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GSW Immobilien AG presents the 10th Housing Market Report Berlin

Berlin, January 29, 2014: Berlin breaks all records. Between June 2012 and 2013, Berlin's population increased by almost 50,000. And there were more than 20,000 new households. Although the number of finished dwellings did increase, the figure was still with approx. 5,400 far below the level of demand during the year. Shortage of apartments and houses is reflected in the rents and prices that have been growing over the years. While they did increase in 2013 as well, the rise was considerably lower than in previous years. Rents and prices for owner-occupied apartments and multi-family residences only increased during the past year half of much as in 2012. These are some of the findings presented in the 10th Housing Market Report for Berlin, which is released today by GSW Immobilien AG in collaboration with CBRE, a real estate service provider. "The lower dynamic noticed on the housing market is not surprising," states Jörg Schwagenscheidt, member of GSW's executive board. "Berlin has made tremendous strides in catching up over the past few years. Rent prices are now dictated by supply and demand," Schwagenscheidt adds.

More than 80,000 offers relating to properties for rent or sale during the first three quarters of 2013 were collected and evaluated to prepare the annual assessment of Berlin's housing market. The rental properties were assigned to the 190 postal codes used in Berlin and analyzed. The Housing Market Report also provides an overview of approx. 250 new building projects and analyzes for the first time almost 500,000 moves to and from Berlin and within the city.

Based on that, Berlin's population has been growing continuously for ten years - due for the most part to the influx of new residents. The difference between the influx and outflux of residents only amounted to 477 persons in 2003. In 2012, Berlin reported an influx of more than 41,000 new residents. The majority of the newcomers settled predominantly in city center districts, while Berliners themselves tended to move more towards the outskirts when opting to move. The districts registering the most moves were Berlin-Mitte and Friedrichshain-Kreuzberg, whereas eastern peripheral districts like Treptow-Köpenick and Marzahn-Hellersdorf recorded the least moves. Moves clear across the city or over large distances are the exception, however. The majority of the people moving actually moved to adjacent neighborhoods.

Quoted rent prices

While the rent prices quoted for apartments in Berlin did rise once again in 2013, they did not increase as much as in the past years. On average, rental apartments were offered at EUR 8.02 per square meter, which amounted to 52 cents more or almost a 7% increase compared to the year before. Thus, the 92-cent increase noted per square meter in 2012 was reduced noticeably. The rents in the upper and lower price segments rose even less at 5 or 4% respectively than the average price segment, which made up the majority of the demand.

With regard to quoted rent prices, Friedrichshain-Kreuzberg has taken over as front runner for the first time passing Charlottenburg-Wilmersdorf. With more than EUR 1 per square meter, quoted rent prices increased here by almost 12% to exactly EUR 10. Charlottenburg-Wilmersdorf ranked second with EUR 9.45 and Berlin-Mitte third with EUR 9.09. As in the past, the rent prices for apartments in peripheral districts like Marzahn-Hellersdorf (EUR 5.46 per square meter), Spandau (EUR 6.29 ) and Reinickendorf (EUR 6.61) were the lowest. "Looking for affordable housing has definitely become more difficult now than in the past, but still Berlin does offer those with low incomes less expensive housing," reports Jörg Schwagenscheidt, member of GSW's executive board, while commenting on the current market situation. "All districts in the lower market segment offer rent prices of less than EUR 6 per square meter," Schwagenscheidt adds.

Prices quoted for owner-occupied apartments and multi-family residences

While the purchase prices for owner-occupied apartments and multi-family residences increased during the past year again, the prices only rose at approx. 9% half as much as in the year before. Owner-occupied apartments were correspondingly offered on average for EUR 2,474 per square meter (a 9.6% increase), multi-family residences for EUR 1,472 per square meter (a 9.1% increase).

In Berlin-Mitte, owner-occupied apartments remained with an average price of EUR 3,462 per square meter the most expensive in the city by far. The price increase did decline considerably compared to the prior year with +2.9%. The prices in the other remaining city center areas Friedrichshain-Kreuzberg, Charlottenburg-Wilmersdorf and Tempelhof-Schöneberg also exhibited a similar development. On the other hand, the districts, which are located primarily at the rapid transit circle, are currently exhibiting a noticeable upturn. Lichtenberg reported with more than 30% the greatest increase by far in prices quoted for owner-occupied apartments. Even Neukölln showed a considerable rise of more than 20%. The market situation even in peripheral areas like Reinickendorf, Marzahn-Hellersdorf and Steglitz-Zehlendorf is picking up.

This can also be seen in the multi-family residence segment: The five districts with the greatest price increases are located either completely or to a large extent at the outskirts of the city. In contrast, the price increase in city center locations was below average. For instance, the increase in Charlottenburg-Wilmersdorf only amounted to 0.5%. The prices demanded here are still the highest in the city by far with an average price of EUR 1,842 per square meter.

New buildings

The construction of new residential buildings is gathering speed in Berlin. In 2013, 250 projects were identified, in which a total of about 18,000 apartments are expected to be finished by 2016 – most of which fall primarily in the owner-occupied segment however. New building projects were noted in the meantime in all twelve districts. The majority of activity is still concentrated in the city center. With more than 4,600 units, most apartments are planned for Berlin-Mitte. Surprisingly, that is followed by the Lichtenberg district, which is located outside of the rapid transit circle. Here, more than 50% of the planned accommodations are single-family residences though. With almost 1,200 apartments currently planned, more units are being built here than in any other district outside of the rapid transit circle. And more than 2,000 apartments are also being constructed in Friedrichshain-Kreuzberg and Pankow. "If the growth in population continues, the tension on the market will increase in spite of the construction projects," states Michael Schlatterer, housing market expert in CBRE's Residential Valuation Department. The number of households increased significantly at the current rate of 20,000 and more per year than the number of apartments finished. "When it comes to residential construction in particular, there is a deficit of building projects being implemented," Schlatterer adds.

Housing Cost Atlas

After the share of the purchasing power that Berlin households have to pay for rent plus ancillary expenses increased to 27.4% on average in 2012, the figure decreased to 26.6% during the past year. It is necessary to take into consideration, however, that the offered apartments, which form the basis of the calculation, were on average about 2 square meters smaller in 2013 than those in the prior year.

The housing expense ratio varies within Berlin and is the highest with more than 33 or 29% respectively in Charlottenburg-Wilmersdorf and Steglitz-Zehlendorf. The largest apartments that are offered for rent in Berlin can be found here. The apartments in Neukölln are considerably smaller, and thus the housing expense ratio with 22% is the second most favorable in Berlin. The ratio is only lower in Marzahn-Hellersdorf at 18.7%. High earners are, on the other hand, more willing to accept higher housing costs. With 28.7%, one-fifth of Berlin's postal code areas registered the highest housing expense ratio, which also had the residents with the highest purchasing power. In contrast, the housing expense ratio in the bottom one-fifth is only 25.2%.

The entire Housing Market Report and diagrams can be downloaded at the homepage of GSW Immobilien AG: www.gsw.de/english/unternehmen/wohnmarktreport

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