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The city of Berlin. The upswing continues

March 12th 2019

By Housing Market Report Berlin 2019 BERLIN HYP & CBRE

Berlin remains one of Germany’s most dynamic cities. Population and economic output have been rising continuously for many years - as has the need for living space.

Berlin’s population, economy and labour market are continuing to grow. Over 3.7 million people were living in the city at the end of 2017; the growth of recent years continued in the first half of 2018 but, in comparison, somewhat less dynamically. The economy also continued to expand: the gross domestic product rose by 3.1 per cent in 2017 and thus more strongly than the German national average (2.2 per cent). Based on developments in the first half of the year, economic growth in 2018 is also expected to exceed Germany’s national average.

Today, services account for 85 per cent of Berlin’s economic output. Strongly influenced by the Internet economy, the “Information and Communication” segment recorded particularly high growth with added value in price-adjusted terms rising by 9.4 per cent. Tourism and the construction industry also saw another significant increase.

Berlin has thus somewhat bridged the economic gap in which it had been lagging behind the six next largest metropolises in Germany.In the meantime, however, the city has just overtaken Düsseldorf in terms of asking rent levels. In 2017 and in contrast to previous years, Berlin no longer ranked last of the seven cities when it came to the number of completed building projects for apartments. Comparable to the number of apartments completed in Düsseldorf, Hamburg and Stuttgart, 3.1 new apartments per every thousand inhabitants were completed in Berlin. Significant gap in the labour market The growth of Berlin’s economy is also clearly reflected in the labour market.

The long-time double-digit unemployment rate is now stable at below 10 per cent. However, there is a clear gap within the city: in comparison, districts such as Reinickendorf, Neukölln and Spandau have the highest unemployment rates, while unemployment is at its lowest in the up-and-coming eastern districts such as Lichtenberg, Pankow and Treptow-Köpenick, but also in the bourgeois west in Charlottenburg-Wilmersdorf and Steglitz-Zehlendorf.

In 2017, Treptow-Köpenick recorded the highest percentage of population growth in Berlin, also ranking second in absolute terms. One important reason is the completion of numerous new buildings in larger apartment building projects and individual houses. In terms of new construction completions, the district ranked third in Berlin’s 2017 statistics, ranking second in the issue of permits.

The district of Berlin-Mitte illustrates how closely population development and new construction are linked, recording both the most extensive residential construction and the highest absolute population growth.

In 2017, more new apartments were completed here than in any other district, while more permits to build further apartments were issued here than anywhere else. Pankow, the first district in Berlin to exceed the 400,000-inhabitant mark, ranked third in terms of absolute population growth. Due to the population development in previous years and the high amount of potential building land, the forecast for Berlin’s population for the year 2030 predicts the strongest growth of all districts in absolute and relative terms.

Optimism in the north-east Both districts of Lichtenberg and Marzahn-Hellersdorf, between the city centre and the city’s eastern outskirts, also show clear growth and optimistic forecasts. Although both are already densely populated to an above-average extent –due, above all, to their large prefabricated housing estates dating from the 1970s and 1980s – they still have great potential in properties that have not yet been developed or are underused.

All other districts are also showing an increase in terms of population development. There was even room for people to move to Friedrichshain-Kreuzberg, which is by far the city’s most densely populated district; by 2017, almost 14,000 people were living here on one square kilometre of land. The district of Reinickendorf recorded the smallest increase in population: only 73 apartments in apartment buildings were completed here in 2017. In future years, however, Reinickendorf will have one of Berlin’s largest building land reserves at its disposal on the grounds of Tegel Airport.