Business & Economy

PROPERTY: Slowdown in Frankfurt, Berlin rents rising faster

03 March, 2017

According to Frankfurt’s Property Valuation Committee, newbuild apartments in urban districts cost an average of EUR 4,800/sqm in 2016, which is 9% more than in 2015. Prices are expected to continue to rise this year as the city’s population continues to grow, interest rates remain low, and demand once again far outstrips supply.

Nevertheless, the rate at which prices are rising has recently slowed somewhat, following a 12% increase from 2014 to 2015. In some sectors, the prices for existing apartments have risen more quickly. Pre-1949 apartments are 10% more expensive than 12 months ago, while units built between 1950 and 1974 cost roughly 11% more. Price inflation for apartments built between 1975 and 1999 is running much lower at just 3%. In addition to condominium price increases, the price of land in Frankfurt has also risen, contributing to the overall upward price trend.
Meanwhile, rental apartments in Berlin were offered at an average of EUR 9.00/sqm per month last year, excluding heating, warm water and service charges.
This was one of the findings of the ‘Berlin Housing Market Report 2017’ from CBRE and Berlin Hyp. The city-wide figure is therefore 5.6% or 50 cents higher than a year earlier and growing at the same rate as had been reported two years ago. The rate at which rental prices are increasing would be even higher if furnished apartments were included in the calculations.
Furnished apartments now represent 27% of all rental offerings in Berlin. According to CBRE’s Michael Schlatterer, this would push the price increase up to 9.6%, the same rate at which house and condominium prices are increasing. Across all market segments, the average advertised price for a condominium in Berlin has risen to just under EUR 3,300/sqm. The median asking price for multi-family housing across all market segments has risen even more dynamically, adding 15.7% and climbing to EUR 2,253/sqm.
As a result, Berlin has become even more attractive for investors.
“Germany, and Berlin in particular, continue to be regarded by equity-rich global investors as safe havens and as highly attractive investment destinations,” said Schlatterer. In 2016, sales in Berlin involving more than 50 units accounted for roughly EUR 3.4 billion, almost one quarter of the transaction volume for the whole of Germany. The rapid growth in purchase and rental prices in Berlin is largely due to the city’s dynamic population growth and ten years of insufficient housing construction. The city’s vacancy rate fell to a new historic low of 1.2%.
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