Germany - Berlin

HousingMarketReport

Berlin: Huge Potential on the Housing Market

In Berlin’s most expensive neighbourhood, the rents for apartments on the market are almost four times as high as in the city’s cheapest district. On average, when moving into a new apartment, city-centre dwellers around Friedrichstrasse have to spend almost half the local household income on rent, not including service costs. In some areas on the outskirts, on the other hand, housing costs are minimal.

Apartments in Wittenau, in the north of the city, and in Biesdorf, in the east, are on the market at basic rent prices amounting to only about 15 percent of people’s household income in these neighbourhoods.

These are some of the results of the first issue of the Berlin HousingCostAtlas, appearing in this edition of the HousingMarketReport. Berlin’s leading housing company, GSW Immobilien GmbH, and the international property consultancy, Jones Lang LaSalle, present detailed information on the city’s 189 postal code districts. “Absolute housing costs by no means tell you everything about a neighbourhood,” said GSW’s Chairman of the Management Board, Thomas Zinnöcker. “You can find out far more when you express them in relation
to resident’s incomes.”

This relationship shows how highly many residential locations, such as the city centre, are valued. Just as importantly, it also shows the places where the limits of how much people will spend have been reached, or even exceeded; where the rental level is leading to a change in the population structure, or where there is scope for increasing rents. GSW and Jones Lang LaSalle collected a great deal of data for this analysis.“We evaluated almost 44,500 rental prices for 3.3 million square metres of living space, sorted them according to the postal code and related
them to the household income data for these Berlin districts,” said Andrew Groom, European Director Jones Lang LaSalle, Head of Valuation & Transaction Advisory. “Never before has there been such a detailed analysis of the housing market in Berlin.”

In this edition of the HousingMarketReport, before the very detailed analysis based on geographical location, there is a dynamic study of housing cost development in Berlin’s 12 city districts. With respect to cost, developments were relatively calm in 2007. In 2006, there was a noticeable rise in rents and purchase prices – an upturn that followed a long period of stagnation and decline. In 2007, rents and prices remained fixed at the same level, although there were clear improvements in Berlin’s labour market situation and local economy. “Property prices and rents follow the economy, but with a delay, as people only decide to move and buy after their income rises,” said Groom. For this reason, 2008 could see what might appear to be a paradoxical development: Economic growth may taper off slightly, while the property market simultaneously brightens up.

Author(s):

Source: GSW, Jones Lang LaSalle

Published: 06.03.2008