Friday, 5 June 2009

Residential Rent Development in Berlin

The Berlin Rent Table 2009 was published this week (see also yesterday's blog entry). The average increase of the net rent was 4 ct per sqm per month annually for the last two years since the last rent table, that is 1.7 % for the 2-year-period. In the same timespan the utility cost and heating (Betriebskosten und Heizkosten) increased on average by 5% to 2.35 Euro per sqm per month. Basically the increase in those ancillary costs is taking away the option for higher rent increases. Here should be an angle for optimising the performance of properties through Property Performance Improvement.

A more detailed analysis of the rent development in different market segments shows an interesting difference in the development of the net rent: The increase in rents for small apartments < 40 sqm over the 2-year-period was 5.3% to 5,41 Euro due to increased demand in that period. These apartments were especially popular with "New-Berliners".
For apartments between 60 to 90 sqm the increase was below average at 0.9 % for two years. This segment is still very low at 4.71 Euro per sqm compared with Hamburg at 6.53 or Munich at 9.90 Euro. Some segments have seen above average modernisation activities and thus above average rent increases. This applies to buildings from 1919 to 1949, 1950-1955 and 1973 to 1983 (the latter for ex West-Berlin). Here the increases were between 3.8 and 3.9 %.

The variation in the different market segments shows that a good asset strategy will yield better returns, even in times of slower rent increases. For support of the development of a successful property or portfolio strategy contact Berlin Portfolio Ltd.

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