Why Berlin is the market everyone wants to invest in right now
September 26, 2023
Ahead of the RPA Group's new and upcoming launch into the German capital, Berlin, we thought we'd take a look at the Berlin property market.
It's fair to say it has enjoyed a renaissance since the end of the Cold War and now after years of strategic investment in its transport infrastructure, housing market and embedding forward-focused industries like tech and green energy, we’re witnessing its ascendancy. Whilst Europe has been experiencing its own share or inflationary related problems the long term outlooks for investors remain incredibly positive with a 130% increase in new build property values expected over the next 10 years and a 63% rise in rents by 2028.
Why Berlin, Why Now?
Of all the European capitals Berlin remains relatively affordable to live in. It’s not even Germany’s most expensive city in terms of real estate (that goes to Munich), but a series of events – both planned and unexpected – have combined to make the city, in 2023, an absolute sweet spot for investors.
An already rapidly increasing population accelerated by an influx of Ukrainian refugees establishing new lives in the city has made Berlin the fastest growing city in Europe.
A red-hot jobs and employment market where in the last two years office employment has increased by 12% (Frankfurt, the financial centre, has only increased by 2%); the number of tech jobs has boomed by 35% (2015-21); and Tesla have established their first European manufacturing hub for cars, the Giga Factory, which will now also produce batteries. Little wonder that Berlin’s average salary is nearly 20% more than the average London salary.
A slowdown in construction after Covid has been furthered exacerbated by the rising prices in construction materials and interest rates leading some developers to shelve projects. Quality, new build and eco-efficient properties are therefore hugely in demand. In Feb 2023 Reuters reported that the German Property Federation were expecting a 700,000 shortfall in new build German homes over the next few years.
The end of the rent cap has ushered in market forces back to the Berlin rental market, and with the rising population demand for rental properties, prices have risen sharply with the present cycle expected to last until well after 2030.
What are the forecasts for property values in Berlin?
130% increase forecast in value of Berlin newbuilds over next 10 years (Guthmann)
63% rise in Berlin rents over the next five years (Immowelt)
What are the experts saying?
PWC: Berlin #3 in Emerging Trends in Real Estate® Europe 2023
Guthmann, Berlin Market Report July 2023:
“Builders do not seem to be charging the increased costs to buyers at the moment. This makes it a good time to buy a new-build property.”
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GEORGE RADFORD
MANAGING DIRECTOR (UAE &AFRICA)
about the AUTHOR
George is the co-founder of RPA Group and Managing Director of the business in the UK and Africa. A qualified Chartered Surveyor (MRICS) with almost 20 years of property investment experience, George has helped his clients to successfully grow and strengthen residential property portfolios over multiple markets and territories. Active in building and advising upon his client’s investments, George is now focusing on procuring UK investments exclusively for RPA Group clients and investors, providing insightful and strategic advice and opportunities.