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31.03.2021

Investment

Turnaround in Berlin’s standard land values

For years, prices for standard land values have been spiraling in one direction: upward. This is now changing. At least in the short term, prices are holding more or less steady. For real estate buyers, this means that the value of undeveloped land in many Berlin districts has not changed since last year. Multi-family houses in particular are becoming more affordable – but not everywhere. The prices of some residential properties are still rising. Where is the strongest growth? And what influence has coronavirus had on the prices of new building land? Let’s clarify the most important questions.

More popular than ever: prices for owner-occupied homes continue to show strong growth

Standard land values are the average price per square meter of building land in a specific area with comparable conditions in use and level of value. Every year, Berlin’s land valuation committee publishes the figures for all areas of the city – derived from aggregated land sale data. In its latest market report, the committee notes an end to the upward price trend for building land. Why? Apparently because buyers are holding back on investments – especially when it comes to commercial properties.

The situation is quite different in the owner-occupied housing sector. Prices for building land for single-family homes are continuing to rise sharply. In real terms: Between September and November 2020, prices rose by more than 15 percent – compared with the standard land value level of January 1, 2020. Only building land in the segment from EUR 2,000 per square meter settled at a comparable level. Clearly, everyone still loves the idea of owning their own home. For many, it remains the investment of choice.

Your dream property: How to determine the standard ground value

From Kladow to Buch: What are the standard land values in each residential area? Would-be homebuyers can access not only the latest price data online, but prices going back as far as January 1, 2002. Berlin’s Land Valuation Committee (Gutachterausschuss für Grundstückswerte) has set up a web tool for this purpose: BORIS Berlin.

All you need is a zip code and BORIS will show you the latest land price data on a map of Berlin that is  subdivided into building land sections. If you are interested in finding out how much building land costs in your preferred areas, David Borck Immobiliengesellschaft will be happy to provide you with personal assistance.

Boom: Prices are rising most in these districts of Berlin

Even though standard land values in many urban areas are now rising more slowly, in some districts, price rises are still accelerating. For example, the value of building land in Tempelhof-Schöneberg and Lichtenberg has risen by around 23 percent in just one year. How can this be explained?

“This development shows once again that the upward trend now not only has the city center and the established premium locations firmly in its grip, but that districts on the periphery of the city center are also experiencing a steady increase in value,”

explains David Borck, Managing Director of David Borck Immobiliengesellschaft.

Housing on the outskirts of the city: Coronavirus boosts the rise in prices

Fresh air, space, being close to nature. Understandably, this makes single-family homes on the outskirts of Berlin increasingly desirable. The reasons for the continuing growth in land prices are complex – and are not going away any time soon. David Borck comments:

“Price increases in the outer districts will continue, because the coronavirus crisis has prompted many Berliners to look for a larger dwellings in the suburbs and exurbs. And they are more likely to find what they are looking for in Berlin’s outlying districts.”

In short, homes outside the city are a good long-term investment with a high return. Nevertheless, there are also price ceilings in these locations. The most expensive building plots for single-family homes are in Grunewald and Dahlem, where prices remain unchanged at EUR 2,900 per square meter. At the other end of the scale, building land in Schmöckwitz is currently the most affordable at EUR 180 per square meter.

The vexatious rent cap : real estate prices remain stable

The Land Valuation Committee’s report also reveals that Berlin’s controversial rent cap has had little impact on residential property prices. Good news for investors! The losses of the first six months of 2020 were largely compensated by price increases in the second half of the year. According to preliminary data, the number of transactions (23,681 in total) declined by only 11 percent compared to 2019.

The office investment market, on the other hand, has been much harder hit by the negative trend. Transactions were down by a massive 31 percent. As more people are working from home, this is unsurprising – although this trend may well be only temporary.

Conclusion: Berlin residential real estate trend confirmed

What conclusions can be drawn from the latest data on standard land values and prices? First and foremost: Despite the pandemic and political machinations, investments in the capital city remain in high demand with real estate prices holding steady at almost the same level. Once again, Berlin residential real estate has confirmed its status as a sought-after and secure form of investment.

We will be happy to advise you on the new standard land values, provide you with a no-obligation estimate of the value of your property, or assist you in acquiring property – in the city center or on the periphery of Berlin.

 

Outlook: Upcoming topics in this newsletter

We are staying up to date. Are you?

In our upcoming newsletters, you can look forward to these and other topics:

  • Development of rental prices vs. ownership prices
  • Decision on rent cap: What awaits landlords and tenants in Berlin?

Yours

David Borck Immobiliengesellschaft

Schlüterstraße 45 | 10707 Berlin | service@david-borck.de
Telefon +49 (0)30 887 742 50 | Telefax +49 (0)30 887 742 525