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Berlin on course for continued growth in residential development

The volume of residential real estate under development in Berlin has finally returned to the heights last seen during the boom decade of the 1990s. In 2015, Berlin's building authorities approved the development of 22,365 apartments, a figure almost twice as high as the number of permits issued in 2013. And there's no doubt that the upsurge in construction activity comes at an opportune time. After all, for an ever-increasing number of both national and international cosmopolitans, Berlin is most definitely “the city to be”. According to figures published by Berlin's Investment Bank, the city has grown by 144,000 inhabitants over the past three years alone – equivalent to adding the total population of a city such as Paderborn or Regensburg.

High demand due to population growth and smaller households

Around 3.5 million people currently live in Berlin, and the population is still growing. In its latest population forecasts, the Senate Department for Urban Development and the Environment assumes that the number of Berliners will exceed 3.8 million by 2030, and that is based on their mid-range scenario. In its upper-range scenario, the Senate goes as far as to forecast that Berlin's population could break through the four million threshold. As a result of this rapid growth, there has been equally rapid growth in demand for housing of all types — from small practical apartments through to luxury penthouses.

The situation is compounded by the long-term trend toward smaller households, which is also serving to drive demand for more residential property. Berlin's Investment Bank revealed that 53.9 percent of the city's households were single-person households in 2014, and 28.4 percent of households comprised just two persons. Based on these figures, four-fifths of all Berlin households are classed as small households. Still, the term “small household” doesn't actually mean that people are actually living in smaller homes. If anything, the trend toward more space per person and bigger homes is showing no signs of reversing anytime soon. What's more, the tendency for people to live in ever-larger homes is set to continue.

Limited development restricts the availability of housing

The development of new residential real estate has been trailing the city's population growth for a number of years. After peaking at almost 25,800 building permits in 1997, the number of apartments approved went into steady decline, reaching a low-point of 3,100 permits in 2003. The number of apartments gaining official approval each year remained in the four-figure range all the way until 2012 – between 2003 and 2012, Berlin's officials issued building permits for a total of just under 54,600 apartments, at an average of just 5,500 apartments per year. It wasn't until 2013 that the number of permits once again rose into the five figure range, with a total of 12,500 apartments approved for development.

Alternatives to developing new housing

2015 saw a much needed release of pent up pressure in Berlin's housing construction market. With building permits issued for 22,365 apartments, the volume of approvals represented a seven-fold increase over 2003. A total of 17,935 apartments will be created as newbuilds, a third of which have been earmarked as condominiums. But it is not just new residential developments that will deliver new living space. More than 4,400 apartments will be created either as a result of rezoning existing buildings for residential use, or by adding storeys to existing buildings and converting unused loft space. These methods for delivering new residential space are certain to play an ever greater role in future, especially as they provide significant opportunities to increase the supply of housing in popular, central districts.

 

 

 

A good example of a hugely successful attic conversion, can be found in the sought-after Pariser Straße: An impressive Wilhelminian apartment building has become home to luxurious penthouses, offering the perfect balance between modern comfort and historical flair. Berlin's Senator for Urban Development, Andreas Geisel, recognizes the substantial potential of loft conversions: Up to 50,000 apartments could be created in this way, he estimates.

Berlin-Mitte has a clear lead in new residential developments

Of the building permits issued by Berlin's officials during 2015, more than 3,800 were for units in Berlin's popular Mitte district. The vacant lots that dominated the district's streets at the start of the twenty-first century have steadily disappeared. This comes as no surprise given the extent of demand for new residential space in Berlin-Mitte: The perfect combination of homely neighborhood and major metropolis certainly offers rich variety. In the numerous neighborhoods, each one quite different from the next, there is sure to be the perfect spot for everyone. And apartments here are much sought-after: With a vacancy rate of less than two percent, it does not take long to find tenants for a newly available apartment. The ideal foundation for an attractive investment, today and in future.

 

Photo: Wilhelminian apartment building in Pariser Straße (credit: Zabel Propety AG)