Berlin office market registers record result

Many B, C and D cities in Germany are now more attractive for investors than the Big Seven of Berlin, Düsseldorf, Frankfurt, Hamburg, Cologne, Munich and Stuttgart, according to a report in Handelsblatt.

A study by the real estate agency Engel & Völkers analysed real estate offers in 57 German cities, including properties in a range of locations, building standards and ages.

Despite Germany’s general shortage of housing, higher prices and rents can be achieved in university towns and the regions around the largest metropolises than within the Big Seven, according to another study by consultants F+B. The main reason for this is that prices and rents in A cities have already reached such high levels. Square metre prices for condominiums are already higher than the square metre prices for mixed-use residential/commercial buildings. F+B points out that as property prices accelerate at a faster rate than rental prices, rental yields are driven ever lower.

Meanwhile, take up of 860,000 sq.m. in Berlin’s office market in 2016 broke the previous record set in 2015 by almost 3%, according to Immobilien Zeitung.

The report said the city’s vacancy rate stands at 3% and demand is far outstripping supply. As 2016 drew to an end, around 370,000 sq.m. of new space was under construction, of which roughly 245,000 sq.m. was as yet unlet.

Nevertheless, only a quarter of the office space currently being developed will come onto the market during 2017. At the same time, office developments are competing with hotel and housing projects for the small number of development sites in Germany’s capital city.

As a result, peak rents at Potsdamer Platz and Leipziger Platz have now risen to EUR 28.50/sqm. This is 14% higher than in 2015 and approaching the level seen during the new