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Yes, the analysis of Berlin's property market is included in our pack
Interested in buying a nice property in Berlin? You're not alone!
Many people are drawn to Berlin's creative energy and dream of owning a trendy loft or a stylish apartment in this vibrant city.
Is it a wise investment, though? Are property prices increasing in Berlin? What is the current trend? Is it better to invest in Mitte or Kreuzberg? What are the property taxes? Where are the best yields?
We know the answers.
The Investropa team has done their homework on this market. Actually, we've organized all our findings in a pack. Get it now.
In this article, we'll provide you with helpful information.
How's the real estate market in Berlin?
Is the property market getting better or worse? People have different views. We like to be unique and analyze the latest data and stats to make accurate conclusions.
Property types
In Berlin, you can find various types of properties for sale, including apartments, houses, and commercial spaces.
Apartments are commonly available, ranging from cozy studios to larger multi-bedroom units, often located in different neighborhoods with diverse atmospheres. Houses for sale can include townhouses, single-family homes, or even unique properties with historical charm.
Additionally, there are commercial properties like shops, offices, and warehouses, offering opportunities for businesses.
Each property type offers its own features and benefits, catering to a range of preferences and needs for potential buyers in the vibrant city of Berlin.
Should you buy or rent?
(If you plan to use it yourself and not as a rental)
Whether you've already made Berlin your home or are contemplating it for the future, you might be pondering the buy vs. rent decision in this vibrant German capital.
Obviously, it's better to buy if you are looking for a long-term investment and want to build equity in a property.
One data can help you make a decision - the property price-to-rent ratio. This helps you understand the connection between rental income and the property's current price in terms of years.
According to Numbeo, the property price-to-rent ratio in Berlin is around 28.62, which is above the world average.
This value indicates that it would take you 29 years of paying rents before you can afford to buy a property in Berlin.
Housing prices in Berlin
On average, according to the last data from Europace AG, Germany, purchasing a property in Berlin would cost you around $8,700 per square meter.
Naturally, property prices are quite spread out. An apartment in Mitte might have a different price per square meter than a modern loft in Kreuzberg. We actually give you a more detailed breakdown in our pack for buying property in Berlin and in Germany.
To put things in perspective, it is similar to the prices you can find in a city like Oslo.
However, housing prices in Berlin are higher (9%) than in Frankfurt.
The most expensive neighbourhoods in Berlin are probably Charlottenburg, Wilmersdorf, and Mitte, while the cheapest neighbourhoods are probably Marzahn, Hellersdorf, and Lichtenberg.
Trends
First and foremost, we have to acknowledge that Germany is, today, an incredibly stable country. The last Fragile State Index that has been reported for this place is 23.6.
It is something to have in mind when wondering whether it's a good investment to buy a property in Berlin.
Also, according to the IMF’s forecasts, Germany's economy is expected to soar by 6% in the coming 5 years, resulting in an average GDP growth rate of 1.2%.
If you want to invest in real estate in Berlin it's a good thing because a growing economy (usually) leads to higher incomes for citizens, enabling them to invest in real estate, which boosts demand and prices for properties.
Also, in Germany, the average GDP per capita has changed by 0.2% over the last 5 years. It's not much, but the growth is here.
Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Germany right now.
Buying property in Berlin
Buying real estate in Berlin can be difficult due to the lack of reliable and up-to-date information available throughout the process. That's why we have created the pack to buy property in Berlin and in Germany.
Buying process
In the pack of documents we have built, we've covered everything about buying a property, from the contacts you'll need to the taxes that need to be paid, and even where to look for available properties.
Now, we're presenting a simpler version to make it easier for you to understand and follow along.
This is the step-by-step process to purchase a property in Berlin, Germany:
- Determine budget and property preferences.
- Engage a real estate agent or use platforms like ImmobilienScout24.
- Visit properties and shortlist potential options.
- Conduct due diligence, including review of the Grundbuch (land register) and Wohnungsgrundbuch (condominium register).
- Secure a mortgage pre-approval from a German bank, if needed.
- Make a written offer to the seller, using the Kaufvertrag (purchase contract) template.
- Negotiate terms, including the Übernahmevereinbarung (transfer agreement) for existing furnishings.
- Hire a notary to handle the legal aspects and draft the official purchase contract.
- Obtain a Finanzierungsbestätigung (financial confirmation) from the bank to show readiness for funding.
- Apply for a Wohnberechtigungsschein (residence permit) if purchasing a subsidized property.
- Attend the notary appointment to sign the Kaufvertrag and pay the deposit.
- Pay the Grunderwerbsteuer (property transfer tax) and Grundbuch- und Notarkosten (land registry and notary fees). The notary then registers the new ownership at the Grundbuchamt (land registry office).
Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Germany.
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Where to find a property
Start your property search in Berlin by exploring these websites:
- Engel & Völkers - A real estate agency in Munich, providing personalized advice for buying and selling exclusive properties.
- Rightmove - A property portal offering houses and apartments for sale and rent in Germany.
- Buy Berlin - A real estate company specializing in property sales and furnished rentals in Berlin, offering a range of apartments in various neighborhoods.
- Rentola - A rental home search engine, offering over 13,000 available rental homes with price comparison and customer support.
- Deutsche Wohnen - A rental property platform by Deutsche Wohnen, offering apartments and commercial rental offers with customer service for tenants.
Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Germany.
What properties?
As mentioned before, the average price per sqm in Berlin is $8,700. A 1-bedroom property with 60 square meters of space would cost approximately $522,000, and a 2-bedroom with 85 square meters of space would cost approximately $740,000.
However, the cost of properties will fluctuate depending on both their characteristics and their location.
Typical neighborhoods in Berlin usually come with higher price tags. If you're thinking about Mitte, an apartment might be around $1,000,000, but a residence in Prenzlauer Berg could be priced at $1,960,000.
On the other hand, some places are more affordable. You may find a condominium in Hellersdorf for $290,000, or you could locate one in Marzahn priced at just $230,000.
Find a more detailed breakdown in our full pack for buying property in Germany.
Risks and pitfalls
Here are the main pitfalls when buying property in Berlin, Germany:
- Potential restrictions on foreign buyers due to German regulations.
- Leasehold system for land, limiting full property ownership.
- Risk of historical building restoration costs and compliance with preservation rules.
- Exposed to fluctuating rental laws and tenant protection rights.
- Challenges with language barriers during negotiations and legal processes.
- Capital gains tax implications for non-resident property owners.
- Complex bureaucratic procedures and slow administrative processes.
- Limited availability of parking spaces, leading to potential parking issues in the city.
We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.
Everything you need to know is included in our Germany Property Pack
Living in Berlin
Living in Berlin is an exciting and diverse experience, with plenty of opportunities for cultural exploration, creative expression, and a vibrant nightlife.
Cost of living
The cost of living in Berlin is generally lower than other major cities in Europe, making it a great place for people looking for an affordable place to live. However, the cost of living has been increasing in recent years, so it is important to research the cost of living in a particular area before moving to Berlin.
Here are some examples to better understand the cost of living in Berlin:
- Monthly rent for a cozy apartment in Kreuzberg or Neukölln: €900-€1,500.
- A currywurst with pommes at a local Imbiss stand: €3-€5.
- Monthly public transportation pass covering AB zones: €80-€100.
- A bottle of Berliner Kindl beer from a Späti: €1-€2.
- Admission to the East Side Gallery, a historic stretch of the Berlin Wall: €3-€5.
- Monthly membership at a unique Berlin-style co-working space in Friedrichshain: €100-€200.
- Fresh produce from one of Berlin's vibrant weekly markets: €20-€40 per week.
- A Berliner Weiße beer with syrup at a traditional Berliner pub (Kneipe): €3-€5.
Neighbourhoods
Since our intention is to provide information in a clear and reader-friendly way, we've created a summary table outlining the various neighborhoods in Berlin. For yields, prices and rents, check our property pack.
| Neighborhood | Description | Strengths | Weaknesses |
|---|---|---|---|
Prenzlauer Berg | Prenzlauer Berg is a trendy and vibrant neighborhood with beautiful historic buildings, numerous cafes, and a lively arts scene. | Great cultural offerings, family-friendly, excellent public transportation. | Higher living costs, crowded on weekends, limited parking. |
Kreuzberg | Kreuzberg is known for its diverse and multicultural atmosphere, offering a mix of hip bars, international cuisine, and street art. | Rich nightlife, strong community spirit, affordable housing options. | Noisy at times, some areas may feel less safe at night. |
Charlottenburg | Charlottenburg is an upscale neighborhood with beautiful parks, high-end shopping, and elegant residential streets. | Luxurious lifestyle, good schools, well-connected to the city center. | Expensive housing, limited nightlife, can be less diverse. |
Neukölln | Neukölln is a rapidly evolving area with a mix of cultures, trendy bars, and a growing number of artistic spaces. | Affordable living, creative atmosphere, great food scene. | Some areas are still undergoing gentrification, occasional safety concerns. |
Friedrichshain | Friedrichshain is a lively neighborhood known for its alternative and bohemian vibe, featuring a variety of clubs, cafes, and graffiti-covered streets. | Exciting nightlife, young and energetic, many entertainment options. | Noise and crowding, limited green spaces, increasing popularity may lead to rising prices. |
Mitte | Mitte is the central district of Berlin, home to iconic landmarks, government buildings, and a mix of historic and modern architecture. | Rich history, excellent public transport, diverse cultural attractions. | Higher living costs, tourist crowds, limited green spaces. |
Wedding | Wedding is a diverse and multicultural neighborhood with affordable housing options and an emerging arts and culinary scene. | Affordable living, cultural diversity, good transportation links. | Some parts may be less gentrified, perceived safety concerns. |
Tiergarten | Tiergarten is an expansive park and a residential neighborhood in central Berlin, offering a tranquil escape from the city bustle. | Beautiful green spaces, proximity to the city center, peaceful ambiance. | Relatively limited amenities, fewer entertainment options. |
Moabit | Moabit is a quiet and residential neighborhood surrounded by waterways, featuring a mix of historic and modern architecture. | Peaceful atmosphere, good transportation links, affordable housing. | Some areas may lack vibrant cultural offerings, limited nightlife. |
Tempelhof | Tempelhof is known for the former Tempelhof Airport, now a public park, and its relaxed, family-friendly environment. | Spacious parks, family-friendly, calm atmosphere. | Limited shopping options, fewer entertainment venues. |
Life in Berlin
Berlin is one of the most dynamic and vibrant economic centers in Europe. It is home to an abundance of start-ups, innovative companies, and a strong services sector, as well as a thriving tourism and hospitality industry.
What expats usually like the most in Berlin is the vibrant nightlife and the unique cultural attractions. From trendy bars and clubs to iconic landmarks such as the Brandenburg Gate, there's something for everyone to enjoy.
Unfortunately, we can't say there is no crime in Berlin (the crime rate index is around 44, which is not so favorable. Examples of crimes in Berlin include theft, pickpocketing, vandalism, and drug-related offences, which are typically committed by the local population and have minimal impact on the expat population.
A good point for a property investor - Berlin has an extensive mass rapid transit system, known as the Berlin U-Bahn.
Access to healthcare in Berlin is very good, with a Healthcare Index of 68. A strong healthcare infrastructure always improves the desirability of a location, which is a good thing for real estate.
Finally, it is worth noting that Berlin has three universities ranked in the world top 100: Charité - Universitätsmedizin Berlin, Humboldt University of Berlin and Free University of Berlin.
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Renting out in Berlin
If your intention is to buy a property not for personal use, but to rent it out and create income, then this section is for you.
Long-term
Tenant Profiles in Berlin
According to the data reported by Wikipedia, the home ownership rate in Germany is 49%, which is quite low.
It means that, if you decide to buy and rent out in Berlin, there will be a significant tenant pool. It's a good thing.
If you decide to buy and rent out to long-term tenants, you should target young professionals, students, expats, and families looking for a more affordable place to live in the city. Berlin is also home to many creative professionals, entrepreneurs, and digital nomads, who are all potential tenants.
Here is a little summary table we've made for you.
| Property type and area | Profiles of potential tenants | What they are looking for | Expected monthly rent in $ |
|---|---|---|---|
Apartment in Mitte | Professionals, expats | Central location, cultural scene | $800 - $2,000 |
Studio in Prenzlauer Berg | Artists, young professionals | Lively neighborhood, cafes | $600 - $1,500 |
House in Charlottenburg | Families, expats | Residential area, green spaces | $1,000 - $2,500 |
Condo in Kreuzberg | Youth, students | Alternative vibe, nightlife | $700 - $1,800 |
2-Bedroom Apartment in Neukölln | Young families, professionals | Diverse community, amenities | $800 - $2,000 |
Loft in Friedrichshain | Artists, creatives | Open space, cultural hub | $700 - $1,800 |
1-Bedroom Apartment in Wedding | Singles, young professionals | Affordable living, community | $500 - $1,300 |
Rental yields
As of today, rental yields in Berlin are within the 3-4% range. It's low. A good rental yield is typically considered to be around 7% or higher (you might know it already).
Berlin's prime rental yields are found in areas with a high concentration of students, young professionals, and expats, as these demographics tend to be in the market for short-term leases and rental contracts. As such, the most profitable rental properties are often located near universities, tech hubs, and popular tourist attractions.
For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.
Finally, be aware that rental incomes in Berlin are taxed at 10%, which is very advantageous.
Short-term
You could also decide to rent short-term to business travelers, students on exchange programs, or digital nomads looking for an extended stay in Berlin. Tourists looking for an extended stay in the city are also potential tenants for short-term rental in Berlin.
If you decide to go with that option, look for properties in Mitte, Charlottenburg, Kreuzberg, Friedrichshain, Prenzlauer Berg, and Neukölln. These areas are popular with tourists and offer a good return on investment.
Currently, there are approximately 7,000 active Airbnb listings in Berlin, reflecting a highly dynamic and bustling short-term rental market. The average daily rate stands around $139.
You have the opportunity to generate a nice additional income stream then. According to online testimonials and analytics platform like AirDNA, Guesty and Inside Airbnb, people who offer short-term rentals in Berlin can make around $2300 per month. Also, the average occupancy rate is estimated at 90%.
Is it worth buying real estate in Berlin then?
Buying a property in Berlin can be a smart move if you're planning to settle down in the city for the long haul. It's a good choice if you want to build equity and have confidence in Berlin's stable economy.
The property price-to-rent ratio suggests that buying makes more sense in the long run compared to renting. Plus, Berlin offers various property types to suit your preferences and needs. If you plan to rent out the property, the diverse tenant pool and low rental income tax can provide a decent income stream.
However, if you're not sure about your long-term stay or have a limited budget, buying may not be ideal. The high property prices in certain neighborhoods could strain your finances. Additionally, Berlin's property market carries risks like price fluctuations and regulatory changes.
If you're looking for high rental income, Berlin's relatively low rental yields might disappoint you. And, as a foreign buyer, you'll need to navigate complex ownership regulations and potential language barriers.
In short, Berlin's property market can be a good fit for long-term investors with a stable financial outlook, but it may not suit those with short-term plans or a tight budget.
Make sure you understand the real estate market in Berlin
Don't rush into buying the wrong property in Germany. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.
The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.