The main fact is there was virtually no output for new residential construction in Germany in the last years.
In combination with the international demand especially in Berlin Mitte, Prenzlauerberg and Pankow there is a market shortage and the result are strong and rising prices.
New buildings sell for EUR 3000/mÃ‚Â² and more.
Rent for a new building in these areas start at EUR 10/mÃ‚Â²
So do good renovated prewar houses, EUR 8/mÃ‚Â² at least.
If you want to keep the property and rent it out
The Yield predictions go down because of rising prices but if you get into the game the yield won’t go down, because once you are invested the rising prices for buildings just help to grow your possibilities for rent adjustment.
If you want to resell:
The demand in Mitte and Prenzlauerberg is high to very high, People can afford to pay EUR 3000 and more per mÃ‚Â².
This is not the case in the Rest of Berlin.
Why Mitte and Prenzlauerberg
There is just a small room for a movement into the neighborhood districts, Wedding and Friedrichshain have a social structure problem, that won’t vanish so fast because of the highly protective rental laws in Germany.
It will take ages, if at all to change this structure.
Pankow and Weissensee seem to gain speed as some developers discovered the area, the market is mainly driven by heritage buildings (the renovation of those buildings guaranties one of the rare possibilities to save tax while investing).
But even Pankow and Weissensee have a social structure problem, but its more likely that this will change in the future due to some parameter. For example a lot of commercial contracts in Weissensee, cancellation of rental contracts is much easier here.
A lot of my customers compare the prices with other major cities in the world, but I think this is dangerous because the local people have to pay the rent/or the house with money the ear locally. Nevertheless there is a wide range of people in Mitte and Prenzlauerberg who seem to have very deep pockets.