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Berlin: Germany’s Real Estate Market 101

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Berlin real estate – a planned economy

 

Anyone who has ever read any reports on Germany’s property markets will know that the real estate economy in the country is broken down into a number of sub-sectors, both in terms of geography and property types. Given the country’s federal structure, with 16 individual states and city states, there is not a single, dominant property market in the way that London is by far the most dynamic market in Great Britain, or Paris casts its shadow over every other city in France. Experts refer to the big five, major seven or top ten. Whichever way the market is sliced, Berlin is among the most important property centres in Germany.  In this blog, we’ll take a look at some of the key characteristics of the different real estate market sub-sectors in Berlin and explore some of the typical terminology you’ll come across as you engage with local partners, investors and developers.

 

True to type

 

The major real estate categories are the same as those found in any major city, ranging from the city’s housing stock (Wohnimmobilien), which includes detached, semi-detached and terraced houses (Einfamilienhäuser, Doppelhaushälften, Reihenhäuser), as well as rental apartments (Wohnungen), condominiums (Eigentumswohnungen) and multi-family apartment buildings (Mehrfamilienhäuser, Zinshäuser) to commercial properties (Gewerbeimmobilien) such as retail real estate and shopping centres/malls (Handelsimmobilien, Einkaufszentren), office real estate (Büroimmobilien), hotels (Hotel), and commercial and industrial buildings (Gewerbeimmobilien) that can include warehouses and storage facilities (Lagerimmobilien), distribution centres and logistic hubs (Logistikimmobilien), and factories and production plants (Werke, Fabriken or Industrieimmobilien).

 

Zoning in

 

Let’s take a deeper look at this from an urban planning perspective. We’re using Berlin as an example, although the same principles apply across Germany’s other towns and cities. Berlin’s Senate is responsible for producing and maintaining the city’s zoning (or land-use) map. Zoning is used as a tool to steer the way in which the city and individual neighbourhoods develop, either opening up sections of Berlin to new types of use or putting the brakes on potential change. The zoning map (Flächennutzungsplan) is a combination of the descriptive and prescriptive: depending on the existing character of a neighbourhood, or the type of development planning authorities would like to encourage, certain land use categories are mapped out.

 

Living in Berlin

 

For example, residential neighbourhoods (Wohnbauflächen) are designated as W1 (high-density, 5-6 storey apartment buildings), W2 (high-density, typically 3-4 storey, sizeable green areas), W3 (groups of multi-family apartment buildings, rows of terraced houses, etc) and W4 (residential areas on the city’s periphery, typically detached and semi-detached houses). Both W3 and W4 areas can have a more urban or more rural character and, as housing density increases, an area can be reclassified.

 

Working in Berlin

 

Then there are the mixed-use areas (Gemischte Bauflächen) M1 (downtown CBD with a mixture of office, hotel and retail space alongside inner-city housing) and M2 (lower density and not quite so central, with a higher proportion of housing alongside the other categories). Then there are the sections of the city with high concentrations of retail stores and inner-city shopping centres (Einzelhandelskonzentration). Commercial and industrial areas (Gewerbliche Bauflächen) include the established production facilities of Berlin’s major manufacturing and technology companies (places like Siemensstadt), many of which are fairly central, along with sites further away from the CBD and brownfield sites that offer potential building land as Berlin’s economy grows.

 

Leisure in Berlin

 

For specific industries or sectors of the economy, there are also a number of special zones (Sonderbauflächen) reserved for scientific and laboratory use, or big box, out-of-town retail outlets. These zones tend to be unique in character, such as the area around the Olympic Stadium or the science and technology hub at Berlin-Adlershof. Major space is allocated for parks, waterways, allotments, cemeteries, sport facilities and other open spaces (Grunflächen), as well as for agricultural and farming use (Landwirtschaftsfläche) and forests (Wald).

 

Change-of-use?

 

Converting property from one use to another is an option many investors explore; unfortunately it is not usually a straightforward procedure. In Berlin there are strict regulations against the misuse of property (Zweckentfremdungsverordnung). If land or an a property are authorised for housing. A change-of-use application (Antrag auf Nutzungsänderung) can be submitted to planning authorities in the hope of receiving their approval. Approval is required if you are planning to convert a shop into a restaurant, for example, or develop a property that falls outside the current zoning specifications.
Do you think that Berlin’s authorities are too prescriptive in their zoning plans? Or are you happy that the character of a neighbourhood is secure in the hands of the city’s urban planners? Let us know what you think!

One Comment

on Berlin: Germany’s Real Estate Market 101.
  1. -

    Honestly! This is first class.
    We have published and spread the word several times.
    Love to read it and great to see that the German market is opening for English speaking real estate investors.

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