Realtalk: Why more Berliners invest in real estate now
Berlin’s economy is growing unstoppably: Currently an annual GDP growth of 2.7% can be observed in the city. The GDP - or gross domestic product - is the unit used to measure the market value of all the goods and services produced in a certain region over a certain period of time. Considering that Berlin’s GDP is at the peak of Germany’s stable economy, the city seems to be very well off.
And yet, so far only 15% of Berlin’s residents own property - a staggering low compared to most other large metropoles in the western world: 32% in New York for example, and as much as 52% in London. So how come Berliners are only beginning to invest in Berlin real estate now? The answer is a complex composition of social, historical and economical factors:
100 years ago Berlin measured a population of 4 million people and was considered an international centre of leadership in science, arts, the humanities, education and the industries. However, when the ruins of the city were divided between the USA, UK and France on the western side and the Soviet Union on the eastern side after WWII, foreign investors lost interest in Berlin as an economical hub. The city was rebuilt to a certain extend, but frankly investing large capital into this hot zone of the Cold War was too risky. Without international capital circulating in the city, locals naturally saw no need to invest in Berlin real estate either. Living here was cheap, and without noteworthy economic progress the city fell into a Sleeping Beauty-like trance on both sides of the Berlin Wall - an under-capitalised shadow of its former glory.
Then the Berlin Wall that separated the West and the East from one another was finally torn down in 1989, and the city was once again named the capital of reunified Germany. The 1990s were the Berliners’ playground of rediscovering what their city’s identity meant. The combination of incomparably low living costs with the vast possibilities an open market metropole like Berlin had to offer created a cultural boom that would soon attract major international investors once again. The city’s population began growing, and every year it seems to grow ever faster. While between 2000 and 2005 Berlin’s population grew by 11,800 residents only, it grew by 206,500 residents between 2013 and 2018.
Due to its high living standard and attractive state subsidies to boost innovation, there is an immense influx of top talent in all areas of the industry. Every single day almost 165 new people move to Berlin. That is 60,000 new residents every year that need a place to live - and with an apartment vacancy of 1.1% currently and only 8,800 new housing units finished annually, the demand for residential space is enormous. For more information about the Berlin real estate market, please feel free to subscribe to our newsletter.