Berlin's New Construction Holds Steady: Rising Rents Persist

The construction sector in Berlin is showing unexpected resilience, defying prior forecasts of a significant downturn. Recent analyses presented by the Berlin Hyp real estate financing bank and the consultancy firm CBRE indicate that the city is on track to maintain its construction activity levels.

During a discussion held in Berlin, officials noted that previous predictions had anticipated a drop in the number of completed residential units to between 10,000 and 12,000 annually. However, the latest evaluations revealed that the number of new apartments is likely to remain around 14,000 to 15,000 each year, largely due to the proactive efforts of municipal housing companies.

In 2023 alone, nearly 16,000 new apartments were completed in Berlin. Despite the stabilization of purchase prices for condominiums and single-family homes, rental prices continue to rise sharply. Reports indicate that from 2023 to 2024, rental prices escalated by approximately 12 percent, reaching an average of EUR15.79 per square meter.

Comparatively, the increase in rental prices in Berlin has positioned the city among the leaders in terms of rental growth when contrasted with other major global cities. Analyzing the rental market, it becomes evident that Berlin households tend to be smaller, and residents enjoy a relatively high amount of living space per person.

However, a lack of smaller housing options, such as one-bedroom apartments and micro-apartments, has been identified as a significant issue. The demand for furnished apartments has surged, reflecting this shortage. While there is a clear market for furnished accommodations, the current supply has not kept pace with the rising demand.

Authorities are expressing concern over the impact of this growing rental market, particularly in light of the increasing prevalence of short-term rentals that are removing traditional housing stock from the market. There is hope that new legislative measures at the federal level will empower local governments to better manage and regulate the housing market, particularly regarding the availability of affordable housing for residents.