Real estate as a capital investment in Berlin: investment, property prices and value development

Real estate as a capital investment in Berlin – The real estate market in Berlin attracts investors worldwide, not least because of the unique increase in value it has shown over the years. The combination of moderate rental income and substantial value appreciation offers excellent investment potential. Tax incentives increase Berlin’s attractiveness for private and commercial real estate investors. Let’s take a look at the price development in Berlin over the last 10 years (spoiler +147%).

Germany’s AAA location: Berlin

Anyone buying their first property is looking for an immediate return. If you have time, you can make impressive profits in Berlin. Tax-free for owner-occupiers after just 3 years. For owner-occupiers, for investors, Berlin is the place to be in Germany and nothing will change.

Berlin real estate market: A market with exceptional value growth.

This makes Berlin not only the place to be, but also a hotspot. The most expensive streets in Berlin are mainly in Mitte and the southwest, as far as Wannsee and Potsdam. No other German city sees more investment. But how have buyer prices (for houses) developed?

A look at purchase price trends over the last 10 years and what you can learn from them for your investment in Berlin.

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Why do many domestic and foreign investors love Berlin?

The impressive rise in real estate values in Berlin

The development of property prices over the last 10 years is remarkable: from an average value of 2,070 euros per square meter, prices have risen to 5,114 euros per square meter, which corresponds to an impressive increase of 147% (official data: Federal Statistical Office). Even in shorter periods such as 5 years (increase of 51% to 3,378 euros/m²) and 3 years (increase of 20% to 4,249 euros/m²), the enormous growth potential of the Berlin real estate market is evident.

Berlin: +147 % price increase in 10 years

The figures illustrate the long-term value creation of Berlin real estate:

• 10 years: Increase from € 2,070/m² to € 5,114/m², which corresponds to an increase in value of 147%.
• 5 years: Increase in value from € 3,378/m² to € 5,114/m², an increase of 51%.
• 3 years: Improvement from € 4,249/m² to € 5,114/m², an increase of 20%.

Tax-free sale: Example of personal use

Saving taxes in Germany is not that difficult. For example, through personal use. Calculate the increase in value, a great investment with a lot of security.

• Investment sum: 13 million euros
• Tax-free sale possible after 3 years for private use.
• An increase from EUR 13.0 million to EUR 15.6 million was realized for non-rented properties, which corresponds to a
• This corresponds to anincrease in value of 20.3% or EUR +2.639 million in 3 years.

PS:

• Long-term letting: A combination of rental income and capital appreciation can lead to considerable increases in assets after 10 years(speculation period).

Rental yield compared to value appreciation

Despite a current rental yield of just 1.2% with an average basic rent of 13,500 euros per month, the long-term performance illustrates the true profit potential. Over a period of 5 years, the rent adds up to 810,000 euros and over 10 years to 1,620,000 euros, making the property not only an ongoing income stream but also a valuable asset.

You can invest in Berlin apartment buildings or in private real estate for your own use, such as villas in Berlin.

Townhouses, residential and commercial buildings in Berlin.

Exclusive villas in the southwest of Berlin.

Tax benefits for private use and rental

One of the biggest attractions of the Berlin real estate market is the tax incentives. For private use, the German tax system allows a tax-free sale after just three years. Regulated by the speculation tax. This means that a non-rented property purchased for 13 million euros can be sold for 15.6 million euros after an increase in value of 20.3% – a tax-free profit of 2.639 million euros.

Strategic investment approaches for landlords

For landlords, the ten-year holding period for a tax-free sale offers a long-term investment opportunity. Through the combination of rental income and capital appreciation, a landlord can realize significant asset growth after 10 years. This underlines the importance of choosing the right time to buy and sell in order to make the most of market opportunities.

Conclusion: Long-term prospects in the Berlin real estate market

The data speaks for itself: the Berlin real estate market offers enormous potential for investors with a long-term perspective. Although rental yields may be moderate at the moment, the continuous increase in value and tax advantages ensure that patience and a strategic approach pay off. Berlin therefore remains a top address for real estate investors with foresight.

More about investments in Berlin

Read more about investments in Berlin here:

• Buying a villa in Berlin
• Berlin’s most expensive street
• Real estate as a capital investment
• Off Market Real Estate Berlin