Housing Market Report Berlin 2016

The gap between supply and demand in the Berlin Property Market keeps growing. According to the Housing Market Report Berlin 2016 published by Berlin Hyp and CBRE the efforts made by the government introducing new rent caps had little effect on the rent development.

 The report shows that on average the rents offered rose by 5.1% just below 9.00 Euro/m² (2014: +6.6%). The increase in Mitte was ca. 7.0% while Friedrischshain-Kreuzberg and Reinickendorf rose by 5.9%. The lowest increase was in Lichtenberg at 0.9%.

As reasons for the strong increase two main factors are stated:

1.      1.Steady increase of the Berlin population through steady influx based on the apparent attraction Berlin has.

2.      The number of new projects especially in the central districts. The rent caps don’t apply to new apartments coming into the market.

Condo prices rose by 10.1 % on average with the biggest increase in Steglitz-Zehlendorf (+16.3%).

The Housing Market Report Berlin 2016 is available for download on our website www.berlin-portfolio.com.

Housing Market Report Berlin 2016

Property Management Case Studies

Anyone can decide to start a Property Management in Germany. No qualifications or permits are required. It is vital for the well being of a property investment that the owner checks all the aspects of the management frequently or as a long distance investor have someone do this on the owner's behalf.

We are always astonished about the things that can happen in a Property Management and for how long it can go unnoticed. For illustration purposes we have compiled a small selection of actual Property Management Case Studies, just the names were changed. Here are the topics currently available:

1. Regular Rent Increase Forgotten!
2. Trouble with the Re-Renting Process.
3. Property Manager with Criminal Energy.
4. No Documentation of the Building and Investments Made.

To read the details, just follow this link Property Management Case Studies. It will take you to the relevant section of our website.

Property Management Case Studies

City of Berlin Population Will Increase 7.5% by 2030

The City of Berlin has just published the population forecast up to 2030. The numbers are broken down to the level of districts; even more detailed area data will be available in February.

From 2012 to 2014 the population net increase was 135,000. For the forecast several models were used and the variant with the “middle” result was chosen as a foundation for future planning of personnel in public services, infrastructure and transportation. The higher version for the prognosis takes into account a higher number of refugees as well as a higher number of “natural” influxes because of higher economic prosperity assumptions.

One of the big unknown factors obviously is the number of immigrants and refugees. For the period 2015 – 2020 the variation is ranging from 94k to 174k.

The population development has huge impact on the Berlin Housing Market and the prognosis provides valuable information for future development of demand for apartments in general but also specifically type and location.

The main results of the prognosis based on the “middle” variant are:

• The population of Berlin (City without Brandenburg suburbs) will grow by 265,000, ca. 7.5%, to reach 3.828 M by the year 2030.
• The average age will increase to 44.3 years from 42.9 in 2014. The increase is caused by disproportional increase in “over 80s” 66% and “over 65s” by 12%.
• The active working age share of the population will rise minimally by 16,000 to reach 2.36 M with a constant number of young adults (18-25) of ca. 262k.
• The number of children under 6 will reach ca. 206k and the age group 6 to 18 will increase by 22% to reach 414k.
• The district with the highest expected population growth is Pankow (+16.0%) and the lowest rate for Tempelhof-Schöneberg (+2.6%).

Click to enlarge

The population development by district demonstrates a significant movement from the city center to the more affordable north and northeast of the city with actually negative values for Mitte, Friedrichshain-Kreuzberg and Charlottenburg-Wilmersdorf.




The source of the information in German is www.stadtentwicklung.berlin.de.

The interpretation of the data made available for Property Investment and Property Management will be different based on the goals of the activity. The age bracket forecasts e.g. are most interesting for special properties like assisted housing for the elderly whereas the location data will be of interest for all types of market activities.

Detailed data for 60 city regions will be available in February 2016. If you are interested in receiving the information, you can either sign up to this blog or send me a short feedback on our website www.falkenberg-solutions.com. You can access the feedback form on the right hand side of the webpage.

City of Berlin Population Will Increase 7.5% by 2030

Berlin No.1 in City Ranking for Real Estate Investment - by Urban Land Institute

Emerging Trends in Real Estate® Europe 2016

According to Emerging Trends Europe, the five leading cities for investment prospects in 2016 are Berlin at Number 1, followed by Hamburg, Dublin, Madrid and Copenhagen. Many interviewees back the German capital to thrive well beyond 2016, based on its young population and its growing reputation as a technology centre, as well as the land available for development.

The Report is avaiable for downloading at the website of the Urbal Land Institute (ULI)

http://europe.uli.org/report/emerging-trends-real-estate-europe-2016/

For support in property search and assessment in the Berlin Property Market please contact us directly: Contact form

Berlin No.1 in City Ranking for Real Estate Investment - by Urban Land Institute

Berlin is Globally Ranking Fourth For Foreign Real Estate Investment

Despite moderate concerns about the impact of higher interest rates, 64% of respondents to the 24th annual survey taken among the members of the Association of Foreign Investors in Real Estate (AFIRE) and released today say they expect to have modest or major increases in their investment in US real estate in 2016.  Another 31% say they expect to maintain or reinvest their investments. No one plans a major decrease.

For the second consecutive year, New York outranked London as the top global city for foreign real estate investment. Berlin, ranking fourth, became the first German city to be named among the top five global cities:

Click the image to enlarge

These are some of the findings of the Association of Foreign Investors in Real Estate (AFIRE)
More details in their press release:
http://afire.membershipsoftware.org//Files/2016_Survey/Public/2016_Survey_Press_Release.docx

For detailed information about the Berlin Property Market also visit our website.

Berlin is Globally Ranking Fourth For Foreign Real Estate Investment

Miet-Map Berlin - Housing Cost Based on U+S-Bahn (Subway, Tube) Map

The biggest German property portal Immobilien Scout 24 has produced a map of Berlin based on the U-Bahn and S-Bahn lines, indicating the average net rent for a 70 m² one-bedroom-apartment (Zwei-Zimmer-Wohnung) in the area around the stations. It is an orientation for new arrivals to give an indication where to look - not less and no more.

For large image click the map, it will take you to the Immoscout24 webpage

It is the net rent and for budgeting purposes one has to be aware that the ancillary cost can easily add another 5 € or using the example 350 € to the budget.

The implications on the Immo Scout 24 site are, that you can use it to check your rent and ask your landlord to reduce the rent if it more than 10% above the rent table. Don't even try, it is a feature to sell their rent check (MietpreisCheck) which is based on their market data and not the official rent table. Unfortunately there is more detail to it, like: Age of the building, building standard etc..

An interesting idea - I wonder if it will catch on.

For more detailed data on the Berlin Housing market sign up on our website to receive the Berlin Housing Market Report 2015 and you will automatically receive the Report 2016 when it is available.

Miet-Map Berlin - Housing Cost Based on U+S-Bahn (Subway, Tube) Map

Common Errors about the "Mietpreisbremse" (rent increase control)

On 1.June 2015 a package of new regulations regarding the German Residential Market became effective. Ever since, many confusing announcements and blog posts were published. Here are the essentials. I will focus on the Berlin Housing Market as Berlin was one of the first states having made all the preparations for the new regulation to be applied to the entire city from the first day.

What is regulated by the Mietpreisbremse package?

1. ONLY contracts signed after 1. June 2015!
   Exception: Contracts with pre-agreed increases (Staffelmiete), these are limited to a net rent of not more than 10% above the Berlin Rent Table.
2. The cost for the renting agent cannot be asked from the tenant, unless he has specifically instructed an agent to find an apartment for him. (The one who orders a service has to pay for it).

 What does this mean for you as the landlord?

Rent Level

First of all there is no immediate action required for either old (before 1.June 2015) or new contracts. Even if the agreed rent in new contracts is more than 10% above the rent table it is up to the tenant to contest the rent level providing the reasons why the rent supposedly is too high. Until and unless this occures the rent in the signed contract is owed.

Renting Agent Commission

This item is more risky for the agent than for the landlord as it constitutes an offence for him to charge the renting commission to the tenant and will attract a fine when reported to the local authorities. Whether the landlord has to pay the commission is not part of this discussion and depends on the direct contractual relationship landlord/agent.

What does this mean for the tenant?

Rent Level 

If the new tenant feels he/she is charged over the odds, immediate action is required: Checking the rent table for location, building age and standard compared to the rental contract. Should the contract rent be more than 10% above the rent table a reprimand letter IMMEDIATELY has to be sent to the landlord or management company. Only from this point a possibly lower rent is owed, before this point the contract rent has to be paid. Legal advice is recommended.

Renting Agent Commission

Should the tenant have received a charge for the renting commission for a contract after 1. June 2015 they should make a request for refund and/or report to the local authorities ( in Berlin it would be the "Wirtschaftsamt" as part of the local council "Bezirksamt"). Legal advice is recommended.

Common Errors about the "Mietpreisbremse" (rent increase control)

What will 2016 bring for you in the Berlin Property Market?

First of all a Happy New Year to you and your family, may it bring health and prosperity.

"Fireworks in San Jose California 2007 07 04 by Ian Kluft img 9618" by I, Ikluft. Licensed under CC BY-SA 3.0 via Commons

What happened in the Berlin Property Market in 2015?

Last year was a very busy year for everyone involved in the Berlin Property Market. No matter whether you were looking for an investment opportunity, trying to get the best price selling a property or getting best results from managing property investments.

The German residential real estate market has turned into a major destination for international property investors with the main focus on its capital Berlin. High value investment apartments were one of the main features with new developments coming onto the market. Apartment blocks are high in demand and low in supply so expectations on the side of the sellers quite often exceeded the investment targets of the potential buyers and many deals did not make it to the goal line.

New rent regulations for the residential property market have emerged in quick succession with the intention of slowing down the fast rent increases seen in most of Germany’s big cities. More of this can be expected as the immigration crisis has increased the pressure on affordable housing. We can expect a package of incentives for the development of subsidized housing, especially with state elections coming up in five German states (Bundesländer) including Berlin.

What will be the impact of the increase in interest rates by the FED in the United States? Will more money from the stock market casino come into the property markets? Will it affect the financing of real estate and slow down price increases?
These are some of the developments of last year that will definitely spill over into 2016.

What you can expect from us in the first weeks of 2016

Here is what we have planned for you:

• We will provide information on new investment offers from our network.
• There will be information on regulatory action on all aspects of the property market in Germany, especially in Berlin.
• We will provide insights into malpractice of property management companies and what to do to protect yourself from it.
• Last but not least we are waiting for the Berlin Housing Market Report 2016. If you have signed up with us for this report in the past you will receive it automatically, if not you can sign up on the link above.

The year 2016 will be an interesting year for watchers of the Berlin property market and an exciting one for participants.

Let us know where we can assist you in making 2016 a great success for you. 

I am looking forward to hearing from you.

Uwe Falkenberg

Falkenberg Solutions
Real Estate Consultants

What will 2016 bring for you in the Berlin Property Market?