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Berlin: Europe’s Best-Kept Secret for Luxury Real Estate

March 6th 2019

By Mansion Global

Despite rising demand in recent years, Berlin has surprisingly great value when compared to European top markets.

Culture, art, dining, transportation and atmosphere are all big draws in the city, which is also enjoying a strong economy nearly 30 years after it was reunified.  

Young, creative, high-tech and yet grandly historic, reunified Berlin turns 30 next year, and demand for property in the coolest area of Germany has never looked hotter.

Average prices in Berlin increased 10.5% over 2018, but the average property price has risen more than 120% since 2004, according to Knight Frank.

The real estate agency reports that both the prime and mainstream markets have witnessed strong price growth in the last five years as a consequence of a shortage of new supply, an expanding population, a strong economy and a robust labor market.

Knight Frank’s latest Berlin Insight report suggests that in 2017, although 24,740 building permits were issued, only around 15,670 residential units were completed, which equates to around 1% of the total number of existing homes. But Berlin needs to deliver 20,000 units a year to keep pace with demand.

Despite this, compared to other European capitals, Berlin remains a great value.

An apartment in Munich can cost double that of Berlin, and of all the German cities with a population above one million people, Berlin has the lowest house prices, said Claire Locke, an account manager for Knight Frank in Germany.

At present, international demand for buying property is particularly strong. In fact, the vast majority of Berliners, 85%, rent their homes.

“In the prime market, 43% of buyers come from abroad,” Ms. Locke said. “International investors are capitalizing on comparatively low capital values, the size of the rental market, as well as strong population growth and Berlin’s expanding economy.”

One of the biggest draws, however, is the city’s cutting-edge culture—its 440 art galleries, 180 museums, three opera houses and multiple concert halls. This is coupled with green space—59% of the city is made up of parks or open green spaces, and there are 180 km of navigable waterways.