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2023 IBB Housing Market Report Summary 2023 IBB Housing Market Report // Summary // Foreword Foreword In 2022 and 2023, Berlin experienced extraordinary events the likes of which have not been seen since reunification. The war in Ukraine and the resulting movement of refugees presented Berlin with major challenges, which, in addition to the existing pent-up demand on the housing market, led to further tightening of the situation. Berlin’s population grew by around 10% over the last ten years, whereas the housing stock increased by just 7%. Berlin will need 272,000 new apartments by 2040. In addition to the developments on the demand side, the economic consequences, including increases in construction, energy and financing costs as well as inflation, presented many citizens and companies with major, sometimes even existential challenges. It is therefore our most urgent goal to provide affordable homes where people in Berlin can live well and safely in climate-adapted neighbourhoods. In order to meet the pent-up demand, it remains crucial to ensure dynamic construction activity and to achieve the target of at least 20,000 new apartments each year. In an effort to strengthen new construction, we must continue to tear down bureaucratic hurdles and to accelerate procedures. The Fast-Track Construction Act is currently the Senate’s most important project to accelerate housing construction. It aims to bundle measures to speed up and simplify planning and approval procedures in order to remove obstacles to the urgently needed construction of new housing. The Fast-Track Construction Act is to be submitted to the Berlin Parliament by mid 2024. Christian Gaebler More than ever before, funded housing is an important pillar when it comes to providing affordable housing. More Senator for Urban and more households – including middle-income families – are dependent on this. We are strengthening Berlin’s Development, Building housing market by ensuring a noticeable increase in supply in this segment. In 2023, the Federal State of Berlin and Housing approved funding for 3,492 apartments. For the years 2024 and 2025, funding for new construction was increased to EUR 1.5 bn annually in the Federal State’s budget. As a result, 5,000 funded apartments are to be approved each year. Even if this issue is sometimes pushed into the background in view of current crises, the fight against climate change is the central task of our time. The building stock is an important factor when it comes to achieving climate targets. The energy-efficient refurbishment projects in around 850 apartments approved in 2023 as part of the newly launched IBB Social Housing Refurbishment Programme, which links funding for energy-efficient refurbishments to rent and occupancy commitments, are therefore a good signal. Our goal must be to achieve both social and ecological justice. Extraordinary times lead to new stakeholders and market dynamics, as this year’s focus topic of the IBB Housing Market Report shows. Temporary furnished accommodation is becoming an increasingly popular segment in Berlin. As a result, rents are being driven ever higher. This thwarts our efforts to offer a safe and affordable home for everyone living in Berlin. This issue must be the focus of the upcoming amendment of the rent freeze at federal level. Berlin will support this endeavour. A joint commitment to housing policy continues to be important when it comes to creating the framework conditions for adequate action in the public interest – both for those living in Berlin and other stakeholders in the housing market. The IBB Housing Market Report is an important source of information in this regard. 2 2023 IBB Housing Market Report // Summary // Foreword Foreword 2022 was once again not an easy year for Berlin’s housing market. In 2022, triggered by Russia’s war of aggression against Ukraine, Berlin experienced the largest inflow of refugees in decades. As a result, demand for living space in Berlin’s already very tight and strained housing market increased rapidly. At the same time, rising energy and living costs increased the financial pressure on households. On a positive note, the number of completed apartments rose again for the first time in 2022 despite high construction costs and a difficult interest rate environment. Even though construction intensity has reached the very high level last seen in the mid 1990s, further efforts in the area of new construction and housing promotion will be necessary in the coming years to ease the situation on the housing market. This is particularly evident when building permits are concerned which in 2022 were below the previous year’s approval figures. And for the first time since 2005, we saw fewer permits than building completions. In 2022, more than 77,000 people – the highest number ever – came to Berlin. Strikingly, Berlin’s growth was based exclusively on migration gains, while natural population growth was negative for the first time since 2006. The steep increase in asking rents made the supply of housing even more difficult in a situation that was already fundamentally tight. EUR 13.99 per sqm. (median): This is how much Berlin’s households had to pay on average for a new apartment to rent in 2023, around 21% more than in 2022. This was not the case in the commonhold apartment Dr. Hinrich Holm segment in 2023 where the average asking price remained flat against the previous year’s level. The owner-occupier Chairman of the Board of segment even saw a decline. The supply situation even increased in both segments. Investitionsbank Berlin (IBB) Low-income population groups are particularly affected by the tight market situation. Apartments with rent and occupancy restrictions are one way for these households to find affordable housing. However, due to the expiry of old funding schemes, this stock fell by 23,266 apartments in 2022. Since 2014, the IBB New Housing Fund has therefore been promoting the construction of new apartments at socially acceptable rents. In total, 21,064 funded housing units have already been approved, including more than 12,000 that were ready for occupancy by 31 December 2023. The new housing funding regulations added further funding models and improved conditions even further. This enabled us to commit around EUR 717m in funding in 2023 – the highest figure to date. In addition to existing and new permanent rental apartments, more and more furnished and temporary apartments were offered on online portals. This segment differs fundamentally from the conventional rental property market, for example through furnishing surcharges or all-in rents which already include other services such as Internet and electricity costs. In this segment, the legal requirements also differ from those that apply to regular rental apartments. This year’s IBB Housing Market Report therefore also focuses on temporary furnished accommodation. As in previous years, the housing market is facing multiple crises. In addition to existing tension on the housing market, climate protection and the urgently needed energy transition will be a particular focus in future. In order to fulfil these tasks, further efforts will be needed on the housing market. The analyses in the IBB Housing Market Report continue to support well-founded housing policy and economic decisions. We wish you an insightful and exciting read! 3 2023 IBB Housing Market Report // Summary // Selected data at a glance Selected data at a glance Berlin 2022 Change compared to 2021 123.60 5.8 percentage points ⭢ 8.80 -1.0 percentage points ⭢ 110.10 7.3 percentage points ⭧ 1,877 6.2 % ⭧ 155.80 22.1 percentage points ⭧ Population (at the main place of residence) 3,755,251 2.1 % ⭧ Number of households 1,983,000 -1.3 % ⭧ 1.90 5.6 % ⭢ Share of one-person households (%) 49.80 -2.8 percentage points ⭢ Percentage of needy households within the meaning of German Social Security Code II (SGB II, Sozialgesetzbuch (SGB) Zweites Buch II) per 100 inhabitants 12.16 -0.4 percentage points ⭨ Average monthly net household income in EUR (median) 2,550 10.9 % ⭧ 2,014,562 0.8 % ⭧ 1,693,600 0.8 % ⭧ 93,499 -2.8 % ⭨ Number of apartments completed (total) 17,310 9.1 % ⭨ of which completed flats (new build**) 15,404 6.7 % ⭨ 16,968 -9.3 % ⭨ 15,186 -10.7 % ⭨ 1.91 1.1 % ⭢ Living space per residential unit (in sqm) 73.20 0.0 % ⭢ Living space per resident (in sqm) 38.30 -1.0 % ⭧ Rent index, net rent without heating costs (2020 = 100) 102.10 2.1 % ⭧ Ancillary rent costs index (2020 = 100) 101.00 0.0 % ⭧ Asking rents (in EUR net without heating per sqm. of living space)* 13.99 21.2 % ⭧ Asking purchase prices (commonhold apartments) (EUR per square metre of living space)* 5,746 -1.2 % ⭨ Key figures trend arrow 2024 Economic factors Gross domestic product (GDP) (2015 = 100), price-adjusted Unemployment rate (related to all members of the civilian working population – in %) Consumer price index (2020 = 100) Construction costs per square metre of living space (new build) (EUR) Price index for new residential buildings (2015 = 100) Housing demand People per household (average household size) Housing supply Housing stock of which leasehold flats of which council housing (pursuant to housing law) Building permits (total) of which building permits (new build**) Rents and housing market Occupancy density (residents per housing unit) Sources: Statistical Office for Berlin-Brandenburg; Senate Department for Urban Development, Construction and Housing; VALUE Marktdatenbank * Evaluation period: 2023, change compared to 2022; data basis: VALUE Marktdatenbank ** including non-residential buildings Supplementary and detailed data can be found in the supplementary list of tables of the Housing Market Report at 4 2023 IBB Housing Market Report // Summary // Housing policy in the city Housing policy in the city in 2023 Housing policy in 2023 was shaped by a number of events. The most important of these are listed below in chronological order: January 2023 The Housing Allowance Plus Act (Wohngeld-Plus-Gesetz) into force, including a significant improvement in benefits, an expansion of the group of beneficiaries and the addition of the heating costs and climate component. February 2023 The IBB Social Housing Refurbishment (IBB Soziale Wohnraummodernisierung) funding programme comes into force. It is designed to support the socially responsible implementation of climate protection targets in existing buildings and create economic incentives for building owners to refurbish existing buildings. Berlin repeats the election to Berlin’s Parliament from September 2021. The CDU becomes the strongest party. March 2023 The ordinance to reduce the cap on general rent increases is passed: In Berlin, rent increases are limited to a maximum of 15% in three years for a further five years in accordance with section 558 (3) of the German Civil Code (BGB, Bürgerliches Gesetzbuch). May 2023 The Administrative Court of Berlin issues a positive ruling on the effectiveness of agreements preventing the sale of properties with rental apartments in social conservation areas. June 2023 Termination protection clause extended: In Berlin, a ten-year lock-up period will continue to apply from 1 October 2023 if owners intend to divide their property into commonhold units. The 2023 simple representative list of rents for Berlin (einfacher Mietspiegel) is published. It is based on an index update and is considered a transitional rent index until the qualified representative list of rents can be published in 2024. The ‘Socialisation of Large Housing Portfolios’ commission (Kommission ‘Vergesellschaftung großer Wohnungsbestände’) presents its final report: Based on a six-month process, the commission considers socialisation to be feasible. The 2023 Housing Subsidy Regulations (WFB 2023, Wohnungsbauförderungsbestimmungen 2023) are published: The conditions for the IBB New Housing Fund (IBB Wohnungsneubaufonds) are significantly improved by introducing construction cost subsidies, among other things. July 2023 The ‘Alliance for New Housing Construction and Affordable Housing’ (Bündnis für Wohnungsneubau und bezahlbares Wohnen) presents its first monitoring report. September 2023 The Senate and the state-owned housing companies sign a new cooperation agreement, valid from January 2024. (Contents: very moderate rent increases, promises of affordability for social rental policy, more funding for new construction). The 6th Amendment Act to the Building Code for Berlin is passed with significant changes for timber construction methods and accessibility and other elements The Bundesrat approves the amendment to the Building Energy Act (GEG, Gebäudeenergiegesetz). In future, every newly installed heating system must be operated using 65% renewable energy. In a first step, municipalities must submit a municipal heating plan by 2028 and large cities by 2026. The law comes into force on 1 January 2024. October 2023 The update of the ‘Alliance for New Residential Construction and Tenant Advisory Services in Berlin` (Bündnis für Wohnungsneubau und Mieterberatung in Berlin) is signed with the districts. The decisions made include, among others, the rapid creation of planning and building law, the application of the Berlin model of cooperative building land development, the activation of new construction potential and cooperation in digitalisation. November 2023 The Federal Constitutional Court rules that the reallocation of funds from the Special-Purpose Covid Fund to the Climate and Transformation Fund is unconstitutional. December 2023 Approval of a total of 3,492 funded newly build apartments (WFB/IBB New Housing Fund (IBB Wohnungsneubaufonds)) distributed over the year 2023. Entry into force of the IBB Social Institutions Apartments (IBB Soziale Trägerwohnungen), WFB Social Demand Groups (WFB – Soziale Bedarfsgruppen) and IBB Young Living (IBB Junges Wohnen) funding programmes. Application stop for the KfW programmes 297 and 298 for climate-friendly new construction (Klimafreundlicher Neubau) as the funds provided under these programmes are exhausted. 5 2023 IBB Housing Market Report // Summary // General situation and important trends General situation and important trends Demographic and economic challenges are having a drastic impact percentage points to 7.4% in 2022, while people moving to the Berlin faced new challenges in 2022 and 2023, which were also relocations were predominantly from the inner to the outer city, reflected in the dynamics of the housing market. The Russian the inner-city districts recorded migration gains due to people war of aggression in Ukraine and the resulting refugee move- moving into the city from outside. inner city also rose by 13,294. This trend reversal must certainly be seen in the context of refugee movements. While inner-city ment resulted in a substantial increase in the German capital’s population: In 2022, a net total of 77,779 people came to Berlin The extent to which households can provide themselves (+2.1%). At the same time, rising interest rates and difficult with housing also depends on the employment status of the economic conditions hit many market players hard. This widened household members. In October 2023, the unemployment rate the gap between supply and demand for housing even further, increased by 0.5 percentage points year-on-year to 9.3% (192,771 bringing the situation on Berlin’s housing market to a head. people). At district level, ten districts also recorded a higher Asking rents in 2023 are clear evidence of this development: At unemployment rate than in the previous year. Neukölln once a mean value of EUR 13.99 per sqm., the listed rent level for the again saw by far the highest number of unemployed – at 14.1% city as a whole rose sharply both as a percentage and in absolute – measured in terms of civilian labour force. This was followed by terms compared to the previous year (+21.2% and EUR +2.45 per Mitte with 11.1%. Steglitz-Zehlendorf again had the lowest rate sqm. compared to 2022). At the same time, Berlin once again re- at 6.7%. corded a decline in the number of listings which hit households looking for a home particularly hard. Trend in supply Trend in demand With the increase in supply, new construction and expansion In 2022, Berlin’s population grew and reached a new high of pressure on the housing market. The focus here is on pent-up 3,755,251 in total. The gains were entirely due to positive net construction demand, which describes the potential of apart- migration – primarily caused by refugee migration from Ukraine ments that can be added to the housing stock in the coming (46,432 people). Increased immigration from other regions was years. In 2022, pent-up construction demand corresponded to also recorded, resulting in an increase of around 78,000 people 62,361 apartments. Compared to 2021, this figure decreased in 2022. On the other hand, the natural population growth trend slightly, but still remained at a high level. Around 53,000 apart- reversed: For the first time since 2006, more deaths than births ments were in the new build sector. Many of these apartments were recorded. (70.1%) were already under construction. Construction permits continues to be the most important instrument for relieving for most of them were issued between 2020 and 2022. Looking The number of inflows from the greater Berlin area and the old at the years 2013 to 2019, the realisation rate was 86.5%, which and new federal states in 2022 remained at roughly the same is not surprising given the average processing time of 28 months. level as the previous year, with only the inflows from the old federal states decreasing by around 3,000 compared to 2021. The Building permits mark the beginning of the construction phase. outflow trend seen in recent years continued: For a number of In 2022, permits for 16,968 apartments were issued in Berlin years now, the greater Berlin area and the new federal states (es- – 1,748 fewer than in 2021 (-9.3%). Fewer and fewer building pecially Brandenburg) have been the destination for many Berlin permits have been reported each year since 2017. In a ten-year households. In 2022, 11,012 people were recorded to have moved comparison, only 2013 saw fewer permits issued. Classified by to the municipalities in the greater Berlin area. A total of 6,984 sub-segment, multi-storey residential construction continued to Berliners moved to the new federal states – the second-highest dominate with 13,967 approved apartments (around 82%). Trep- figure since 2013. tow-Köpenick recorded the highest figure with 3,099 approved apartments in 2022, followed by Lichtenberg (2,157 apartments) An unusual picture emerged when it comes to age groups: For and Pankow (1,817 apartments). The three eastern districts the first time in over ten years, only the group aged 65 and above together accounted for around 47% of all new building permits. showed a net migration loss. Migration gains were recorded in Steglitz-Zehlendorf and Neukölln recorded a strikingly low num- the other age groups in 2022, above all in the 18 to under 30 age bers of new building permits of 293 and 379 residential units, group with a balance of 52,096 people. The gains in migration respectively. A look at the previous year shows that the decline among under 45-year-olds were clearly characterised by migra- in the number of new building permits was mainly driven by tion from Ukraine. The internal migration rate increased by 0.3 Lichtenberg and Spandau, which together recorded 3,200 fewer 6 2023 IBB Housing Market Report // Summary // General situation and important trends building permits than in 2021. However, the focus of new construc- rented housing stock) from 1.71% (2021) to 1.01% (2022). The divi- tion in 2022 continued to be on the eastern part of the city. Housing sion into commonhold units was observed throughout the city, with companies were once again the main building owners, followed by a geographical focus on the city centre. A particular focus was on public contracting parties. Charlottenburg-Wilmersdorf, Mitte and Friedrichshain-Kreuzberg – districts with structurally high shares of rented apartments. In 2022, In terms of completions, a total of 17,310 new apartments were the majority of the apartments sold (55.9% or 5,292 apartments) built, 1,440 more than in the previous year (+9%). Although the were vacant at the time of sale. 6,192 apartments – 71.9% of all sales Senate’s new construction target of 20,000 apartments per year was – were sold by private sellers. On the acquisition side, almost every not achieved, this did mark the first increase in completions since apartment was purchased by private buyers (93.4%). This suggests 2018. Most of the apartments were built in apartment buildings: an increasingly small-scale privatisation of residential property in Around 83% (14,393 apartments) of all completed apartments fell Berlin. into this segment. Compared to 2021, the number of apartments in apartment complexes increased by 1,511. In addition, a total of 975 Market for detached and semi-detached homes detached and semi-detached houses were built in the year under review. This corresponded to a decrease of 277 residential units, mean- In terms of price development, owner-occupied homes experienced ing that this segment accounted for around 6% of new construction a trend reversal in 2023: After rising for several years, the asking activity. In the last ten years, construction of new owner-occupied purchase price fell again for the first time in 2023. On average, homes has effectively halved (-49%). In terms of the geographical owner-occupied homes were listed for EUR 639,000, corresponding distribution of all segments, most residential units were completed to 8.5% against the previous year. The price decline was evident in in Treptow-Köpenick (3,904 apartments) and Marzahn-Hellersdorf both the new-build and existing property segments, with existing (2,761 apartments). Neukölln recorded the fewest completions with properties especially experiencing a drastic price slump of around 392 realisations in 2022. 9.5% (EUR 66,000 in absolute terms). By contrast, prices for new builds fell more moderately by around 3.8% (EUR 29,030 in absolute Since 2014, the construction of new apartments with socially accept- terms). The decline must be seen in particular in the context of high able rents has been funded by the Federal State of Berlin as part of interest rates and the economic situation. Price momentum was the IBB New Housing Fund (IBB Wohnungsneubaufonds). A total of driven by the top price category above EUR 700,000, which fell from 21,064 funded apartments were approved between 2014 and 2023, 48% of all listed apartments in Berlin as a whole to 38% within just including 12,407 funded apartments that had already been com- one year. Large shares of owner-occupied homes in this category pleted by 31 December 2023. Since the start of the new construction were recorded particularly frequently in Charlottenburg-Wilmersdorf funding programme, funding provided by the Federal State of Berlin (76%) and Steglitz-Zehlendorf (71%). The lowest price category of has risen steadily from a maximum of EUR 1,200 per sqm. of living less than EUR 500,000 was mostly see in Marzahn-Hellersdorf with space in 2014 to up to EUR 5,300 per sqm. of living space in 2023. 35% and Treptow-Köpenick with 34% of listings. Throughout Berlin, The year 2023 saw a peak with an approved funding volume of EUR the share of owner-occupied homes on offer with an asking purchase 717 million for 3,492 funded apartments. A total funding volume of price of less than EUR 500,000 rose by 9 percentage points to 28%. around EUR 2,288m was approved from 2014 up to and including The decline in asking prices was accompanied by a parallel increase 2023. Depending on the funding model, different initial rent levels in the number of listings: Since 2021, this has risen by around 1,000 are possible as part of new-build funding. These range between EUR listings per year, including in 2023. A total of 5,235 owner-occupied 6.50 per sqm. to EUR 7.00 per sqm. of living space in the 1st funding homes were offered (+23% compared to 2022). model and in the newly introduced 3rd funding model of the 2023 Housing Subsidy Regulations (WFB 2023, Wohnungsbauförderungsbestimmungen 2023) with an extended income limit of up to 220% Market for commonhold apartments at a maximum of EUR 11.50 per sqm. of living space. For many people, home ownership is an important element of personal fulfilment and retirement security. Compared to the previous Division of apartment blocks into commonhold units year, the number of commonhold apartment listings registered in 2023 increased by 1,969 and most recently totalled 25,598 listings, The structure of owners on the supply side changes particularly as which is a first in a multi-year comparison: For the first time, more a result of subdivision into commonhold units. In 2022, a total of owner-occupied apartments than rented apartments were listed on 17,123 apartments resulted from the division into apartment units public platforms. Existing apartments (20,469 listings) accounted and 9,472 apartments were sold. Compared to the previous year, this for the lion’s share here, whereas only 2,068 new-build apartment corresponds to a decrease in the allocation rate (in relation to the listings were recorded. In contrast to owner-occupied homes, median 7 2023 IBB Housing Market Report // Summary // General situation and important trends asking prices for commonhold apartments stagnated recently. In In the overall view of the price structure by age category and living 2023, households had to pay EUR 5,746 per sqm., which is EUR 71 space, there was few changes in 2023 compared to previous years. per sqm. less (-1.2%) than in the previous year. The minimal decline Once again, apartments built since 2011 were the most expensive, in prices was more pronounced in new builds than in existing with rents of between EUR 18.57 per sqm. and EUR 23.21 per sqm. properties: Newly built residential units were listed for an average The highest value was recorded for the smallest flats with less than of EUR 8,038 per sqm., 4.4% less than in the previous year. The 40 sqm., which were well above the EUR 20 per sqm. mark for the median asking price for existing apartments remained almost at the first time. Very high asking rents of over EUR 14.00 per sqm. were previous year’s level at EUR 5,380 per sqm. In structural terms, the also reported in the neighbouring building age category (2002 to most recent completion years and very small residential units of less 2010). The highest median asking rent was again seen in Mitte at than 40 sqm. and very large apartments of 90 sqm. and more once EUR 18.26 per sqm., followed by Friedrichshain-Kreuzberg (EUR again stood out due to their high asking prices. The highest median 18.33 per sqm.) and Charlottenburg-Wilmersdorf (EUR 17.20 per purchase price was found to be EUR 8,650 per sqm. for apartments sqm.). On the other hand, Marzahn-Hellersdorf and Reinickendorf under 40 sqm. built in 2011 or later. In geographical terms, the were at EUR 10.61 per sqm. each and Spandau at EUR 10.13 per highest values above EUR 6,000 per sqm. were seen in the inner-city sqm. The view of the various geographical structures painted an districts of Friedrichshain-Kreuzberg, Mitte, Pankow and Charlotten- impressive picture: In 2023, Berlin’s city centre became increasingly burg-Wilmersdorf. Marzahn-Hellersdorf, Reinickendorf and Spandau separated from the rest of the city. With a median of EUR 17.80 per recorded the lowest values. sqm., the mean value was EUR 6.76 per sqm. higher than in the outer city districts. Away from Berlin’s city borders, the greater Berlin area (excluding Potsdam) stood out with a high median of EUR 12.38 Market for rented apartments per sqm. Potsdam also recorded EUR 13.00 per sqm. The increase was seen in all geographical structures in 2023, but particularly in In 2023, Berlin experienced a sharp rise in median asking rents. With- Potsdam’s city centre. in one year, the median rose from EUR 11.54 per sqm. to EUR 13.99 per sqm. – an increase of 21.2%. Over the longer period from 2014 to 2023, this represents an increase totalling EUR 5.75 per sqm. (around Key topic: Temporary furnished accommodation 70%). This means that the level for newly let and re-let apartments was twice as high as the local comparative rent. Existing apartments The decreasing number of listings for regular rented apartments was accounted for the majority of units offered. In this segment, the offset by an increasing number of listings for temporary furnished asking rent rose from EUR 10.53 per sqm. to EUR 12.45 EUR per sqm. accommodation. According to our own analyses, this segment com- (EUR +1.92 per sqm. or 18.2%). These price trends become clear over prised at least around 15,000 to 20,000 apartments in the capital city a multi-year period of analysis: In 2023, asking rents for existing in 2022 and dominated the supply situation with a total of 27,402 apartments were 55.6% higher than in 2014. The building stock is listings in 2022. These registered listings mainly concerned inner-city contrasted by new construction, where current developments in districts such as Mitte, Charlottenburg-Wilmersdorf and Friedrichs- construction costs and interest rates as well as the special position in hain-Kreuzberg. However, the peripheral districts also recorded a tenancy law are noticeably reflected: In 2023, an apartment that was significant increase over the ten-year period. The majority of listings newly built between 2022 and 2023 fetched an average asking rent were placed by commercial players who offered the apartments on of EUR 19.85 per sqm. – around 22% more than in 2022 (EUR +3.58 large, specialised service platforms and who listed permanently. A per sqm.). This represents a 61% increase in rents in this segment look at the price structure showed that temporary furnished apart- since 2014. ments were significantly more expensive than regular rented apartments. The median asking rent for temporary furnished apartments The increase in asking rents was accompanied by a parallel decline in in 2022 was EUR 24.44 per sqm. (all-in rent). This discrepancy can be the number of listings: Compared to the previous year, the number partly explained by the different composition of the prices offered for of listings fell by around 2,000 to around 24,000. The average pub- furnished and temporary apartments. Rents are often all-in rents and lication time of a listing for a rented apartment was less than one can include a furnishing surcharge, operating costs with and without week; as recently as 2014, rented apartments in Berlin were listed heating, electricity costs, Internet access and, if necessary, additional for more than four weeks. While the number of listings for regular services such as final cleaning, etc. Nevertheless, it was found that rented apartment decreased, the number of temporary furnished the average net rent, without heating, of these apartments, which apartment on offer increased noticeably. Around 30,000 listings were was recorded in some cases, was also above the regular rent level. As recorded in this segment in 2023, compared to around 16,000 in a consequence, temporary furnished apartments are only relevant 2014. In addition, acording to IBB Wohnungsmarktbarometer private for a certain group of tenants. The offer is aimed primarily at young, contacts were used as one of the most important letting channels. educated and working people with above-average net household 8 2023 IBB Housing Market Report // Summary // General situation and important trends incomes or additional income. Despite the enormous significance of temporary furnished apartments in Berlin’s rental housing market, there are numerous legal uncertainties and unclear data bases. No official figures are available for this segment, nor is there a clear basis under tenancy law. On the one hand, this leads to risks for tenants and landlords; on the other hand, it makes it more difficult to monitor the housing market and subsequently to take political action based on this. Further studies and clarification of legislation are urgently needed. Where does Berlin’s housing market stand today? Last year, Berlin’s residential property market experienced very dynamic population growth in the face of deteriorating economic conditions, above all the difficult interest rate environment. This had a noticeable impact on Berlin’s housing market. The capital city remained an attractive destination, especially for young adults, as evidenced by the high migration gains in the city centre. According to the current population forecast, Berlin is set to grow by 5.0% by 2040. The creation of affordable and needs-orientated living space therefore remains a key issue. Compared with other major German cities, Berlin’s housing market was in a special position in 2022 and 2023 – as can be seen from the sharp rise in median asking rents. While Berlin’s rent cap appeared to be a short-term easing phase, in the current year under review, i.e., 2023, the capital city recorded the highest increase in asking rents since the start of the survey. In no other comparable city was gap between asking rents and local comparative rents so wide. In this tense situation, the construction of new affordable housing plays is essential. However, rising interest rates proved to be particularly challenging. While an increase in supply can be achieved in the short term by realising the construction overhang, a stable approval process is of great importance in the long term. Although the total number of building completions recently rose again slightly, the number of building permits continued to fall. Continued efforts are needed here. In addition, the implementation of climate protection and energy-efficient refurbishment of the building stock will remain key tasks in the coming years. 9 2023 IBB Housing Market Report // Summary // Imprint Imprint Published by Investitionsbank Berlin Bundesallee 210, 10719 Berlin Telephone: +49 (0)30 / 2125-0 Fax: +49 (0)30 / 2125-2020 Copy and Editing Investitionsbank Berlin Real Estate and Urban Development Julia Kühle Telephone: +49 (0)30 / 2125-3904 Fax: We would like to thank the Senate Department for Urban Development, Building and Housing – in particular, Ms Julia Ponikau, Mr Lars Rohrschneider and Mr Stephan Egerer – for their kind support. The summary of the 2023 IBB Housing Market Report is made available to the public for information purposes only. All underlying information has been carefully researched and compiled. We do not assume any guarantee for correctness or completeness. The 2023 IBB Housing Market Report, the supplementary list of tables for 2023 as well as additional interactive presentations and a summary in German and English can be found at: Economic affairs Claus Pretzell Telephone: +49 (0)30 / 2125-4752 Fax: Corporate Communications Lisa Kaufmann Telephone: +49 (0)30 / 2125-2918 Fax: RegioKontext GmbH Geena Michelczak Sophia Wiedergrün Emily Kuntz Hendrik Schlichting Arnt von Bodelschwingh Telephone: +49 (0)30 / 95 59 49 12 Fax: +49 (0)30 / 50 34 84 42 E-Mail: Design and Production Runze & Casper Werbeagentur GmbH Telephone: +49 (0)30 / 28018-0 Photos Senatsverwaltung für Stadtentwicklung, Bauen und Wohnen (Senate Department for Urban Development, Building and Housing) Photo credits: Andreas Labes (p. 2) Investitionsbank Berlin (p. 3) 10 Investitionsbank Berlin Bundesallee 210 10719 Berlin Telephone: +49 (0) 30 / 2125-0 Fax: +49 (0) 30 / 2125-2020 Hotline Landlords and investors: +49 (0) 30 / 2125-2662 Home owners: +49 (0) 30 / 2125-3488 Last revised: April 2024

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