per sq. m of a house – 4,200 euros. Buyers will pay the least per square meter in Marzahn-Hellersdorf. Here the average price per square meter of an apartment is 3,300 euros, per square meter of a house is 3,900 euros.
From 2015 to 2020, apartment prices in Berlin increased by almost 50%. Prices for semi-detached houses increased by about 27% over the same period. However, these were years of low interest rates, but that time is over. Now interest rates have risen from 1% to 3.5-4%.
High energy prices, inflation and a sharp increase in interest rates on loans have led to buyers becoming more cautious. Financing often requires at least 60 percent of equity, which many potential buyers, especially young ones, currently cannot afford. In this regard, the growth in real estate prices has decreased significantly, and in some regions there has been a drop in prices by 10-15%.
But everyone is gradually getting used to the new interest rates, demand for housing is still high and analysts do not predict its decline. This is due to the fact that many new construction projects have not been implemented due to the increase in the cost of materials, so there is less and less real estate on the market.
The main factor that affects the cost of objects is their location. In second place is the year of construction and the quality of the building. The most budget offers start from about 800 euros per sq. m. The cost of new buildings and elite offers ranges from 3,000 to 7,000 euros per sq. m. The average cost of an apartment on the secondary market in Berlin in 2024 is about 5,250 euros per sq. m. The average cost of a new building is 8,200 euros per sq. m.
The objects of secondary real estate located in the central areas, in old sanitized houses of pre-war construction, are in the greatest demand. Their cost varies from 2000 to 3000 euros per sq. m. Less popular are objects in houses built in the 1960s and 70s, located on the outskirts of the city, in particular in the eastern districts of Berlin with Soviet buildings. Such offers cost on average from 800 to 1,500 euros per sq. m.
The rental market
In Germany, only a small part of the population owns residential real estate. Most Germans prefer to rent a house. The inflation rate in the country is minimal, the state’s economy has been demonstrating stability for a long time, and German laws reliably protect the rights and interests of tenants, including protection from unjustified rent increases. In such conditions, it is quite easy to plan expenses and rent an apartment for a long time. Indefinite rental contracts are common in Germany and residents of German cities have been living in such apartments for decades, changing their place of residence only if absolutely necessary. And Germans who do not have a permanent income receive subsidies from the state to pay rent.
In recent years, competition in the rental real estate market has increased and it has become quite difficult to rent a house. Rental of living space in megacities is especially in high demand. Today, about 85% of the population lives in rented apartments in Berlin. Either small apartments or, conversely, luxury apartments are in the greatest demand among tenants. The construction of new residential complexes does not keep pace with the growing needs of the population, demand significantly exceeds supply, so the city authorities are trying to regulate pricing to protect tenants from excessive price increases. By law, the rent must correspond to the average rate for the area and cannot significantly exceed it.
High rental demand plays into the hands of investors. Berlin apartments have a steady profitability of 2-4%. The owner of a home in the German capital will be provided with a stable income for a long time. Rental prices have risen across the country in the last two years, and Berlin is no exception. The average base rent in 2023 in the capital amounted to 13.6 euros per square meter, which is 19% more than in 2022. The most expensive rental housing costs in the Friedrichshain-Kreuzberg area (17.9 euros per sq. m.), and the cheapest apartments are located in Marzahn-Hellersdorf (10.8 euros per sq. m.). Rental rates increased the most in the districts of Neukeln and Friedrichshain-Kreuzberg – by 23.5 and 23.2 euros per sq. m. m accordingly.
Landlords should remember that the Germans monitor compliance with the laws on limiting rent increases very carefully. In case of violations of the law, the chances of staying with the tenant on an indefinite contract with a forcibly low rental rate are high, which will sharply reduce the profitability of the property.
Districts of the city
Each of the districts of Berlin has its own characteristics that make it more or less attractive for buying real estate. The choice depends on the budget, preferred lifestyle and the purpose of the purchase.
The most respectable areas are considered to have developed infrastructure, where wealthy Germans live and the lowest percentage of unemployed and migrants is observed. Such locations include Charlottenburg-Wilmersdorf, a prestigious, calm and safe area in the west of Berlin, known for its green areas and high–class schools. The Tiergarten and Charlottenburg parks are located here. Housing is expensive here.
Mitte is the central district of Berlin, which combines modern infrastructure and many historical attractions. This is one of the most profitable locations for investment. Mitte has panels from the time of the GDR, and buildings built in the XIX century, and houses erected after the unification of Berlin. Its advantages are proximity to the main attractions, well–developed infrastructure, a variety of cafes, restaurants and shops. Disadvantages are the high cost of housing and excessive tourist activity.
Kreuzberg is a cultural and artistic center of the city, known for its multicultural environment. The disadvantage of the area is that it can be noisy and crowded.
Friedrichshain is a picturesque area popular with young people and expats. There is quite affordable housing, lots of parks, and an active nightlife. But some parts of the area can be noisy.
Areas such as Charlottenburg-Wilmersdorf, Pankow, Steglitz-Zehlendorf are more suitable for families
Pankov is a quiet family area in the northeast of the city. There is a lot of greenery, good schools and kindergartens, a calm atmosphere. The disadvantages of this location include some distance from the center.
Steglitz-Zehlendorf is a southwestern district that combines an urban and rural atmosphere. Its advantages: good schools, safe and quiet streets, lots of parks and lakes. Cons – less night entertainment and cultural events.
Less prestigious and less expensive areas include Spandau, Lichtenberg, Marzahn, Hellersdorf, Vedding, Neukeln. The lowest prices are observed in the Hellersdorf area of east Berlin with a cost per square meter of about 800 euros. Multi-storey buildings and Soviet buildings prevail here.
Foreigners prefer to settle in the central areas of the city – Charlottenburg, Wedding, Neukeln, Prenzlauer Berg, Tiergarten, Friedrichshain. Locals prefer greener and quieter areas: Pankow, Koepenik, Zehlendorf, Steglitz.
Despite the fact that more than 30 years have passed since the fall of the Berlin Wall, you can still see the differences between the eastern and western parts of the city. For example, in the eastern districts of Prenzlauer Berg, Friedrichshain, Lichtenberg, panel houses with typical apartments typical of the socialist period are still common. Such housing is quite in demand on the market – it is kept in good condition and costs less than new buildings. Due to the more affordable rental prices, these areas attract young people and students. Western areas such as Charlottenburg, Wilmersdorf and Schoeneberg are characterized by modernist architecture, more diverse buildings and higher real estate prices. Families, businessmen, and people who are looking for luxury housing prefer to settle here. Thanks to the attraction of investments and the development of urban infrastructure, the border between the western and eastern parts of Berlin has been gradually erased over the years.
It is difficult to name areas where real estate is 100% suitable for renting, since different tenants pursue different goals. Some want to rent expensive housing in the center, closer to work, others want to save money and pay as little rent as possible, others prefer to live in a quiet family area away from the hustle and bustle of the metropolis.
New residential projects and market prospects
Germany is one of the most stable and economically reliable countries in the world. This creates a favorable investment environment and provides investors with a high level of security. Therefore, the purchase of real estate can be recommended in any economically healthy region of the country. Berlin has been in the TOP 5 best European cities for living, career growth and investment for many years. Demographic forecasts say that by 2030 the population of the German capital will increase by 266,000 people. At the same time, there is not enough living space right now, the city is in dire need of new and affordable housing. Local authorities see a way out of the situation in the creation of new neighborhoods on the periphery, consolidation of existing buildings, and intensive construction of residential complexes.
In the south of Neukeln, the state housing Association plans to sell about 900 apartments by 2026. In Pankow, between Blankenburg and Heinersdorf, the Blankenburger Suden district will be built – a new quarter with 6,000 apartments, schools, kindergartens, green spaces, convenient transport links and 40 hectares of commercial space. The first apartments should be ready for occupancy around 2030.
It is planned that Berlin-Oberhavel in the Spandau area will become one of the largest new urban areas of the city with 13,250 apartments. The 206-hectare block stretches along both banks of the Havel River, where more than 9,000 new apartments, schools and kindergartens, green areas and commercial areas will be built by 2027.
The Berlin real estate market looks quite promising for investors. The shortage of housing in the city, where more than 80% of citizens live in rented housing, provokes an increase in rents, which means that it increases the income of landlords. Apartments in new buildings and objects after renovation are a special priority. Such projects have a significant potential for cost growth, and also require lower monthly maintenance costs, due to the lack of fees for major repairs of the building in the near future. In addition, such housing meets modern energy efficiency standards. Buying an apartment in Berlin guarantees both a reliable and stable rental income and a high profit on further resale.
Thank you for your help in preparing the article:
Irene Verkhovetskaya, General Manager of Estate-Service 24
Antonina Zhivalova, Sales Manager and Ekaterina Demidova, CEO of DEM GROUP GmbH
Anna Larina, Director of the Department of Foreign Real Estate at NF Group.
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