Glad tiding for investors in regard to Berlin’s residential real estate market keep coming in on a daily basis almost. The international auditing and tax consultancy firm of Ernst & Young recently commissioned an independent prestigious French market research institute to conduct a poll among the board members and senior executives of 812 internationally active companies. 39 percent of the polled managers hailed from North America, 33 percent from Western Europe, 20 percent from Asia – seven percent from Central, Eastern and Northern Europe.

Here is what Ernst & Young wanted to know from the decision makers: “From your perspective, which three European cities represent particularly attractive investment locations at the moment?” The answer will come as a surprise to many Germans. Among the European cities, Berlin ranked third, directly behind London and Paris. Frankfurt, while ranking fourth, did so with a considerable lag. Munich, by the way, only ranked eighth, whereas Hamburg, Düsseldorf and Stuttgart scored places 12, 19 and 23, respectively. This means: Berlin took the lead among all German cities, and did so by a wide margin. Despite my own enthusiasm for the city, this outcome caught me off guard, I have to admit.

To say it again: this was not about Berlin as a real estate location, but about its attractiveness as investment location. As far as the residential real estate location Berlin is concerned, good news confirming how lucrative the city is for investors are coming in every week. The steep increase manifested by the figures of the latest rent table demonstrates that we are seeing precisely what Jürgen Michael Schick and I kept predicting in this very publication: Due to the plunge in construction activity at a time when the population is rising – with the number of households rising even faster – it was perfectly obvious that the vacancy rate, which had caused rents to stagnate or indeed to decline for many years, was going to plummet dramatically.

And this is exactly what a recent survey by Investitionsbank Berlin has confirmed as it shows how low the vacancy actually is now. The “active market” vacancy rate in the Germany’s capital is down to just 2.7 percent, according to the bank’s survey findings. A ratio between two and three percent is regarded – as anybody who knows a thing or two about real estate will confirm – as necessary reserve for any functioning housing market. In some of Berlin’s districts, though, this ratio has already been clearly undercut. Only the boroughs with a large share of prefab housing continue to show excessive vacancy rates. The survey moreover revealed that a large share of the apartments listed as “vacant” in the stats are only unoccupied because they are undergoing modernisation, not because no one is interested in renting them.

Hence it comes as no surprise that both the rent rates for existing properties and those in new ones are surging at a pace not seen in many, many years. So it is only plausible that the multiples at which apartment buildings in Berlin are appraised have soared lately. After all, the multiples reflect the expectations among market players, and these are clearly bullish in regard to Berlin.