Scarcity is fueling Berlin’s hot property market, where freehold apartment values have soared over the past year, according to a report Tuesday from Engel & Völkers.
The average sales price for freehold apartments in the German capital jumped more than 13% over the course of 2017, with some of the greatest price growth in high-end locations, according to the brokerage, which analyzed government data from 2016 and last year.
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Three of the four most expensive neighborhoods in Berlin saw double-digit price growth, according to the report.
Wilmersdorf, where apartments can sell for as much as €18,200 (US$21,587) per square meter, saw prices rise 11% last year to reach an average of €401,400 (US$476,114). Zehlendorf apartments saw prices rise 10% to an average of €367,300 (US$435,667), and Prenzlauer Berg saw a 16% spike in prices last year to €338,000 (US$400,913), according to the report.
"The sale prices for freehold apartments in very good locations in Berlin have risen enormously in the last five years," said Günter Fischer, managing partner of Engel & Völkers Berlin-Mitte. "In some of these locations, the market is gradually reaching its upper limit."
Berlin’s marketalso showed strength into the first quarter of 2018.
A separate report ranked Berlin the fastest growing prime property market in Europe and the fourth strongest in the world in the first three months of this year. Prime prices alone, defined as the top 5% of the market, rose nearly 11% over the year ending in March, according to the report, also out Tuesday, from global real estate consultants Knight Frank.
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Engel & Völkers reported Mitte as the most expensive neighborhood in Berlin with prices rising only 2% in 2017. Mitte’s most expensive homes sell for €19,500 (US$23,129) per square meter.
The rapid price appreciation and limited inventory in the center of the city have pushed buyers out to less desirable regions. In fact, sales have slowed in Berlin as new development and listings fail to keep up with the pace of demand.
"There is still further potential for new-build projects," Mr. Fischer said, "especially in the good and average locations of Berlin."