Rents are rising everywhere – except in Berlin

Frankfurt The experts at the online real estate portal Immowelt do not have good news for many tenants, but they do for landlords: The prices for apartments will rise in most German cities this year, the market observers predict in a current study.

“The corona crisis has shown how stable the residential property market is: rents have not collapsed, on the contrary, they have even risen,” says Cai-Nicolas Ziegler, CEO of Immowelt.

The demand is still high, the supply – especially in the low-priced segment – is still manageable. “We therefore firmly assume that there will be no trend reversal this year either,” concludes Ziegler. However, the increase in rents will not be as strong as in previous years. According to the forecast, it will be more expensive for tenants in eleven of the 14 major cities examined with more than 500,000 inhabitants.

After all: In Munich, Germany’s most expensive city, the curve of rent increases is noticeably flattening according to Immowelt. After the enormous increases in recent years, the asking rents for existing apartments will probably only go up by one percent, the experts predict.

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At the end of the year, tenants must expect to pay 16.10 euros per square meter per month when moving. Despite the comparatively small increase, Munich would still be in first place in the rental ranking by a large margin ahead of all other major cities at the end of 2021.

View of Munich

Apartment rents in the Bavarian capital are rising more slowly than in previous years.

(Photo: dpa)

After Munich follows Frankfurt in second place on the price scale. After a forecast increase of three percent, the monthly rent per square meter at the end of the year would be 12.20 euros. Behind it brings Stuttgart strong on. For the Swabian city, Immowelt predicts the strongest increase by the end of the year: The rental prices for existing apartments will increase by six percent by the end of the year, so that the rent per square meter will then probably reach 12.10 euros.

In Düsseldorf, Cologne and Nürnberg (plus four percent each) tenants will probably also have to dig deeper into their pockets. An increase of five percent is also for Leipzig forecast. With prices per square meter of 6.80 euros at the end of 2021, the price level there is significantly lower than in western German cities.

Berlin rent cap keeps prices low

According to the Immowelt forecast, falling asking rents are predicted for only two cities: Hamburg (minus one percent) and Berlin (minus five percent). In Hamburg this is likely to be due to a larger supply after many new construction projects have been pushed forward. In Berlin, on the other hand, the rent cap is pushing prices down.

The controversial measure of the Berlin Senate came into force a good year ago. Accordingly, landlords have to adhere to upper limits when letting new ones and even lower the applicable rents if the legally defined thresholds are exceeded by more than 20 percent. This move met with fierce resistance in the real estate industry, and the Federal Constitutional Court was brought in. A verdict is expected this spring.

At the same time, experts point out that the regulation has pushed rents for apartments down – but this did not have the desired effects because, on the one hand, the residents of expensive apartments benefit from it and, on the other hand, some landlords prefer to leave their apartment empty or sell it than to offer them to the reduced rents.

According to Immowelt, asking rents for existing apartments in Berlin have already fallen by eight percent from 2019 to 2020. After a further decline, the rent will level off at 8.70 euros per square meter at the end of 2021, the experts now believe. For comparison: Before the introduction of the rent cap, rents of 11.10 euros per square meter were required.

Immowelt also points to the negative side effects of the law: The proportion of cheaper existing apartments in the overall supply has fallen sharply, while the proportion of unregulated, expensive new buildings is increasing.

New buildings drive up costs

The already high-priced new buildings will be further decoupled from the existing properties in many cities over the course of the year, the online portal expects. For Berlin, an increase of six percent in apartments for first-time occupancy is forecast, while the rents of existing apartments are falling. New buildings are excluded from the Berlin rent cap. The square meter in a new apartment in the federal capital then costs 13.20 euros monthly rent.

As with existing properties, the strongest increase in new buildings is likely to be in Stuttgart: plus seven percent by the end of the year. An increase of five percent is expected for Dresden and Leipzig.

The price differences are also large for new buildings: in Stuttgart, tenants of a new building pay 16.30 euros, in Munich (plus three percent) as much as 20.10 euros per square meter. In Leipzig it is just 8.80 euros per square meter. In many other cities, the rent for an existing apartment is already higher.

But the experts do not expect more expensive new build rents for all cities. In Dortmund a decrease of six percent is assumed in Bremen of one percent. The interest in new buildings has declined in both cities in the past, so that the asking rents for these apartments fell slightly, as the study says. This development is likely to continue until the end of the year.

As a basis for the forecasts, Immowelt evaluated the rental prices of several hundred thousand properties that were offered on the website. The rental prices reflect the basic rent for an exemplary apartment with three rooms and 80 square meters on the second floor.

More: Get out of the city: The surrounding area is also becoming more attractive for tenants