Berlin’s housing market is more attractive than ever. By now, even institutional investors are sharing this view – and the above-mentioned BulwienGesa survey says as much. However, I should like to add, this sort of announcement by institutional investors in surveys does not necessarily imply that they will put their money where their mouth is, and actually do some investing. There are any number of examples to back the point I am trying to make. Things take time, reads the institutional players’ maxim, and so my guess would be that many insurance companies and superannuation schemes will not commit themselves in Berlin until prices have risen further.
Even now, though, the Berlin market is attracting an increasing number of family offices and high net worth individuals that seek to benefit from the soaring rent rates and purchase prices.
I, for one, find that the decisive question is this: Will the political arena just watch from the sidelines? Will Berlin limit itself to draft proposals in the German Upper House to lower the capping limits? As it is, there are first signs in Berlin for a political agenda that will seek to implement re-letting restrictions in rather dubious ways, for instance after the expiration of government-sponsored follow-up funding.
I vividly recall the situation in the late 1990s when Berlin’s boroughs successively introduced “urban milieu preservation areas” characterised by housing rent caps. Hamburg is experiencing a similar phenomenon at the moment. So what are the parameters that the incoming city government will define in the wake of Berlin’s mayoral elections in September? Already, the incumbent Senator for Finance is openly considering another real estate transfer tax hike, whose rate is 4.5% as it is. Calls for tightening the restrictions on rent increases for re-let apartments are also getting more vociferous. And a key role will no doubt be played by the German Tenant Union whose demands have an uncanny way of making themselves more than just heard in German politics.