Berlin Housing Market Report 2013

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HousingMarketReport_Berlin_February 2013

HousingMarketReport2013with HousingCostAtlas

HousingMarketReport_Berlin_February 2013

MASTHEAD

9th Edition

Publisher: GSW Immobilien AGCharlottenstrae 4, 10969 BerlinTel. +49 (0)30. 25 34 13 32Fax +49 (0)30. 25 34 19 34

Market data: Dr. Henrik Baumunk, Kristina Krger, Michael Schlatterer MRICS Residential Valuation, CBRE GmbH

Editor: Roland Stimpel

Graphics/Layout: Storkan Informationsdesign

Project management: Katja Binnyus, RUECKERCONSULT GmbH

Responsible under German press law:Thomas Rcker, Head of Corporate Communications, GSW Immobilien AG, [email protected] (also for download of HousingMarketReport)

Cover photo: Caro/Eckelt

DISCLAIMER 2013 GSW/CBRE

Information herein has been obtained from sources which are accessible to the public, (or, in certain cases, in exchange for a fee) and believed reli-able. While we do not doubt its accuracy, we have not verified each piece of information and cannot make any guarantees about it, barring willful intent and gross negligence. It is your responsibility to independently confirm its accuracy and completeness. The information contained in this market report may not be used, reproduced or published without prior written permission of GSW and CBRE.

1_HousingMarketReport_Berlin_February 2013

The Berlin housing market is experiencing the strongest growth in rents and purchase prices in more than 20 years. On average, rents for listed apartments are more than 13 percent higher than in the previous year. Inner-city locations are enjoying the most pro-nounced demand, but interest is also growing in other parts of the city. The markets for owner-occupied apartments and apartment buildings are seeing an even bigger boom. Here, buyers are increasingly discovering simple locations and properties that often used to be seen as difficult to rent or that could only be rented at extremely low rents. And its been proven that when buyers and investors discover a location, the rent prices go up.

Boom times like these in particular require a precise and detailed analysis of the markets and their potential. Among the individual districts and neighborhoods, there are some trail-blazers that are already extremely expensive. By contrast, some areas are lagging behind or have yet to feel the upturn to a significant extent. The Housing Market Report 2013 pre-pared by GSW and CBRE provides a precise breakdown of the 190 locations at postal code level. Almost 105,000 properties advertised for rental or purchase were analyzed for the report based in terms of price and size for various geographical levels.

The 190 Berlin postal codes allow for differentiated allocation. For 188 of the postal codes, there is a sufficient data pool that is used in the Housing Cost Atlas to calculate the average asking rents and their development compared with the previous year. Average asking rents in the lower and upper market segments are also shown, allowing readers to identify the most pronounced luxury markets and affordable niches.

The purchasing power of the residents of each postal code as calculated by Michael Bauer Research GmbH enables a deeper analysis. These figures were used to calculate the housing cost ratio the relationship between average asking rents and purchasing power in the re-spective area. This ratio reveals which areas are particularly expensive for local residents, as well as places that remain affordable for low-income households. This also highlights poten-tial for investors, such as in areas where purchasing power is stable but rents are low, mean-ing that there could be demand for higher-quality residential construction. The analysis of a total of 199 new construction projects throughout Berlin, to which we have dedicated its own chapter, also provides useful information.

In order to more immediately capture the rapid market development, the publication date of the Housing Market Report has been brought forward compared with previous years, so that data on asking rents and purchase prices covers the first three quarters of 2012. But this period provides a more than solid data pool, with over 100,000 properties registered as available for rent or purchase. We would like to expressly thank CBRE, our partner in preparing this Housing Market Report, for the extensive work involved in collecting and processing the data.

All in all, the aim of the report is to provide an objective, in-depth contribution to the dis-cussion about Berlins housing market. It seeks to combat generalizations and distortions with solid, proven facts. The report shows that while the Berlin housing market is seeing a general positive development, there are still big differences between individual neighbor-hoods. Boom locations are often found next to quiet niches; luxury and simple apartments will remain immediate neighbors in the future. The dynamic nature of Berlins housing market aside, its diversity will remain.

Strong upturn in Berlin

GSW-Vorstand Andreas Segal, Thomas Zinncker, Jrg Schwagenscheidt (left to right)

Thomas Zinncker Chairman of the Board GSW Immobilien AG

Jrg Schwagenscheidt Member of the Board (COO) GSW Immobilien AG

Andreas Segal Member of the Board (CFO) GSW Immobilien AG


Berlin is catching up with other major cities in terms of income and rents but living remains affordable compared with purchasing power.

More inhabitants, more jobs and higher ex-pectations are driving demand, while there is scarcely any supply-side growth

Rents are rising across the board most no-tably in up-and-coming inner-city locations, less so at the edge of the city

House and apartment buyers are coming to Berlin from around the world and increas-ingly taking a chance on simple locations.

Around 200 apartment building projects are in the works, mostly in the inner city. Build-ing cooperatives are booming too

Rents, purchasing power and supply struc-ture broken down by neighborhood: A pre-cise analysis of the local markets

Berlins neighborhoods at a glance: Expensive locations in the city center, middle-class sub-urbs and affordable areas on the edge of town

The highest and lowest rents, household income, apartment sizes and rents as a proportion of local purchasing power

Charlottenburg-WilmersdorfFriedrichshain-KreuzbergLichtenbergMarzahn-HellersdorfMitteNeukllnPankowReinickendorfSpandauSteglitz-ZehlendorfTempelhof-SchnebergTreptow-Kpenick

Rent map for Berlin as a whole

City comparison

Berlin as a location

Apartment rents

Investments and ownership

New construction

HousingCostAtlas: A detailed analysis

190 neighborhoods in 12 districts

Rent levels

Exceptional residential areas

3

4

6

8

10

14

40

Back cover

Back cover

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Total rent in Berlin on average one-third cheaper than in MunichComparison of housing costs and retail purchasing power in major German cities

Munich

Cologne

Hamburg

Frankfurt am Main

Berlin

City

1) Retail purchasing power includes the purchasing power attributed to each resident of a location for consumption, not including costs such as telecommunications, car ownership, amortization and insurance that arise independent of a location 2) Basis for calculation: 1.8 residents per household, incl. operating costs Munich: 2.94 /m2 (rent index 2011), Cologne: 3.14 /m2 (operating costs index 2010), Berlin: average operating cost 2.15 /m2 for East Berlin and 2.75 /m2 for West Berlin (BBU 2012), Hamburg: 3.13 /m2 (operating costs index 2011), Frankfurt am Main: 2.90 /m2 (rent index 2010)

Purchasing powerper residentin /month

Retail purchasing power1) per residentin /month

625

543

540

555

484

Basic rent in /m2/month

Total rent2) per residentin /month

Purchasing power per resident excl. retail purchasing power, excl. total rent in /month

12.88

9.00

10.02

11.43

7.50

659

461

540

605

410

1,019

864

817

784

679

2,303

1,868

1,897

1,944

1,574

Sources: empirica-systeme, Michael Bauer Research, compiled by: CBRE

The residents of economic centers in many countries typically have the highest income, but also pay the highest rents and property prices. However, Germanys price structure shows that, despite the upturn it has expe-rienced, Berlin has yet to catch up with the other major cities in the country. Purchasing power and rents are significantly higher in the four next-largest cities of Hamburg, Munich, Cologne and Frankfurt. Thanks to their in-come, residents of these cities still have more left in their pockets after their high housing costs are deducted. But the gap is narrowing. At present, rent including heating accounts for 27.4 percent of monthly household purchas-ing power in Berlin. Only Cologne comes in lower (24.7 percent). By contrast, the figure is 28.4 percent in Hamburg, 28.6 percent in Munich and as much as 31.1 percent in Frank-furt. Compared with the total household bud-get, housing costs in Berlin remain moderate.

Living costs are rising in all major citiesIn a number of cities, the proportion of pur-chasing power accounted for by housing costs is likely to increase over the coming years. The number of residents is rising, as is their income; meanwhile, new construction activity will be nowhere near sufficient to keep pace in the foreseeable future. Ancillary expenses for energy and housing maintenance services are also on the rise. Housing is commanding a larger share of the private budget in all major cities, not just in Berlin. But househunters can compensate for rising housing costs to a certain extent by moving to an area that is further outside the city center or living more centrally but compromising on

factors such as quiet, comfort, or floor space. To date, despite lower purchasing power, Ber-liners have been living in spaces comparable to those in other cities: Listed apartments in Berlin and Hamburg average 74 square me-ters, while the figures for Frankfurt and Mu-nich are 76 and 75 square meters respectively. Only Cologne with its large number of small post-war apartments has a smaller average size of 68 square meters.

If prices and rents rise in inner-city locations in particular, residents will increasingly have to ask themselves what is more important to them space or location. And many are likely to come down on the side of location, pre-ferring to remain close to their jobs and city infrastructure. They will be able to offset the higher costs per square meter not only by liv-ing in smaller apartments, but also through lower travel costs and more affordable retail and service offerings. This applies across all income groups and puts into perspective the frequently expressed fear that central Berlin could soon only be affordable for the wealthy.In any case, well-off residents would not wish occupy the entire inner city. Many cen-trally located neighborhoods are dominated by post-war prefabricated apartment blocks and social housing with cramped layouts, or developments that lack infrastructure and are impacted by traffic and commerce. In these areas, rents will remain lower than elsewhere. Central Berlin will retain its mixed popula-tion structure. Indeed, neighborhoods that are currently mainly home to low-income households, such as parts of Neuklln, Wed-ding and Moabit, will see an intensification of

this social mix. Although not everyone who wants to live in the inner city will be able to do so any more, this also applies to the mid-dle classes and is the inevitable consequence of a general excess demand for centrally lo-cated apartments.

No risk of a bubble on the rental marketThe debate on the Berlin housing market has recently been dominated by the issue of crowding out. In the near future, however, its attention is likely to turn to the growing scarcity of apartments throughout the city. Al-though some market observers are currently expressing fears of a bubble, this does not relate to a surplus on the supply side, but rather to the possibility of overheated pur-chase prices as apartments in Berlin are seen as a safe haven against inflation and the cri-sis affecting the euro zone. Even if new con-struction were to increase, a situation like in the late 1990s is not anticipated in the fore-seeable future. Back then, it was the conse-quence of the euphoria following the fall of the Berlin Wall, and extremely high level of housing promotion subsidies. Today, expectations remain optimistic, but are more moderate than before. Tax breaks and subsidies are thin on the ground, and there is far less land available for development. Even if an economic downturn were to coincide with increased new construction activity, one fundamental phenomenon would remain: For more than a decade, Berlin has seen a rise in demand for housing, but almost no new pro-duction. Investors who avoid overpriced loca-tions and asking prices are assured of a stable market with growth potential.

City comparison: Housing costs on the rise as Berlin catches up in both income and rents

In the table, retail purchasing power and rent including heating is subtracted from the total purchasing power in each city. The numbers are based on data from Michael Bauer Research (purchasing power) and are presented per resident, based on an average 1.8 residents per household. The resulting figure represents the amount of money residents of each city have available to them, either for saving or spending on luxuries.


1

2

3

4

5

6

7

8

9

10

11

12

Sources: Berlin-Brandenburg Statistics Office, Federal Employment Office (unemployment rate), compiled by: CBRE

Berlin Barometer

78

9

10

11

6

43

2

5

1

12

Water Forest / park

Built-up space

Charlottenburg-Wilmersdorf

Friedrichshain-Kreuzberg

Lichtenberg

Marzahn-Hellersdorf

Mitte

Neuklln

Pankow

Reinickendorf

Spandau

Steglitz-Zehlendorf

Tempelhof-Schneberg

Treptow-Kpenick

Berlin total

City district Residents 20121) Population development1)

2007 to 2012 in %

Population densityper km2 2011

Unemployment rate 2) 2011 in %

Existingapartments2011

Permits for building new apartments2011

Newly finishedapartments2011

Residents 20121)

change from 20111)

1) as of: June 2) all employable civilians

3.1

3.5

3.6

1.8

4.7

4.8

4.9

1.6

2.5

3.4

1.0

3.8

3.3

4,997

13,500

5,074

4,097

8,614

7,080

3,647

2,733

2,492

2,903

6,343

1,453

3,927

11.3

16.6

12.9

12.5

15.2

18.5

10.5

15.1

14.8

10.2

11.6

10.8

13.3

183,152

144,913

136,782

106,255

187,165

144,808

185,436

102,556

97,680

129,221

167,967

102,496

1,688,431

343

787

237

67

709

60

749

73

46

113

187

148

3,519

421

190

151

20

209

8

602

46

63

67

103

110

1,990

325,399

276,136

266,653

254,153

342,388

320,364

378,173

245,444

229,720

298,417

335,055

245,487

3,517,389

+3,898

+4,588

+3,754

+2,494

+6,958

+5,912

+4,780

+3,063

+2,293

+1,942

1,976

+1,917

39,623

Growing economy boosts the housingmarket particularly in the city center

Berlins growth is continuing unabated. There has been a stable upward trend in terms of population, economic output and employment for a number of years. This can be attributed to the citys varied industry struc-ture, which has a promising future, as well as its attractiveness for residents and visitors and its growing importance as a German and European center for politics, culture, science and tourism. The quality of the location is im-proving from year to year, said Jrg Schwa-genscheidt, Chief Operating Officer of GSW Immobilien AG. We are happy to see that private individuals and investors are increas-ingly recognizing the virtues of Berlin.

The citys upturn is documented by its popu-lation development. The number of inhabit-ants has been on the rise for eight years now. Around 130,000 more people are currently living in the city than in 2004, and the popu-lation increased by some 15,500 in the first half of 2012 alone.

Population growth is not only concentrated on districts located entirely or partially in the city center. Pankow and the Prenzlauer Berg area are leading the way, followed by Neuklln and Mitte, where the number of inhabitants increased by between 4.7 and 4.9 percent in the period from 2007 to 2012. The other end of the table is occupied by three districts that are entirely or partially located on the edge of the city: In Marzahn-Hellersdorf, Reinickend-orf and Tempelhof-Schneberg, the number of inhabitants increased by less than 2 per-cent. Young people who are new to Berlin are

particularly attracted to the inner city but this trend can also be observed among older households. However, the situation is differ-ent for families with young children. According to a study by the Berlin-Brandenburg Associ-ation of Housing Companies (BBU) covering the period from 2006 to 2010, they preferred less densely populated and more affordable neighborhoods on the eastern, western and south-western edges of the city. Compared to the inner city, these locations offer more space something that is needed by growing families in particular at a lower price.

Economic output is a key indi-cator for the housing market. In the first half of 2012, economic output in Berlin increased by 1.8 percent the highest figure re-corded by any of the German states. Accord-ing to the official statistics, financial, insurance and corporate service providers enjoyed the strongest growth. Industry is playing a posi-tive role, while the blossoming startup sector is also becoming increasingly important for the city. Berlin is now Germanys major cen-ter for the development of new Internet ideas and venture capital. The business magazine

Wirtschaftswoche recently described Berlin as heaven on earth for Internet startups.

The tourism sector, another important pillar of the citys economy, is continuing to grow. In terms of overnight stays, Berlin is ranked third in Europe, behind London and Paris. The average number of visitors on a given day is around 500,000. Hotels in the city counted

around 22.4 million overnight stays in 2011, and Investitionsbank Berlin expects this figure to reach around 30 million by 2016. Accord-ing to the hotel and restaurant association DEHOGA, tourism currently accounts for around 275,000 jobs. Negative headlines concerning the delayed opening of the new international airport have done nothing to slow this trend.

Although Berlin still has the highest unem-ployment rate of all German federal states, it is making progress. In the period from March

2011 to March 2012, the number of employed persons increased by 3.4 percent, a higher rate than elsewhere in the country. The highest relative growth was recorded by the construction in-

dustry (almost 6 percent) and the service in-dustry (3.6 percent). The latter sector domi-nates the employment market, accounting for around a million employees. Almost 182,000 people work in the manufacturing industry including construction.

More inhabitants, more jobs and more pur-chasing power all of this means rising de-mand for housing. The impact of this devel-opment varies from district to district. Central areas are leading the way in terms of both rents and purchase prices. The four districts with the highest growth in asking rents com-pared with the previous year are located en-tirely or partially in the city center Mitte, Neuklln, Friedrichshain-Kreuzberg and Char-lottenburg-Wilmersdorf. By contrast, the four

More people, more jobs, more

expectations


1

2

3

4

5

6

7

8

9

10

11

12

Sources: Berlin-Brandenburg Statistics Office, Federal Employment Office (unemployment rate), compiled by: CBRE

Berlin Barometer

78

9

10

11

6

43

2

5

1

12

Water Forest / park

Built-up space



Lichtenberg

Marzahn-Hellersdorf

Mitte

Neuklln

Pankow

Reinickendorf

Spandau

Steglitz-Zehlendorf

Tempelhof-Schneberg

Treptow-Kpenick

Berlin total

City district Residents 20121) Population development1)

2007 to 2012 in %

Population densityper km2 2011

Unemployment rate 2) 2011 in %

Existingapartments2011

Permits for building new apartments2011

Newly finishedapartments2011

Residents 20121)

change from 20111)

1) as of: June 2) all employable civilians

3.1

3.5

3.6

1.8

4.7

4.8

4.9

1.6

2.5

3.4

1.0

3.8

3.3

4,997

13,500

5,074

4,097

8,614

7,080

3,647

2,733

2,492

2,903

6,343

1,453

3,927

11.3

16.6

12.9

12.5

15.2

18.5

10.5

15.1

14.8

10.2

11.6

10.8

13.3

183,152

144,913

136,782

106,255

187,165

144,808

185,436

102,556

97,680

129,221

167,967

102,496

1,688,431

343

787

237

67

709

60

749

73

46

113

187

148

3,519

421

190

151

20

209

8

602

46

63

67

103

110

1,990

325,399

276,136

266,653

254,153

342,388

320,364

378,173

245,444

229,720

298,417

335,055

245,487

3,517,389

+3,898

+4,588

+3,754

+2,494

+6,958

+5,912

+4,780

+3,063

+2,293

+1,942

1,976

+1,917

39,623

districts with the lowest growth are all outside the city center: Spandau, Marzahn-Hellersdorf, Lichtenberg and Treptow-Kpenick. Apart-ments with particularly high asking prices are mostly located in the city center, too: The high-est rents in the upper market segment were re-corded in Mitte, Charlottenburg-Wilmersdorf, Friedrichshain-Kreuzberg and Pankow par-ticularly in the Prenzlauer Berg area.

The price gap is wideningWith the exception of Treptow-Kpenick dis-trict, this rental development is also reflected in the development of purchase prices. After Treptow-Kpenick, which saw an extraordi-nary rise in prices compared with the previous year, Neuklln (albeit starting from a low level) and Charlottenburg-Wilmersdorf recorded the strongest growth in owner-occupied apart-ments in 2012. Sellers in Steglitz-Zehlendorf, Tempelhof-Schneberg and Mitte are also ben-efiting from rising prices. Mitte leads the way in terms of prices per square meter. The district also has a particularly pronounced high-end market segment. On average, asking prices in the most expensive city-center districts are around double the level seen in the districts at the edge of the city at the end of the table.

The gap in terms of rents is less significant, but is also widening. Rents inside and outside the commuter train ring are becoming increasingly differentiated, explained Michael Schlatterer, a housing market expert from CBREs Residen-tial Valuation team. However, the increase in rents is being accompanied by a significant

improvement in the quality of fixtures and fit-tings. In near-city center areas such as south-ern Reinickendorf or Charlottenburg-Nord, af-fordable rental apartments can still be found despite increased rents.

New construction activity which remains modest is also concentrated in the city center.

Friedrichshain-Kreuzberg, Pankow and Mitte saw the largest number of building permits in 2011, while Spandau, Neuklln and Marzahn-Hellersdorf brought up the rear. As building lots in the city center are becoming increasingly scarce, however, new construction is likely to focus increasingly on areas outside the city center over the coming years.

About GSW

With a portfolio of approximately 52,100 residential units, GSW Immobilien AG is one of the leading private residential property companies in Berlin.GSWs corporate strategy is focused on the long-term rental management of resi-dential property, applying a systematic ap-proach intended to enhance both customer satisfaction and operational efficiency. As of December 31, 2011, the companys property portfolio was valued at approxi-mately 2.9 billion. Since this date, GSW has acquired around 7,000 residential units with a value of around 350 million.

About CBRE Group, Inc.

CBRE Group, Inc. (NYSE: CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the worlds largest com-

mercial real estate services firm (in terms of 2011 revenue). The Company has ap-proximately 34,000 employees (exclud-ing affiliates), and serves real estate own-ers, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leas-ing; corporate services; property, facilities and project management; mortgage bank-ing; appraisal and valuation; development services; investment management; and research and consulting. Please visit our website at www.cbre.com.

CBRE Residential Valuation Germany is one of the market leaders for the valuation of real estate portfolios. In 2011, around 700,000 residential units with a volume of some 38 billion were valued. Seven of the top 10 institutional real estate portfo-lio holders are CBRE customers.


jjjjjjjjjjjjj

Charlottenb.-Wilm.

Friedrichsh.-Kreuzb.

Lichtenberg

Marzahn-Hellersd.

Mitte

Neuklln

Pankow

Reinickendorf

Spandau

Steglitz-Zehlendorf

Tempelh.-Schneb.

Treptow-Kpenick

Berlin average

Source: empirica-systeme (2012 statistics), IDN ImmoDaten (2011 statistics); compiled by: CBRE1) excl. bottom and top tenth percentile of quotes 2) forecast 12-month-trend for total market segment

Current rental developmentRental price range for new lettings, 2012

District Middle market segment1)

price range in /m2/monthNumber of rental offers

Bottom market segment Trend 2)

Median in /m2/month

Changefrom 2011 in %

Top market segmentMedian in /m2/month


All market segmentsMedian in /m2/month


8,362

6,007

2,591

3,394

9,077

4,206

8,741

3,790

4,016

5,406

5,071

4,417

65,078

5.93

5.91

4.85

4.05

5.20

5.00

5.58

4.55

4.34

5.56

5.32

5.00

4.89

15.00

15.00

10.00

8.00

16.33

13.33

14.29

9.20

8.28

12.02

13.59

9.56

13.95

8.93

8.94

6.50

5.11

8.11

7.00

8.03

6.36

5.90

8.00

7.51

6.51

7.50

6.37 13.05

6.50 13.18

5.09 8.65

4.36 7.25

5.63 14.12

5.35 11.11

6.00 12.50

5.00 8.55

4.62 7.53

6.04 11.00

5.75 11.51

5.35 8.58

5.30 12.00

6 8 104 12 1614

5.0

7.7

7.3

11.6

7.4

5.0

3.5

5.6

6.9

8.0

6.6

3.3

8.7

5.3

26.5

16.3

12.4

8.9

46.8

9.9

7.2

10.1

8.5

15.8

9.5

15.9

11.6

11.5

6.6

6.7

14.7

12.2

8.4

7.6

6.9

10.7

9.8

6.2

13.8

Rents for advertised apartments in Berlin are increasing ever more quickly. Median ask-ing rents rose by 4.5 percent between 2009 and 2010, by 7.8 percent in 2011, and by as much as 13.8 percent in 2012. The latter is the result of an analysis of more than 170,000 rental properties advertised in 2011 and 2012. The top 10 percent of properties in terms of asking rents saw particularly strong growth of 16 percent. By contrast, rents in the lower mar-ket segment increased by only 8.7 percent.

There are various reasons for this develop-ment. The first is the demand situation, which is driven by Berlins population and economic growth. In recent years, the number of house-holds has increased by an aver-age of more than 15,000 annu-ally. Residents are earning more money, and their jobs are more secure than they used to be. Many of the citys inhabitants are seeking larger, better appointed apartments. The growing demand is also concentrated on certain city-center neighborhoods, where ev-ery apartment could now be rented out sev-eral times over. Further reasons for the rent increase can be found on the supply side. New construction is failing to keep pace with the rise in demand. Although construction activity has increased compared with previous years, it is still a long way from the required level: Only 1,990 new apartments were completed in 2011, corre-sponding to a little more than one-tenth of a

percent of the housing stock and representing less than one apartment per 1,000 inhabitants. The prospects for 2012 are slightly better, with approval granted for the construction of 3,519 apartments. But even if all of these are com-pleted, they will only absorb around one-fifth of the demand generated from migration to the city and that is before considering the increased demand among existing residents.The construction of new rental apartments has a paradoxical effect. In reality, it reduces de-mand-side pressure slightly, and hence curbs the increase in rents. However, it has precisely the opposite impact statistically. Asking rents for new apartments are generally higher than for existing properties. As such, when they

come on to the market, the aver-age asking rent increases. To date, this tends to affect individual areas with large-scale new con-struction projects, and has had a largely minimal impact on the city

as a whole; however, the overall effect is set to intensify over the coming years.

Those with lower rents dont want to moveAverage asking rents are also being driven by a third factor: When the number of available properties is falling, people move house less often, as the gap between their existing low rent and the current market conditions can prove unacceptably high. Even downsizing to a smaller apartment tends not to be an option for them if their new home would cost just as much as their current residence, if not more.

The low level of fluctuation serves to further reduce the supply of available properties. And as affordable properties with existing tenan-cies are held for longer, the focus of supply is shifting: Relatively few simple apartments are advertised, with comparatively more high-end properties coming on to the market instead. This means that the average rent is increasing to a greater extent than rents for the respective apartments within a quality category.There is a corresponding shift in available properties from comparatively affordable to

Rents: Growth accelerating, new construction still weak, city particularly sought after

Housing Market Report methodology advertised rental properties

The analysis includes the asking rents for apartments in Berlin; in 2011 and the period from Q1 to Q3 2012, a total of 172,642 available rental properties were evaluated. The median values for both years were calculated, i.e. the rental level that is higher than half of all available properties and lower than the remaining half. In order to present the extremes of the respective markets, however, the low-est and highest 10 percent of asking rents are presented separately for each district and the city as a whole. The medians within the respective segments are also presented.

Plenty of properties in the better locations


Rental apartments: Current position in market cycle2012

Rental growthaccelerating

Rental growthslowing

Rental declineaccelerating

Rental declineslowing

Source: CBRE

Marzahn-Hellersdorf

Neuklln N

Friedrichshain-KreuzbergFK

PankowP

Charlottenburg-WilmersdorfCW

Mitte M

Berlin total B

MH

SpandauSp

ReinickendorfR

Lichtenberg L

Tempelhof-Schneberg TS

Steglitz-Zehlendorf SZ

Treptow-KpenickTK

relatively expensive areas. In 2011, around 53 percent of all properties advertised were in the more affordable half of the areas sur-veyed. This situation had turned around by 2012: Only 44 percent of properties adver-tised were in the more affordable half of the city, meaning that around 56 percent were in more expensive areas. In the already expen-sive districts of Mitte, Charlottenburg-Wilm-ersdorf, Friedrichshain-Kreuzberg and Pankow, which account for half of all properties adver-tised, the absolute rise was extremely high at up to 1.05 per square meter. This is one of the reasons that average asking rents in Berlin as a whole have seen particularly substantial growth of 13.8 percent higher than the av-erage figure for most individual districts. The fact that relatively few affordable apartments and comparatively more expensive apartments are coming on to the market is not only due to individual landlords driving up their asking rents, but can also be attributed to the nar-rowing of the market and tenants opting to remain in lower-priced apartments.

Short supply across all segments in centerThe highest rental growth is being seen in cen-tral locations. Two very different districts are leading the way: Friedrichshain-Kreuzberg and Charlottenburg-Wilmersdorf have median ask-ing rents of 8.94 and 8.93 per square meter respectively, followed by Mitte with average asking rents of 8.11 per square meter. Within the latter district, however, there is a consid-erable difference when it comes to conditions in the historical Mitte neighborhood and the less prosperous areas of Tiergarten and Wed-ding. Mitte district as a whole saw the highest year-on-year increase in asking rents in Berlin (14.7 percent), which suggests that there are shortages in all market segments.

Pankow and the well-off district of Steglitz-Zehlendorf also come in at or above the 8 threshold. The middle of the list is home to Tempelhof-Schneberg, although here, too, the market is highly differentiated between the attractive inner-city neighborhoods of Schne-berg and the suburban areas of Tempelhof. Next in line is a climber among the districts: Neuklln, where median asking rents on the market as a whole increased by 12.2 percent.

All of the other districts have three things in common: They are located partially or entirely on the edge of the city, they have relatively

low average asking rents of between 5.11 per square meter (Marzahn-Hellersdorf) and 6.51 per square meter (Treptow-Kpenick), and rental growth is comparatively modest at around 6 to 8 percent. Population growth is also relatively low. This applies for Trep-tow-Kpenick, Lichtenberg, Reinickendorf, Spandau and Marzahn-Hellersdorf.

It is no coincidence that rents in the upper mar-ket segment in these districts are also lower than elsewhere in the city and that they have the most affordable apartments at the lower end of the market.

Cyclical development on the housing market

The real estate market develops cyclically and in waves. The waveform cycle graph produced by CBRE shows the phase in which each of the local markets currently finds itself. The extremely high property prices at the apex are followed by a drop in prices that initially accelerates before slowing towards the bottom of the curve. After passing the low point, prices return to growth slowly at first, before picking up speed. As they approach the apex, the rate of price growth slows down again.

This cyclical development can be attributed to the delayed reaction on the supply side to changes in demand. As a result, growth in the advertised rental space is typically at its greatest when providers respond to past price rises by making new properties available. Due to this time lag, properties that need to be made market-ready in re-sponse to price rises sometimes only reach

the market after the downturn has already started. By contrast, relatively few proper-ties are made ready for the market when prices are low. This means that they can-not be used meet the greater demand in the next phase of the cycle, resulting in price growth followed by excess supply establishing itself once again. Movements within the waveform cycle of the real es-tate market can occur backwards as well as forwards. The presentation of the market as a wave-form reflects the amplitudes of the real es-tate cycle and allows the reader to quickly determine the phase in which a market cur-rently finds itself. Generally speaking, the cycle on the local residential property mar-kets is slower and weaker than on the of-fice markets. Movements within the cycle are triggered by sociodemographic and socioeconomic conditions and, in particular, soft image factors.

The graph shows the position of the districts and the city as a whole within the rental market cycle as derived from market data and trend fore-casts. The districts at the far left are at the start of a rental growth phase; for districts to the right along the curve, this phase is further developed.


Charlottenb.-Wilm.


Lichtenberg

Marzahn-Hellersd.

Mitte

Neuklln

Pankow

Reinickendorf

Spandau

Steglitz-Zehlendorf

Tempelh.-Schneb.

Treptow-Kpenick

Berlin average

Source: empirica-systeme (2012 statistics), IDN ImmoDaten (2011 statistics); compiled by: CBRE

Trend 2)All market segmentsMedian in /m2 Change

from 2011 in %0 1 2 3

jjjkjjjjjjjjj

1) excl. bottom and top tenth percentile of quotes 2) forecast 12-month-trend for total market segment

Current price development, apartment buildingsPurchase price range, 2012

District Number sale offers

Middle market segment1)

price range in /m2

162

97

103

53

152

126

206

182

127

180

165

228

1,781

1,833

1,501

1,118

1,278

1,146

1,196

1,414

1,206

1,152

1,454

1,293

1,313

1,349

1,209 2,657

1,058 2,093

825 1,854

696 1,680

793 2,750

766 1,854

955 2,272

906 1,837

781 1,804

1,139 2,846

952 1,918

888 2,410

882 2,255

39.4

40.1

1.7

21.6

23.2

10.1

25.6

1.8

5.7

3.1

4.7

30.9

17.4

Top and bottom segment:

In the apartment building segment, different quality levels and locations have a substantial impact on price development. There were relatively few purchase offers at the district level during the observation period, meaning that in the top and bottom segments, prices and price compari-sons with the previous year are not significant. For this reason, they are not repre-sented in this report.

The Berlin housing investment market is seeing significant price growth. Between 2011 and 2012, the median asking price per square meter for apartment buildings rose from 1,149 to 1,349, an increase of more than 17 percent. This development is partic-ularly pronounced in the lower market seg-ment, which consists of the bottom 10 per-cent of properties in terms of price. Asking prices per square meter increased by almost 56 percent, from 481 to 749. This reflects a significant expansion in the demand base, explained Dr. Henrik Baumunk, Head of Resi-dential Valuation at CBRE in Germany. The low level of new construction activity and ris-ing rents mean that investors expect proper-ties to be rentable in the long term, even in this market segment.

Price development at the upper end of the market was more muted, with the average asking price for the most expensive 10 percent of properties increasing by 7 percent, from 2,550 to 2,727 per square meter. As in the previous year, apartment build-ings advertised for sale were distributed un-evenly across the individual districts. While only around 50 properties were available in Marzahn-Hellersdorf and just un-der 100 properties were adver-tised in Friedrichshain-Kreuzberg, the districts of Pankow and Trep-tow-Kpenick had more than 200 properties on the market. There are also considerable differences in terms of the asking prices in the 12 districts of Berlin. At 1,833 per square meter, asking prices for apartment buildings in Charlottenburg-Wilm-ersdorf were the highest in the city by some distance. Second place was occupied by Fried-richshain-Kreuzberg at 1,501. By contrast, the average asking price in Lichtenberg was 1,118 per square meter, while the figure in Mitte was 1,146.

Although price comparisons with the previous year must be interpreted with some caution due to the differing quality of the properties advertised and the relatively small statistical basis, it can still be ascertained that asking prices for apartment buildings have climbed to more than 1,000 per square meter in all dis-tricts of Berlin. One district was still below this threshold last year; in 2010, there were four.

Everyone wants to own in BerlinPrices for owner-occupied apartments saw even stronger growth than investment prop-erties and rental apartments. The median price for all apartments advertised was 2,258 per square meter, 19.9 percent higher than in the previous year. Demand for apartments in Ber-lin is also continuing to grow among individual investors. This is being driven by inflation ex-

pectations and low interest rates, as well as the low prices compared with other major cities and confi-dence in the development of the Berlin housing market. The buy-ers are international. Estavis AG

established that foreign investors accounted for 29 percent of buyers in the first three quar-ters of 2012, while the figure for the previous year was as high as 34 percent. Buyers came from more than 30 countries, with Italy some way ahead of Russia, France, Turkey, the USA and Israel.

However, there was a tangible narrowing of the market in 2012. Despite or even because of the sharp rise in prices, many owners are refraining from selling their apartments at present. They expect further price growth and do not have any attractive and safe alternative investments for the proceeds of sale. However, those who do choose to offer their properties at a price that is consistent with the market are encountering a large number of potential buyers, many of whom are looking to make a quick purchase. While sellers often had to

Housing Market Report meth-odology investments and owner-occupied properties

In 2011 and the period from Q1 to Q3 2012, a total of 108,896 advertisements for owner-occupied properties and 3,773 advertisements for apartment buildings were evaluated. In the same way as for rental properties, the average (median) values were calculated on this basis. The lowest and highest 10 percent of asking prices were also determined separately.

Purchase prices: Buildings, apartments becoming more expensive particularly in basic locations

Many potential buyers; not

enough sellers


Owner-occupied apartments Apartment buildings

Apartment buildings and owner-occupied apartments: Current position in cycle2012

Sales price growthaccelerating

Sales price growthslowing

Sales price declineaccelerating

Sales price declineslowing

Berlin total

Berlin total

Source: CBRE

Steglitz-Zehlendorf

Steglitz-Zehlendorf



Pankow

Pankow

Mitte

Lichtenberg

Lichtenberg

Marzahn-Hellersdorf

Marzahn-Hellersdorf



Treptow-Kpenick

Tempelhof-Schneberg

Tempelhof-Schneberg

Neuklln

Reinickendorf

Reinickendorf

SZ

TS

L

FK

M

L

B

P

CW

M

CW

FK

P

MH

R

N

MH

TK

TS

B

N

Spandau

SpandauSp

Sp

R

TK

SZ

Charlottenb.-Wilm.


Lichtenberg

Marzahn-Hellersd.

Mitte

Neuklln

Pankow

Reinickendorf

Spandau

Steglitz-Zehlendorf

Tempelh.-Schneb.

Treptow-Kpenick

Berlin average

Source: empirica-systeme (2012 statistics), IDN ImmoDaten (2011 statistics); compiled by: CBRE

0 5 61 2 3 4

jjjjjjjjjjjjj

1) excl. bottom and top tenth percentile of quotes 2) forecast 12-month-trend for total market segment

Purchase price range, 2012

District Number sale offers

Bottom market segment Trend 2)

Median in /m2


Top market segmentMedianin /m2


All market segmentsMedian in /m2


Middle market segment1)

price range in /m2

Current price development, owner-occupied apartments

6,420

4,620

864

387

4,526

1,628

5,614

1,909

1,721

4,106

3,635

2,593

38,023

1,292

1,566

900

600

1,152

936

1,301

929

802

1,146

1,040

987

1,028

4,702

3,941

2,981

2,800

6,650

2,959

4,200

2,778

2,499

4,333

3,580

3,392

4,480

2,586

2,704

1,755

1,289

3,365

1,450

2,473

1,512

1,239

2,105

1,923

1,990

2,258

1,440 4,120

1,776 3,753

973 2,780

690 2,448

1,306 5,353

1,000 2,481

1,498 3,690

995 2,444

889 2,227

1,250 3,701

1,179 3,182

1,105 3,091

1,198 3,875

18.0

59.3

11.6

9.1

46.6

43.5

14.5

18.0

30.5

14.6

18.3

23.4

21.2

2.4

7.6

5.6

30.7

25.0

26.7

10.0

3.4

5.4

16.7

5.9

9.1

10.7

20.7

17.1

12.4

8.5

19.6

29.7

6.4

16.3

18.0

20.3

19.0

34.3

19.9

reduce their initial asking price in crisis peri-ods, some buyers are now prepared to offer in excess of the asking price in order to secure a property. The local debate on junk proper-ties bought at excessive prices and in excess haste is doing little to inhibit the enthusiasm of potential buyers.

Prices up 60 percent in the boom districtInstead, there has been an increase in demand for simple apartments in particular. Average prices per square meter in the lower market segment, consisting of the most affordable 10 percent of properties, have risen by 21.2 per-cent in the space of just one year and the figure for the boom district of Friedrichshain-

Kreuzberg is as high as 59.3 percent. In the upper market segment, the price rise for Ber-lin as a whole was comparatively moderate at 10.7 percent; however, absolute prices reached a new high of up to 6,650 per square meter in Mitte district. Mitte is the most expensive district on the market as a whole, followed by Friedrichshain-Kreuzberg, Charlottenburg-Wilmersdorf and Pankow with its large num-ber of sought-after apartments in Prenzlauer Berg. The green areas of Steglitz-Zehlendorf and Treptow-Kpenick beyond the city cen-ter are the best performers among the other districts. The latter district saw the highest rise in average asking prices, closely followed by the up-and-coming Neuklln.

The word bubble is occasionally mentioned in conjunction with purchase prices for apart-ments and apartment buildings in Berlin. This may be appropriate for overpriced individual investments, and it is true that purchase prices have risen to a greater extent than rents over recent years, meaning lower yields for buyers.

However, the latter reflects the expectation of many market participants that there is abso-lutely no bubble, but rather that Berlin is clos-ing the gap to other major cities in terms of rents and prices, explained Jrg Schwagen-scheidt, CEO of GSW Immobilien AG. This is backed up by the citys positive economic and population development and the growing demand-side pressure on the market.

The graph shows the position of the districts and the city as a whole within the market cycle for the purchase of owner-occupied properties and apartment buildings as derived from market data and trend forecasts. The districts at the far left are at the start of a period of price growth, whereas this growth phase has partly already taken place for the districts higher up the curve. The districts to the right of the peak are seeing fall-ing prices, while the districts at the far right are likely to recover from the low point in the cycle and record price growth again in the near future.


Charlottenburg- Wilmersdorf

Steglitz- Zehlendorf

Reinickendorf

Spandau

Revival in new construction Focus on owner-occupied apartments in city center

New residential construction in Berlin is picking up fast, albeit from a low initial level. At the end of 2012, this report examined around 200 projects that were either under construction or that, according to investors, have a fixed, imminent start date. These proj-ects comprise nearly 12,000 apartments. Most of these are scheduled for completion in 2013 and 2014, with selected projects to follow by 2016. This report only looks at projects that are to be sold or rented, and not those that will serve the contractors own needs. The latter category applies to individual private residences and a number of building coopera-tives for more on these see p.13.

New construction is still focused on the city center, the borders of which are defined by the S-Bahn commuter train ring. The historic Mitte neighborhood and its surrounding areas have the most and the biggest projects in terms of number of apartments and are the most ex-pensive by square meters and absolute prices. Many projects are still tailored to the luxury segment and therefore meet the demand of affluent Germans and international resi-dents flocking to Berlins center. Lower prices are asked in the new inner-city construction projects in Friedrichshain-Kreuzberg, Pankow, Schneberg and Charlottenburg-Wilmersdorf, though these districts also have very high-quality projects with a correspondingly high price level. The price per square meter in the city center is usually above 3,000.

In 2011, the majority of the projects looked at were in central Berlin; now there are also a number of projects outside the S-bahn ring. The main areas here are Treptow-Kpenick and Lichtenberg, both havens for low-cost new constructions with lots of offers for un-der 3,000 per square meter, and Steglitz-Zehlendorf with significantly higher prices. Rental apartments are only explicitly offered in around 10 percent of all projects analyzed. It cannot yet be said how many of the apart-ments will be bought by investors and later rented out. In the few reported projects with rental units, the asking rents are mostly in the range of 9 to 14 per square meter. But this sector is also seeing more activity by private investors and cooperatives. The wave of new construction has not yet spread across the whole of Berlin: While in Treptow-Kpenick several developments have already been real-ized, Spandau, Reinickendorf and Marzahn-Hellersdorf have yet to enter this stage of development.


Tempelhof- Schneberg

Treptow- Kpenick


Marzahn- HellersdorfLichtenberg

Neuklln

Pankow

Mitte

Locations of selected new developments

Owner-occupied apartments

Rental apartments

Mixed use

Exact use not known

Source: CBRE, as of: November 2012


Despite its central location, most new con-struction projects are not in the Mitte district, but rather in Pankow. However, by far the most apartments are planned in Mitte. On average, these projects are the largest in the entire city. This sounds astonishing given the standard notion that the central district would also be the one with the fewest large plots of land available. But in Berlin there are still spaces even in the center. Some of this is due to land that previously bordered the Wall and is only now being developed; some of it is disused industrial and railway land or vacant space in residential and mixed use areas that was developed only sparingly while the city was divided. Mittes gaps are now being filled in not in the entire district, which also includes Tiergarten and Wedding, but almost exclusively in historic Mitte. This is the home of 34 of the 38 total projects registered in the district. However, the biggest project is just a few meters to the west of the former border in Moabit: Part of Europacity, on the former freight yard close to the new central station. There are other big projects where the Wall used to stand on Chausseestrasse and Boy-enstrasse, and in the south of the district on the border with Kreuzberg in Beuthstrasse, Seydelstrasse, Sebastianstrasse and Komman-dantenstrasse. In total, 10 projects with more than 100 apartments each are being built in the district. Mitte is also the center of lux-ury residential construction in Berlin; some of the citys most expensive apartments can be found here. Prices in the yoo building near Friedrichstrasse go up to 3.8 million for a 339 m apartment. A more lavish option for less (relatively speaking) is the Fellini Resi-dences with 565 m apartments for a little over 2.5 million. The highest square meter prices are being demanded in the Crown Princes Gardens diagonally opposite the State Department up to 15,000 for town-houses of undisclosed size.

Second place for number of apartments goes to Berlins record holder for individual proj-ects: Pankow with 41 identified projects. Proj-ects in Prenzlauer Berg, close to the city cen-ter, are mainly filling in gaps. This is also the site of the boroughs biggest project, La Vie, with around 360 planned rental apart-ments on 17,800 m of land that has lain vacant since the Wall fell. The apartments will not be sold individually but rather will be entirely rented. Thanks to this project and several others in Alt-Pankow, Pankow is the only Berlin district in which large numbers of both rental and owner-occupied apart-ments are planned. In historic Pankow there are larger rental and owner-occupier proj-ects such as the Floragrten and numerous smaller projects, usually plugging the gaps in existing blocks. To the north of here in

Niederschnhausen there are still individual plots free for city vil-las in green areas. One notable feature for a district outside the center of Berlin is the number of projects in Weissensee: Thirteen

are planned here. Two of these are to have almost 100 apartments; some of the others will be very small on suburban lots.

A cooperative at the top in KreuzbergThird place for number of apartments goes to Friedrichshain-Kreuzberg. By number of projects, the focus here is on gaps in Fried-richshain neighborhoods, particularly in the Samariter quarter, around Boxhagener Platz and around the Rummelsburg Bay. These projects are mostly for between 10 and 50 apartments a typical strategy when filling in between existing buildings. However, the biggest projects in the district are starting up in Kreuzberg. Leading the way is the ambi-tious Mckernkiez cooperative. It is planning almost 400 apartments around the new Gleis-dreieck Park, but is facing rising cost pressure. However, the second project in the news-paper district close to Mitte is being run by

a global investor planning owner-occupied apartments for up to 5,000 per square meter, and also quite a high share of rental apart-ments, for which there is strong demand in the district. The biggest project in Friedrich-shain is My Berlin with around 150 apart-ments being built directly opposite the Fried-richshain public park. Two thirds of these will be owner-occupied; one third will be rented. More than 100 apartments are also being planned in the Green Village in Rigaer Strasse to the north of Frankfurter Allee on former garage land, though this project is also refurbishing an existing pre-war building.

Treptow-Kpenick is the exception a dis-trict in which new residential construction is booming despite being outside the center. One key area is the Adlershof quarter, which is drawing investors for four reasons: Firstly, this is the home of Germanys biggest tech-nology park with interesting potential tenants. Secondly, there are too few adequate apart-ments for these people nearby. Thirdly, Adler-shof will be just a few minutes away from the new airport by train and highway in future. Fourthly, this neighborhood has been very loosely developed; land is relatively plentiful and cheap. The developments in Adlershof are almost all part of the Wohnen am Cam-pus project being created by various devel-opers in several stages. Overall, the projects in Adlershof are characterized by moderate prices they are aimed at younger scien-tists or even students as well as airport em-ployees and buyers looking to rent to these tenants. With 380 apartments, the biggest project offers small living spaces mainly for students. In total, around 1,200 apartments are set to be built in various projects at the Adlershof science park in the coming years. Here, like in other parts of the district, large numbers of new buildings will be available for square meter prices of well below 3,000, in selected cases even just under 2,000. The projects outside of Adlershof are distributed

Pankow und Mitte leading in

construction

Charlottenburg-Wilmersdorf 24 3 1,300 9.00 14.20 2,490 6,000 45 256

Friedrichshain-Kreuzberg 30 2 1,650 approx. 12.00 2,300 7,500 30 212

Lichtenberg 11 2 600 approx. 10.00 1,540 3,600 45 180

Marzahn-Hellersdorf

Mitte 38 4 3,300 2,280 15,000 31 570

Neuklln 2 70 2,720 3,270 65 200

Pankow 41 7 1,950 8.00 12.50 2,000 6,000 38 220

Reinickendorf 3 130 3,200 4,870 32 136

Spandau 1 40 110 140

Steglitz-Zehlendorf 15 1 700 approx. 9.70 2,300 5,600 48 398

Tempelhof-Schneberg 9 310 2,490 5,900 23 255

Treptow-Kpenick 25 2 1,500 6.00 11.00 1,900 4,200 29 230

Berlin total 199 21 11,550 6.00 14.20 1,540 15,000 29 570

Source: CBRE

District Rent price in /m2/month

Purchase price in /m2/month

Apartment size in m2

Number of projects

Projects with rental apartments

Total number of apartments

Apartment construction projects: Where the cranes are


quite evenly throughout the sprawling district, with clusters in Alt-Treptow near the city cen-ter, in small-town Kpenick and in Friedrich-shagen, which is today expected to suffer on account of new flight paths in future.

Fifth place for number of projects and planned apartments goes to Charlottenburg-Wilmers-dorf. New construction work here is focused on Wilmersdorf in the south. This is mostly filling in the gaps in blocks that have been loosely developed in the past. Exceptions in-clude the major projects in Seesener Strasse and the expansive Rosengrten, which will take over a plot of the small urban gardens that are a typical feature of Berlin in this case, just 300 meters from Kurfrstendamm. There are very few projects in the northern part of Charlottenburg, but this is enough for more than 200 apartments in Carr Reimar on a former parking lot opposite Deutsche Oper. This is the work of the same investors responsible for the nearby Carr Charlotte project. Several smaller projects are spread throughout the green districts of Schmargen-dorf, Westend and Grunewald. As befits their high status, the asking prices per square me-ter are in excess of 5,000.

Residential construction in Steglitz-Zehlen-dorf is concentrated on the most affluent and greenest parts of the district. In Zehlendorf there are two projects with more than 100 apartments; other than this, there are pre-dominantly small and very small projects, in-cluding one with just three apartments. The biggest project is Cedelia with 280 apart-ments in the south of the district. Half of these apartments are intended for rental, the other half for owner-occupiers. Other proj-ects are building exclusively for owner-occu-piers. This is also true of the second-biggest project Fnf Morgen Dahlem Urban Village around an artificial lake. Owner-occupancy is preferred by many of this districts residents, who tend to buy rather than rent. The ask-ing prices for individual houses in the para-dise project in Dahlem are up to 5,600 per

square meter. Significantly less than 3,000 is paid for individual apartments in the relatively urban Steglitz, and also further out in Wann-see. Most of the construction projects have one thing in common: They are not filling a gap between houses in closed blocks; they are out in the open on their own green lots.

Lofts and private homes in LichtenbergThe new buildings in the Lichtenberg borough are both varied and relatively affordable for buyers. The range here extends from lofts in a former department store and urban villas in Lichtenberger Lofts, to rental complexes such as Storkower Bogen, to townhouses in Sandinostrasse in Alt-Hohenschnhausen and owner-occupier areas such as Gartens-tadt Karlshorst and Sonnenblick in Neu-Ho-henschnhausen. But almost all these projects have one thing in common square meter prices of between 2,000 and 3,000.

New construction activity in the Tempelhof-Schneberg district is centered around inner-city Schneberg and comprises mostly smaller and medium-sized projects, usually in attrac-tive locations. Asking prices per square meter in Queens Garden at Viktoria Luise Platz are between 4,700 and 5,900; elsewhere in Schneberg asking prices start at 2,600 and sometimes end well above 4,000. With the exception of three projects in Mariendorf, Friedenau and Tempelhof, all projects in Tem-pelhof-Schneberg are located within the S-bahn commuter train ring.

There is little new construction in the other districts, except for three projects close to the water in Tegel in Reinickendorf where com-paratively high prices of up to 4,900 are be-ing asked per square meter on account of the attractive location. There are two projects in Neuklln, both in the green areas of Britz; one with terraces in the Gartenviertel in Spandau; and no projects to date in Marzahn-Hellersdorf. This may change in the coming years as land here is still particularly plentiful and inexpensive.

Europacity am Hauptbahnhof Moabit 700

Mckernkiez Kreuzberg 380

Wohnen am Campus/ Student residences Adlershof 380

La Vie Prenzlauer Berg 360

Markgrafenstrae/Lindenstrae/Rudi-Dutschke-Strae Kreuzberg 280

Cedelia Zehlendorf 280

Le Bijou Mitte 270

Mendelstrae/Bleichroder Strae Pankow 270

Floragrten (five construction phases) Pankow 250

Rosengrten Wilmersdorf 210

Carr Reimar Charlottenburg 210

Source: CBRE

Project District Number of apartments

Cooperatives: Investors working for themselves

Today and in the past, cooperatives have built and continue to build several hun-dred apartment buildings with thousands of apartments in Berlin, though no one knows the exact number. In these co-operatives, the future users themselves operate as the project developers and contractors. In selected cases, a majority of all the properties in a block or a street are developed by groups examples in-clude Schwiebusser Strasse in Kreuzberg, the street Am Eschengraben in Pankow or presently Boyenstrasse in Mitte.

The members of these groups want to have a hand in designing their future home and are often particularly ambi-tious in ecological and social respects. They save the margin that contractors de-mand for their risk, marketing and profits, in addition to a majority of the incidental costs of purchase. A rule of thumb is that members of these groups pay around 20 percent to 25 percent less than the mar-ket cost of new apartments of similar quality in the same location. However, this is also offset by disadvantages: Cost and planning risks, uncertain time hori-zons and a substantial commitment in planning and organization.

These groups are sometimes initiated by those willing to build themselves and sometimes by architects, who ini-tially act as project developers and later handle the planning. When the group reaches a sufficient size and achieves consensus on the rough planning, a plot of land is bought, usually by a GbR (a company constituted under civil law). The professional part of the subsequent construction process is delegated to ar-chitects and often project managers. On completion, the building is usually trans-ferred from the GbR to a community as-sociation, the members of which buy the individual apartments. There are also building cooperatives or other jointly owned companies that rent the apart-ments to the members.

In the coming years, such cooperatives are expected to be responsible for a double-digit share of new construction activity in Berlin. For commercial inves-tors, they are often the competition for land acquisitions and residential market-ing. However, they often also address entirely different target groups. They are therefore helpful in invigorating the ur-gently needed new construction in the city; they often jumpstart the develop-ment of new locations, acting as pio-neers in certain areas.

The biggest projects in the city


The combination of residential market data is particularly revealing. One especially intrigu-ing aspect in this regard is the ratio of asking rents to local purchasing power, as expressed by the housing cost ratio. Where this is par-ticularly high, local residents would have to pay a relatively large share of their income to find a new apartment in the same area. This indicates a high-quality location: Residents who already live there usually pay a lot for the location; people from other quarters and places of origin with higher purchasing power who are looking for an apartment are inter-ested in this area.

A low housing cost ratio indicates an area for which there is less demand. Or this may be an indication that residents have a higher purchasing power, but only wish to invest a certain amount of this in their apartments and a good location. This applies to many areas on the citys outskirts. What is notable is that the lowest housing cost ratios are found not in the affluent quarters with medium rents, but in the most basic living areas, where house-holds with low purchasing power only have to spend around 20 percent of their budgets on living costs. This share is usually much higher in the more expensive areas. As income in-

Berlin has 12 districts, 96 localities and 190 postal codes. The latter have fewer than 20,000 residents on average and include what the Berliners refer to as a kiez small, rela-tively homogeneous neighborhoods with par-ticular local features. And often also with a characteristic residential market in terms of rents, apartment sizes, trends and resident purchasing power. The markets of the 190 postal codes have been analyzed in detail in the Housing Cost Atlas.

This is based on details of location, size and asking rents for more than 65,000 apartments currently being advertised. There was a suffi-cient number of offers to create an informative database in 188 areas. The data enables a pre-cise look at the detailed structure of the city. It can be used to derive not just average values, but also local extremes such as the existence of a particularly good value sub-market or that of a high-quality luxury segment. It is not rare for these two to be found in the same quarter.

Area type 1: Neighborhood luxuryThe absolute top locations of the city are too functional for many sophisticated tenants with high purchasing power they do not want to be surrounded by offices and hotels. Instead, they prefer mixed and diverse neighborhoods, where at best there are still upper-class pre-war buildings alongside unrefurbished houses from the Imperial period and new attic stories are appearing on social housing from the post-war years. The prices for top apartments in the upper market segment are well above the 15 line.

HousingCostAtlas: Detailed structure of 190 areas

10435 Kollwitzplatz Pankow 18.18 7.01 34.1

10119 Rosenthaler Platz Mitte 17.68 6.73 35.1

10967 Graefestrae Friedrichsh.-Kreuzb. 17.43 5.54 28.6

10777 Viktoria-Luise-Platz Tempelhof-Schneb. 17.14 6.34 33.7

10999 Grlitzer Park Friedrichsh.-Kreuzb. 16.67 5.65 30.4

1) median in /m2/month

Postal code

Basic rent 1) bottom market segment

Housing cost ratio in %

Section District Basic rent 1) top market segment

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creases, an ever-greater share of purchasing power is generally invested in living costs.

Comparisons over time are also revealing: Where have average rents increased espe-cially strongly in 2012, where have they risen only slightly, where have they remained un-changed? A stronger rise points to more dy-namism in the area. Either the asking prices for the same types of apartments have be-come much more expensive compared to the previous year or prices have risen because of improvements in the quality of the build-ings. Or a lot of newly built apartments have come onto the market, statistically raising the local rent level.

Area type 3: Central low-price areasThe inner-city areas of Berlin are continuing to see clear hikes in rent on top of what is already a high rent level. Nonetheless, there are also micro-locations even in the central, high-priced city quarters distinguished by affordable asking rents. They are not attractive to large numbers of tenants and buyers on account of basic property or location qualities. For example, they might have a predominance of simple post-war buildings or be subjected to noise from traffic and industry, and are thus below the Berlin average for asking rents.

Area type 4: Apartment marketsIn some inner-city areas the apartments on offer are particularly small and the asking rents con-spicuously high by comparison. Tenants in these locations are willing to forsake living space for a good location and pay good money for relatively small apartments. An investment in (small) apartments can be worthwhile here. One noticeable aspect is the concentration of such areas in the north of Neuklln. This constellation is only found in areas with pre-war housing, not high-rise apartments or social housing.

Area type 5: Well-connected nichesNot every Berliner wants to pay big city rents and live in big city surroundings but almost everyone wants to be able to reach the big city easily. A good compromise is offered by the neighborhoods between the center and the outskirts, where not much has happened to rents so far. However, they have the potential to rise once househunters discover them. In terms of architectural style, these areas are mostly characterized by high-rises and earlier social housing. These neighborhoods often have abundant green space or are located near parks.

Area type 2: Best central locationsBerlins most expensive apartments are clustered around two centers: The historic one in Mitte and the newer one around Kurfrstendamm. These apartments usually have large layouts; the living costs are correspondingly high. These neighborhoods are also highly frequented by tour-ists and visitors from all parts of Berlin. People who live here care about prestigious addresses and faades, elegant shopping and upscale restaurants. Landlords of properties in these areas demand correspondingly high prices.

HousingCostAtlas methodology

Exactly 65,078 properties advertised in the first three quarters of 2012, includ-ing size and rental information, were al-located to Berlins 190 postal codes. There was a sufficient statistical basis for all postal codes except for 13159 (Blanken-felde) and 14053 (Olympic Stadium). The tables show the median values for all ask-ing rents per square meter for each area, plus the median values for the top and bottom 10 percent of asking prices. This allows an insight into the local high and low-price segment.

To calculate rents including heating, flat-rate additional costs of 2.75 per square meter were added to basic asking rents for western boroughs and 2.15 for east-ern boroughs. This was based on data provided by the Berlin-Brandenburg Asso-ciation of Housing Companies (BBU).

Michael Bauer Research GmbH calculates the average purchasing power per resi-dent and household at postal code level each year. The average housing cost ratio per household was calculated using the following formula:

Unlike in earlier years, vacancy rates have no longer been calculated in 2012. This is because the statistical base was too low in the majority of postal codes. In the particularly popular quarters, vacancies practically only occur during phases of tenant changeover.

average asking rent + additional

costs

average apartment

size

x

=average housing cost ratioaverage

purchasing power

10117 Unter den Linden Mitte 12.03 19.55 103

10178 Hackescher Markt Mitte 11.97 16.53 92

10115 Chausseestrae Mitte 10.71 16.23 80

10629 Sybelstrae Charl.-Wilmersdorf 10.00 15.99 107

10785 Potsdamer Platz Mitte 10.00 18.00 90


Postal code

Basic rent 1) top market segment


Section District Basic rent 1) total market

12049 Hermannstr. West Neuklln 8.00 53 24.4

12045 Sonnenallee North Neuklln 8.34 54 25.2

10829 Schneberger Insel Tempelhof-Schneb. 8.49 58 25.4

12047 Maybachufer Neuklln 8.96 56 25.1

10997 Wrangelstrae Friedrichsh.-Kreuzb. 9.49 57 24.7


Postal code




13355 Humboldthain Mitte (Wedding) 6.05 161 20.1

13357 Gesundbrunnen Mitte (Wedding) 6.50 129 21.4

13347 Nauener Platz Mitte (Wedding) 6.70 123 21.9

10553 Beusselstrae Mitte (Moabit) 6.92 113 23.6

10969 Prinzenstrae Friedrichsh.-Kreuzb. 6.98 111 21.5

1) median in /m2/month 2) ranking among the 188 Berlin postal codes analyzed

Postal code

Basic rent ranking 2)



10315 Friedrichsfelde North Lichtenberg 6.07 +1.8 2,151

13627 Charlottenb.-North Charl.-Wilmersdorf 6.23 +4.9 2,186

13437 Alt-Wittenau Reinickendorf 6.33 +1.7 2,576

10369 Fennpfuhl Lichtenberg 6.33 +0.7 2,286

12359 Buschkrugallee Neuklln 6.39 +1.8 2,394

1) median in /m2/month 2) median total market, change from 2011 3) per household

Postal code

Rent development 2) (basic rent) in %

Purchasing power 3) in /m2/month



10585 323 7.90 (69) 5.63 (69) 14.62 (38) 70 (110) 749 (74) 3,015 (45) 24.8 (122)

10587 489 11.50 (3) 6.03 (36) 14.15 (48) 80 (44) 1,141 (11) 2,753 (81) 41.4 (2)

10589 332 7.79 (71) 5.48 (87) 12.60 (72) 66 (144) 695 (90) 2,718 (90) 25.6 (106)

10623 191 9.88 (15) 5.56 (73) 15.79 (18) 89 (24) 1,127 (12) 3,545 (15) 31.8 (32)

10625 369 8.90 (35) 6.14 (30) 14.75 (37) 80 (43) 934 (34) 3,048 (40) 30.6 (40)

10627 367 7.99 (66) 4.32 (173) 14.02 (53) 78 (57) 838 (53) 3,042 (42) 27.5 (72)

10629 545 10.00 (9) 6.49 (16) 15.99 (15) 107 (3) 1,368 (4) 3,502 (16) 39.1 (7)

10707 446 10.00 (9) 7.00 (2) 15.42 (21) 104 (6) 1,326 (5) 3,501 (17) 37.9 (8)

10709 305 8.46 (50) 6.00 (38) 14.14 (49) 78 (54) 878 (43) 3,165 (29) 27.7 (69)

10711 349 9.48 (19) 6.80 (6) 16.07 (13) 87 (27) 1,069 (18) 3,201 (25) 33.4 (18)

10713 234 8.25 (58) 5.80 (57) 14.42 (43) 72 (90) 793 (60) 2,825 (68) 28.1 (68)

10715 419 8.31 (55) 6.15 (29) 13.80 (58) 74 (80) 813 (59) 2,842 (64) 28.6 (64)

10717 397 8.99 (32) 6.25 (24) 14.77 (35) 92 (18) 1,074 (16) 2,885 (58) 37.2 (9)

10719 451 10.00 (9) 5.99 (45) 15.96 (16) 102 (9) 1,303 (6) 3,564 (14) 36.6 (11)

Housing market data Housing cost

Postal code

Apartment size in m

Basic rent in bottom market segment 1) in /m/month

Basic rent in all market segments 1) in /m/month

Number of rental offers

Basic rent in top marketsegment 1) in /m/month

Total housing cost 2) in /month

Purchasing power per household in /month

Housing cost ratio 3) in %

Charlottenburg-Wilmersdorf:Peak rents and middle-class havens

Along with Friedrichshain-Kreuzberg, Char-lottenburg-Wilmersdorf has been one of the districts with the highest average asking rents for several years now. In terms of their median, Charlottenburg-Wilmersdorf was on a par with Friedrichshain-Kreuzberg in 2012, and posted a slightly higher increase in this fig-ure (by 0.1 percentage points). Despite almost identical rents per square meter, it is much more expensive to live in Charlottenburg-Wilmersdorf because apartments there are an average one-third larger.

The largest apartments in Berlin on aver-age can be found in Grunewald (postal code 14193) at 113 square meters. They also fetch the highest rents including heating in the en-tire city on average: 1,511 per month with average utility costs of 2.75 per square meter. The 10 areas in the city with the largest apart-ments also include Sybelstrae (10629), Oli-vaer Platz (10707), Ludwigkirchplatz (10719) and Westend-West (14057). With the excep-tion of Westend-West, the first three of the areas listed are all located off Kurfrstendamm and still have many historic old buildings. These three areas and Grunewald are also among the 10 most expensive in the city in terms of median asking rents.

With regard to rents per square meter (ex-cluding heating), a newcomer now tops the charts in the district at 11.50 the area around Otto-Suhr-Allee (10587) between Tiergarten, the Technical University, the Spree

and Charlottenburg Palace. This is a very cen-tral and green residential area, but tradition-ally not a fashionable one. Its top position in asking rents and the citys highest increase in average rents per square meter (median) of around 51 percent result from a large-scale project combining new construction and ren-ovation rather than a major upgrade of the

housing stock. Once this new building has been let and if no more are constructed asking rents for apartments in this area will fall again. It only comes 81st in Berlin in terms of household

purchasing power. In addition, the neigh-borhood is characterized by simple post-war properties and commercial space.

Regarding average rents per square me-ter, this atypical case and the central part of Kurfrstendamm are followed by further ar-eas in the catchment area of this grand boule-vard: Savignyplatz (10623), Bahnhof Halensee (10711) and Tauentzienstrae (10789).on the outer ends of Kurfrstendamm. On average, the available apartments are around 15 square meters smaller here, and rents including heat-ing are around 300 lower than in the central part of Kurfrstendamm.

Prices are even lower in the quiet neighbor-hoods around Gntzelstrae (10717), Karl-August-Platz (10625), Lietzensee (14050) and Hochmeisterplatz (10709). Rent levels are sim-ilar further out in Westend (14052, 14057). with its villas and smaller apartment buildings.

The areas around the Deutsche Oper (10585), Mierendorffplatz (10589) and Eichkamp/Heerstrae (14055) offer a special combi-nation: Each has medium to high purchas-ing power but average rents below 8 per square meter and therefore the most afford-able housing costs in the district.

The Westliche Kantstrae area (10627) has the most affordable sub-segment in the dis-trict: The cheapest 10 percent of apartments are listed at 4.32 per square meter on av-erage here. However, the most affordable neighborhood overall is Charlottenburg-North (13627). Here, average rents per square me-ter for the overall market in the district stand at 6.23. It is adjacent to Siemensstadt, part of which has been designated as a Unesco World Heritage Site. Extensive renovation work has been carried out here in recent years, and that has seen tenants benefit from fall-ing ancillary costs.

Traditional character on

Kurfrstendamm


10789 204 9.17 (25) 7.00 (2) 15.11 (27) 87 (28) 1,034 (22) 3,333 (20) 31.0 (37)

13627 130 6.23 (149) 5.65 (66) 7.57 (175) 67 (137) 601 (143) 2,186 (177) 27.5 (73)

14050 257 8.52 (40) 5.85 (53) 14.47 (41) 93 (14) 1,051 (21) 2,834 (65) 37.1 (10)

14052 314 8.50 (44) 6.17 (28) 11.05 (97) 91 (20) 1,018 (24) 3,193 (26) 31.9 (30)

14055 217 7.39 (86) 5.50 (80) 11.62 (92) 84 (38) 850 (51) 3,601 (13) 23.6 (144)

14057 343 8.62 (37) 5.91 (50) 15.00 (29) 99 (10) 1,124 (13) 3,192 (27) 35.2 (13)

14059 355 8.04 (60) 5.50 (80) 12.50 (73) 71 (101) 768 (66) 2,591 (114) 29.6 (48)

14193 695 10.67 (7) 6.80 (6) 16.90 (7) 113 (1) 1,511 (1) 3,778 (8) 40.0 (4)

14197 323 8.07 (59) 6.01 (37) 12.38 (76) 72 (87) 783 (63) 2,644 (101) 29.6 (49)

14199 307 8.33 (54) 6.00 (38) 13.00 (67) 90 (22) 998 (27) 3,147 (36) 31.7 (33)

Bezirk 1) 8,362 8.93 5.93 15.00 88 1,025 3,038 33.7

Berlin 1) 65,078 7.50 4.89 13.95 74 738 2,696 27.4

1) median 2) includes operating costs (BBU 2010) 2.15 /m (East) and 2.75 /m (West) 3) total rent as percent of household purchasing power( ) rank among the 188 postal codes with rental data Sources: empirica-systeme, IDN ImmoDaten, Michael Bauer Research (purchasing power), compiled by: CBRE

Housing market data Housing cost

Postal code

Apartment size in m

Basic rent in bottom market segment 1) in /m/month

Basic rent in all market segments 1) in /m/month

Number of rental offers

Basic rent in top marketsegment 1) in /m/month

Total housing cost 2) in /month

Purchasing power per household in /month

Housing cost ratio 3) in %

Housing cost ratio of householdsin %

36.0 and over

32.0 35.9

28.0 31.9

26.0 27.9

24.0 25.9

21.0 23.9

up to 20.9

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Allocation of postal codes

Due to space restrictions, the location of postal codes is not precisely identified in the Housing Cost Atlas, e.g. on the basis of street and place names. Some postal codes cover several districts. In this Housing Cost Atlas, such areas are listed only in the district in which they are primarily located.


Housing cost ratio of householdsin %

36.0 and over

32.0 35.9

28.0 31.9

26.0 27.9

24.0 25.9

21.0 23.9

up to 20.9

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Friedrichshain-Kreuzberg:Rent increase trend continues

Of all Berlin districts, Friedrichshain-Kreuz-berg has been posting some of the high-est rises in new-lease rents for several years now. For the second time in a row, average rents per square meter across all segments are more than 11 percent higher than before. The figure of 8.94 is the highest in Berlin on a par with middle-class Charlottenburg-Wilmersdorf. However, the apartments adver-tised in Friedrichshain-Kreuzberg are mostly a bit smaller, es

Documents

Berlin Housing Market Report 2013