Although there is an enormous demand for housing in Berlin, the number of newly built apartments falls far short of political targets. The reasons for this are varied and complex. Below, we highlight the most important factors that are currently hampering construction in Berlin.
Over the past three years, the cost of residential construction in Berlin has risen significantly. Particularly affected are:
The result: Many projects are becoming more expensive than planned or are not being realized at all.
Another key factor hampering the market is the drastic change in financing conditions since mid-2022. While construction interest rates were often below 1% during the boom phase, they are now around 4–5%.
Private builders and small developers in particular quickly reach their financial limits as a result.
Construction projects in Berlin are often slowed down by lengthy approval processes. With an average waiting time of 13 to 18 months for a building permit, the capital lags significantly behind the rest of Germany.
The long approval times mean that many projects lose their economic viability.
With the Building Energy Act (GEG), legislators are providing important impetus for climate protection and sustainability. These requirements are fundamentally sensible, but they significantly increase construction costs and planning efforts.
The specifications are often difficult to meet, especially for private or smaller developers. This contributes to a further shortage of new construction projects.
Without substantial reforms in the provision of building land, consistent digitization of public authorities, and more attractive subsidy conditions, the political goal of 23,000 new apartments per year will not be achieved. Only through joint efforts by politicians, business, and administrators can housing construction in Berlin regain momentum.
Would you like individual advice on real estate financing or new construction in Berlin? The Victor Investment team will be happy to advise you personally.
