October 1st, 2015

Berlin Real Estate just keeps getting more interesting!

Find a bar. (Not hard in Berlin). Make sure it’s in an elevated position. (Surprisingly easy, given that the city has so few hills: there are several places where you can enjoy a drink while taking in views from the upper floors of blocks of flats, offices and even multi-storey carparks.)

Look out, and what do you see? Cranes are dotted across the horizon. Berlin, it seems, is having a building boom. New apartment blocks are sprouting up in every corner of the city.

But get things in perspective. Certainly, the recent past has seen plenty of building activity. In the four years from 2010 to 2014, the number of “residential units” (apartments and houses in plain English) is reckoned to have increased by 15,500. But again, keep things in perspective. This is a city of around 3.5 million souls. And that increase of 15,500 over four years represents just 0.8% of the 2010 housing stock.

Furthermore, it’s not just the number of flats and houses in Berlin that’s increasing. So is the city’s population – and that growth in demand is vastly outstripping the supply of new housing.

Look at the numbers. In 2013, around 4,600 new-build flats were released on to the market. The total for last year is unclear, but it was probably around 8,000.

Even if one accepts a modest estimate for likely population growth, the number of new homes required to accommodate these new residents is set to be far higher.

BBSR is the government department that researches building development, predicts that Berlin will require around 16,000 new homes annually. If you read German  – http://www.bbsr.bund.de/BBSR/DE/Home/bbsr_node.html

Take a rather higher estimate of population growth, and demand is likely to be significantly greater. Property agents JLL (jll.de), the German arm of Jones Lang Lesalle, puts the annual requirement at 20,000 new apartments or more.

Let this sink in: just to keep up with the increase in the number of Berliners would require the building of 20,000 new apartments per year.

Yet according to Investionsbank Berlin (ibb.de), it will be 2017 before the total number of new apartments completed since 2010 hits the 20,000 mark.

In other words, you might be able to see plenty of cranes while you cradle a beer in the Solar Bar in Kreuzberg or at the Klunkerkranich in Neukoelln. Yes, plenty of new apartments are going up. But there aren’t enough. Demand will outstrip supply for some time to come.

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Next Estate GmbH is a Berlin based Real Estate company that focuses on the local Berlin real estate requirements of clients in Germany and worldwide.

 Next Estate  serves both the local German market and International clientele and our staff speak and deal with our clients in German, English, French, Italian and Spanish. https://www.next-estate.de/en/immobilien/home/