Berlin’s real estate market update, December 1, 2020
Prices of real estate in Berlin, Germany, increased in the last six months, despite COVID19.
Here is why:
Berlin is a “superstar” city: a very desirable place for young people to move to, from other cities in Germany, and other countries in the EU and the world. Positively developing population with great effect on highest income segments!
Obviously BOOSTING demand for housing.
Berlin is constrained with lots of green areas. The city can’t grow much horizontally. Hight restrictions don’t allow real vertical growth, and of course many of the centrally located properties are protected as preserved – so you can’t just demolish these and build from scratch at higher densities.
Obviously inelastic supply of housing.
Now the new “rent-cap” named Mietendeckel came, creating a short-term demand shock! Landlords aren’t offering their vacant apartments for rent anymore (who wants to see long term 50%-70% cut in his/her yield?!), tenants aren’t able to find apartments for rent, so they simply buy!
The “cheap-money” and relatively high loan to value ratio offered by local German banks and funds, allow the younger generations, with a great positively developing income (thanks to the high-tech sector), to buy their own apartment… We are signing in the coming two weeks more deals than we did since the beginning of 2020!
On the other hand, this could be a great sell-out opportunity for homeowners, allowing them nice capital gains, and to afford now bigger homes with larger equity!
Current politicians’ solutions are achieving the exact opposite of what Berlin needs: more housing; foreign developers are stopping their scout of plots for new developments, scared of the attitude and signaling even harder situation soon.
Kefah Abu Gosh
kag@ProperT.de