Germany Property Investment News

Growth predicted in Berlin's residential market

A new report has predicted that the cost of renting property in Berlin, Germany, will increase over the next 18 months. The second Housing Market Report, conducted by GSW Immobilien GmbH and Jones Lang LaSalle, also notes a quickening rate of property price growth in ten of the city’s 12 districts. The cost of renting in six of Berlin’s districts is predicted to rise, with stable rent levels forecast for five others.

The report is likely to boost the demand for investment property in Germany: as well as forecasting an increase in the cost of renting and buying property, the report also noted that the demand for accommodation over the coming years will require the rate of construction to increase considerably. GSW predicts that 230,000 more apartments will be needed in Berlin within the next seven years. Thomas Zinnöcker, the CEO of GSW, pointed to the rising number of households in the city: “On the one hand, more children are being born in Berlin, on the other hand, more and more older people are living in single person households.”

Zinnöcker also cited the Germany’s falling rate of unemployment as a factor driving the growth in its property market. According to Zinnöcker, a drop of almost 2% in unemployment over the last 18 months has driven up demand for a higher quality of accommodation.

The head of the German valuation advisory department at Jones Lang LaSalle, Andrew Groom, echoed the concerns regarding the demand for property: “The construction of new multi-unit buildings is hovering at a just ridiculously low level for a city of this size. A mere 3,000 new housing units are completed annually in Berlin. Due to the increased costs of building, construction is unlikely to return to a normal level within the near future.”

The report was conducted by analysing the trends in purchase prices and rental levels, following 1,785 properties for sale and 85,000 properties to let.