Berlin is overtaking other major cities in terms of rental costs, but rising income means that the city remains affordable compared to others. If rental and housing prices keep rising, residents will increasingly have to ask themselves what is more important to them – living space or location. Many are likely to come down on the side of location, preferring to remain close to their jobs and city infrastructure.
Germany’s start-up capital
Berlin has long been called “Germany’s start-up capital”. In a recent ranking of European start-up cities, Berlin emerged in the top 10 out of 35 entries. According to the McKinsey Berlin builds businesses report, it is expected that over 100,000 new jobs will be created in the city by 2020. “Berlin is known worldwide as a cultural and economic hub, and it is unsurprising that features in the top-10 of this Index. Its numerous theatres, museums, galleries and music clubs attract tourists from all over the world, while the relatively cheap living and rental costs draw in both artistic and entrepreneurial talent”, the European Digital City Index report states.
Boomtown Berlin and increasing housing demand
With 3.56 million residents, Berlin is Germany’s largest and most populated city. As a popular destination for foreign students as well as immigrants, Berlin’s population keeps growing, with over 250,000 new residents expected to move to Berlin until the year 2030.
Historically, Berlin’s rents and prices have been increasing slowly but steadily. However, in the past few years, Berlin started experiencing a rapid increase in both property prices and rents. According to Immonet, one of the largest real estate portals in Germany, Berlin witnessed the largest rent increase among German cities – 56 percent from the first quarter of 2009 to the first quarter of 2014. Residential property prices increased 43.9 percent in the same period.
Berlin’s real estate market – a seller’s market
An important factor driving the price and rent increase is the insufficient supply of newly built properties. According to a recent study from the Cologne Institute of Economic Research, The Future Demand for Condominiums, the gap between the needed flats and the ones that are planned to be built is expected to remain considerable over the next five years, and somewhat decrease in the next 15 years – as new construction gains momentum. However, if the increase in population, number of households and income continues, new construction is expected to lag behind considerably.
Buyer profiles: From owner-occupier to international investor
With new developments in technology, communication and transportation, investor profiles have shifted from locally-oriented investors to regional and global investors. Never before has it been easier to purchase properties in countries on the other side of the world, even if you’ve never set foot in that country before.
Compared to many countries in the world, Germany is a secure and attractive investment destination. In fact, PricewaterhouseCoopers survey identified Berlin as the top European real estate investment destination. Prices are moderate by international standards for Western capital cities and interest rates are attractively low. Also, the acquisition of real estate in Germany is not restricted by the buyer’s nationality, meaning that essentially, any national can purchase properties in Germany. All these factors lead to a shift in buyer profiles from German local owner occupier to international investors.
The advent of smart property
A recent survey by the Association of Berlin Merchants and Industrialists assesses Berlin’s aspiration towards becoming a smart city. Overall, 45 percent of respondents estimate Berlin’s potential on this matter to be “strong”, while 51 percent assess the status quo as “very weak”. This goes to show the gap between the newest technological developments and the de facto adoption.
In the wake of some billion dollar exits in 2014, the real estate industry experienced an upswing in real estate tech investments in 2015. Whether we’re talking about Uber and the taxi industry, or Airbnb and the hotel industry, it is clear that old patterns have to be revolutionised in favour of customers. But this is not an easy task for real estate. Properties are immovable. That’s why the industry will be one of the last to be revolutionised during the development of the smart city, especially radically.
There are start-ups innovating in every aspect of real estate: from finding the right agent or listings to after-sales property management. However, these solutions only scratch the surface of the potential for innovation, and the market has still to see integrated solutions to problems. Take as an example a business trip of the future to a new city: everything from transportation through accommodation to co-working environments will be thoroughly organised and planned to suit your needs, and all that part of a service provided by a single company.
Local expertise, global reach
Rubina Real Estate is a leading real estate consulting company focused on assisting international buyers with their real estate investments in Berlin, Germany.
With an extensive network of trusted developers, lawyers, accountants and tax advisors, as well as over 110 years of combined experience in Berlin’s property market, their multilingual team is in a perfect position to consult and assist their valued clients from all over the world in their search for selected properties in Berlin.
Through adoption of the latest technological developments and ongoing optimisation, Rubina Real Estate has developed efficient flows to make the entire process from property search to after-sales property management as easy and smooth as possible.
With a subsidiary in China, associate partner offices in Singapore and Hong Kong, as well as successful international cooperation partners, Rubina Real Estate’s is a worldwide active company.