By Sandra Gordon

Monday 11th of June 2018

In 2003, Berlin’s mayor described his city, with its famously affordable rents and thriving art scene, as poor but sexy”. Yet just 15 years later, Berlin has secured the top spot in a global ranking of the world’s hottest residential property markets.

Prices in Berlin soared by 20.5% last year, according to a recent survey of 150 global cities. Other German cities are also flourishing, with Hamburg (+14.1%), Munich (+13.8%) and Frankfurt (+13.4%) all appearing in the survey’s list of the top 10 global housing markets.

Berlin’s move to the top of the global rankings follows several years of double digit price increases, as strong population growth, a healthy economy, record low unemployment and robust interest from overseas investors combined to propel prices higher. As a result, the average property price in the capital has risen by more than 120% since 2004.

The city’s population has grown by about 50 000 a year over the past five years to 3.5 million – and is projected to reach 4 million by 2035. Many of the new residents are transferring to Berlin with their companies, as corporate relocations increase in the wake of the UK vote to leave the European Union. Germany’s open-door policy towards refugees has also played a role in the city’s growing numbers.

The influx of new residents has helped to keep occupancy rates for commercial and residential properties elevated, with both hovering at around 98%, according to Pam Golding Properties’ strategic partner Savills.

Germany’s booming housing markets are dwarfing those in China, which had been leading the global cities index with over 20% annual price growth throughout 2016. In 2016, the 15 Chinese cities tracked by the index averaged 23% growth but in 2017, following a series of government measures aimed at cooling the housing market, growth in the same 15 cities averaged just 1.6%.

The surge in property prices across Germany’s major cities has prompted warnings of a real estate bubble waiting to burst. In February, the country’s central bank – the Bundesbank – suggested that property in many German cities was at least 15% overpriced and could be as much as 35% overpriced in Berlin.

Despite the central bank’s concerns, and several years of high growth in prices, property in Berlin remains relatively affordable to international buyers, particularly those from London, New York and Paris. Prime property in Berlin currently fetches only about a third of the price of equivalent-sized properties in London.

Foreign investors’ enthusiasm for Berlin was further fuelled by a survey released by auditing company PwC late last year, which found that Germany’s capital is the most attractive European city for investment and development potential. As a result, the influx of foreign investment continues unabated, fuelling the development of numerous high-rises, shopping centres and luxury apartments.

To find out more about investing in Germany, the Pam Golding Properties website is a good place to start.



Posted by Sandra Gordon