Berlin Property Portal

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Areas Overview

Berlin.

Berlin is divided into local boroughs (administrative districts), each with its own borough government. The boroughs are subject to Berlin’s city and state government. The boroughs were re-organised in 2001 when the 23 Boroughs that were created following re-unification were reduced to the 12 boroughs that now exist. The boroughs themselves have local neighborhoods “Ortsteile“(sub-boroughs) which are based on historical independent cities, villages, or rural municipalities that were united into a Greater Berlin in 1920. Residents even now normally refer to where they live by this description rather than the new borough name (in a number of cases a local community name has been retained in the name of the administrative borough).

Boroughs vary in size from the smallest, Mitte, with an area of 20km2 to the largest, Treptow-Kopenick, which covers an area of 168km2. The re-organisation of 2001 aimed to create boroughs of roughly similar populations while maintaining the original borough boundaries. The most populated borough is Pankow with 360,000 residents and the least populated is Spandau with approximately 225,000 residents. Graphs of economic performance for each borough are compiled in a separate page.

Transport in Berlin is excellent with an integrated service that means its easy to travel alternatively using Sub/Surface train services (the S Bahn and U Bahn ), Trams and Buses. The Tram service is based mostly around the old Mitte area of East Berlin while all other services are Berlin Wide. A single day pass allows unlimited travel on all services (currently 6.10 Euro) with a slightly higher fee where travel is required into the outlying districts, Potsdam etc.

A shift was also recorded in the occupational status of Berlin's working population since reunification with a fall in employed persons and a large increase in the number of self-employed. The rise in self-employment was found primarily in the areas of financing, rental/leasing, corporate services, construction, trade, hotels and restaurants, and transport services.

The city of Berlin covers a total area of 891.4 square kilometres, with the former East Berlin accounting for approximately 45% of the area and West Berlin accounting for the remaining 55%. Non urban use, farmland, woods, water bodies and recreational areas cover approximately 40% of the city’s area, a very high proportion in comparison to other equivalent European cities. Only 20% of the area is in housing/residential use, less than the 26% European average. This compares favourable with Paris for example which has 72% of its area in housing/residential use.

What's happening in Berlin?

High unemployment in Germany, with Berlin suffering more than anywhere else, has been a major drag on the economy since re-unification. This was compounded in Berlin and other eastern regions by the high levels of migration to the West of Germany. Berlin unemployment peaked at nearly 20% in 2005, since then unemployment has shown an un-interrupted fall with the most recent levels recorded at 14% at the end of 2007. With the accompanying economic improvements of lower unemployment and greater business activity Berlin has at last turned the corner after the years of population decline and economic stagnation.

Berlin has a large number of particularly small flats (29 to 55 m2), mostly these are located in the rear wings of Altbau style buildings dating from around 1900. While these flats do not have the prestige of road front locations, with poorer quality stairs and communal areas, they benefit from a more tranquil ambience without the noise from roads that are now quite busy. A modern approach to the presentation/re-development of smaller units like these is to develop a minimalist approach to maximise the impression of space with an “Open Plan“ approach. In areas with a preponderance of low income families this is not the best approach as generally in these areas the demand is for smaller cheaper accommodation but which can still fulfill the requirements of a small family.

Busy, for Berlin, is not the same as what one experiences in other large metropolitan areas in Europe and elsewhere. With a large footprint the city is laid out with wide open spaces and manages to avoid any of the usual claustrophobic impressions felt in comparatively sized cities which have much less space yet many more people, A relaxed pace of Life.

“Half finished or half unfinished”? Even after 15 years of rebuilding there is still much to be done to get the “everything just right” perfect ness seen in the other major cities of Germany. However much has been done and it does not take too much of a stretch of the imagination to envisage how Berlin will look in another 15 years. Providing the reverse in the population decline and increase in the number of households are maintained the steady fill up of vacant properties should mostly have been completed.

The move to a greater number of smaller households, increased divorce rates, older people living longer on their own and just a general tendency for people to want to live alone, is occurring in Germany as in other developed countries. This is clearly visible in the projected growth of the number of household in Berlin. Current estimates are for a an approximate 10% increase in households (240,000) numbers in the next 10 years without factoring in any change in overall population. Add a conservative growth rate in the population of 10,000 residents (approx 6,000 households) per year and the result is a calculated net increased demand for approximately 30,000 additional homes per year.

Now factor in that that dramatically more properties are being taken out of the city stock than are being build and one gets a very clear picture of what is driving the decline in vacant properties. In time there will be a correction in the numbers of new build but with such low current sales prices and relatively high construction costs the balance between supply and demand will remain unbalanced. An increase in the number of new households can only follow an increase in rents/sales prices or lower construction costs (guess which is the more likely). There will be an improvement in the volume of “New Build” at the high end property locations to cater for the “Professional Classes” and with the eventual overall economic growth in the city this should lead to further re-development in “normal” residential areas.

In absolute terms in 2007, for the first time since the property market collapsed in the late 1990’s, the balance of areas with rents going up is now greater than those going down. The most reliable analysis (GSW/JLL survey October 2007) of the Berlin market shows 3 boroughs with rents declining, 5 boroughs are stationary and 4 boroughs showing an increases in average rents negotiated. The BBU (Association of Housing Companies in Berlin and Brandenburg) determined an average rental increase of 2.8 percent for Berlin by the end of 2006. 2007 is probably year 1 of the true recovery in the real property market of Berlin as improvements in the market up to now have been speculative rather than based on basic economic fundamentals.

"Population Implosion in Europe" the myth, an alternative view.

Most analysts looking at demographic trends, birth rates versus deaths, do the simple math’s and before you know it they project there will be nobody left in x number of years. This simple extrapolation fails to address one of the major issues, immigration, and particular the much high birth-rate of immigrant families. The UK for example has recently published population growth statistics with such a wide uncertainty that it’s impossible to know what exactly will happen due to the unquantifiable effects of long term immigration.

The only certainty about current projections is that the greatest variable is the effects of immigration compounded by the much higher birthrate amongst immigrant families. So what’s the difference in the rest of Europe? Yes, currently immigration has been lower but when the Old Europe countries are faced with the collapse of public and private services or allowing more immigration it’s not too difficult to guess the end result. Neighboring countries may even start to compete with each other for immigrants with specific skills to avoid the loss of services. The Old Europe countries in the east (Germany!) close to the large immigrant resources of New Europe look more likely to experience this.

So how is all this going to affect Berlin? Well the first thing to point out is that population change in rural and urban environments will certainly be different. Analysts regularly point to the move to smaller households mostly driven by more and more people living alone. Think about this, where do all of these people living alone want to be. In isolation within poorly resourced rural environments or in well established city localities with all the resources they require on their doorstep!!!!.

Yes there will be a population implosion of sorts which will almost certainly affect isolated rural areas and small communities. Where critical mass is lost in these communities higher costs per head for services, for a dwindling population, creates further momentum in the movement to larger urban environments. While larger urban areas could handle a decrease in population, by scaling back duplicated services, they probably will not even be faced with this.

The conclusion is that large urban areas, like Berlin, will need to cater for an increase in the number of households due to:

I rest my case!

Future Trends

(Anecdotal based rather than data based). With a definite positive trend to the centre, Mitte, and to a less extend the south of the city these will tend to be the hottest property markets of Berlin. Overall most of the boroughs of Berlin have seen property rents and sales prices stabilise and slowly commence their recovery from the crash in prices that occurred between 1996 and 2004. Current exceptions to this are Spandau where rents have fallen recently and Friedrichshain-Kreuzberg where they have been under pressure. Low rates of return will thus hold back price growth in these areas in the short term. In the medium time-frame buoyancy in the overall market and yield compression will result in prices increasing here as well. In the more exclusive borough of Charlottenburg-Wilmersdorf the market has managed to maintain its position with the highest values. With higher levels of retained wealth and lower vacancy rates than elsewhere in Berlin this borough should maintain its premium position. In Reinickendorf sales prices are seen as quite full valued in the near term but would again be projected to increase in the medium term. The boroughs which are seen as having particularly “troublesome” neighborhoods with local social issues are Wedding and Neukölln. With their perceived attractiveness, due to their central location, detailed research of the surrounding neighborhood is essential when looking at investment in these boroughs. Finally Marzahn-Hellensdorf is going through difficult times where rents and sales prices are stagnant and not projected to change in the near future and will probably be one of the last boroughs to see a recovery.

Yield compression (where property prices increase at a greater rate than rents for the same properties) has been a big story in Berlin. The drive for this has been foreign investors who when faced with net rental yields of 8% for complete multi-dwelling houses said “yes please” while German investors said this was not good enough. Eventually when local investors came to realise the acceptability of this level of yield and wanted to buy foreign investors had driven prices up to 7% yield levels and locals were still too late. The most up to data data available indicates rental yields of 5% for individual properties with a possible 20% discount on complete Multi-Dwelling houses investor yields of 6% are indicated by this analysis. /p>

Whether foreign investors stay ahead of the curve will depend on the volume of investors entering the Berlin market but at this moment in time there does not appear to be any shortage of foreign investors willing to buy at lower yield levels than locally. One of the potential effects of the sudden loss of confidence in the property markets, both commercial and residential, elsewhere in Europe where boom times are definitely over could well be a re-focus on the German property market with even more foreign investors competing for properties. In time this could lead to a complete re-alignment in the owner profile of the property stock in Berlin. Recent improvements in the German economy will no doubt increase the availability of funds for German investors and this competition for quality yield with foreign investors bodes well for the market in Germany and in particular in Berlin.

Projected Trends for Property Rents and Sales in Berlin

Landmarks and Attractions

The principle Museum/Gallery centre of Berlin is located at Museum Island in Mitte where you will find the Old Museum, the New Museum, the Old National Gallery, the Bode Museum and the Pergamon Museum. Away from Museum Island you will find the Victory Column (Siegessäule), Berlin's Zoological Garden. the Brandenburg Gate, The Reichstag, Potsdammerplatz, Alexanderplatz.

Other places of interest outside Mitte include; Kaiser-Wilhelm-Gedächtnis-Kirche and Kurfustendam in Wilmersdorf. Schloss Charlottenburg and the Egyptian Museum in Charlottenburg. The East Side Gallery and Volkspark Friedrichshain in Friedrichshain, Checkpoint Charlie and the Jewish Museum Berlin in Kreuzberg. The Bierpinsel, a 1970s style tower in Steglitz, the Botanical Gardens and The Library of the Philological Faculty at the Free University of Berlin by Sir Norman Foster in Steglitz-Zehlendorf.

12 Boroughs of Berlin

The 12 Boroughs of Berlin are: Mitte, Friedrichshain-Kreuzberg, Pankow, Charlottenburg-Wilmersdorf , Spandau, Steglitz-Zehlendorf, Tempelhof-Schoneberg, Neukolln, Treptow-Kopenick, Marzahn-Hellensdorf, Lichtenberg and Reinickendorf.