Facts about the district
The district of Mitte is located in the city center of Berlin. It includes sections of both the former East and West Berlin areas. Due to the historical nature of this area, this district includes some of the most visited historical sites including the Holocaust Museum, Unter den Linden Boulevard, Museum Island, the Reichstag, the State Opera, the famous Berlin Zoological Park and the Potsdamer Platz.
Berlin-Mitte has a high population density of 8,780 persons per square kilometre, which is understandable as it is in the city center. The population in this area is over 346,000 persons. In spite of the high population, according to the Berlin website, Mitte has “the largest urban green lung in Germany.”
Appealing features of Mitte
Since the reunification of Berlin, the Mitte District has seen quite a lot of construction including many new contemporary buildings, bars, cafes, shopping areas and theaters. There is also the new Hauptbahnhof railway station in Moabit and Tiergarten. Mitte has also grown into a hub for Berlin’s nightlife along the river Spree.
The financial appeal of Mitte
According to the GSW 2013 Housing Market Report, “Mitte is also home to the highest average rent on the entire Berlin market – €12.03 in the Unter den Linden neighbourhood (postal code 10117), which also boasts the highest figure for the upper market segment (€19.55).”
With regard to rental values, they have stated the “In the formerly independent district of Wedding, to the north of historical Mitte, average rents are between €6 and 7. The dividing lines are clearly drawn: Rosenthaler Platz (10119) in historical Mitte is ranked fourth in Berlin with average rents of €11.34, while the immediately neighboring area of Humboldthain (13355) is ranked 161st with average rents of €6.05.”
Where to buy in Mitte?
Investors usually shy away from areas where the rental rates have reached the ceiling. The primary reason is that as rental rates reach and stay at the top of the price range, property values have time to catch up which makes the overall return much less. Instead, investors like to focus on areas where rental rates are growing faster than property values. Where in the Mitte district should investors focus on?
The areas of Moabit and Wedding have had asking rents increase last year by over 10%. This includes the neighborhoods of Soldiner Straße, Nauener Platz and Westhafen where rents have seen an annual increase of around 10%. In Wedding itself, investors should look in Schillerpark and Rehberge, which are found in the Northern area of the district, as rents here have risen quite sharply as well.
This is not the area of highest growth, however. Alt-Moabit West saw asking rents peak at a 13.3% rise over the previous year and Stephanstraße had the largest increase at 13.5%. These are inner city locations that are receiving higher demand from tenants due to higher rental costs in surrounding areas. An interesting feature about this district is that property values are not rising as quickly. There was an average price appreciation in 2012 of around 5%.
Often as rents rise, so does the cost of living index, and many times this increase makes rents less and less affordable. This is not the case in these specific areas. The percentage of monthly income that is spent on housing costs is remains the lowest in the district at around 22 – 24 percent. When you compare that to Hackescher Markt and Alexanderplatz where the ratio has hit an all time high at 47.6 percent, you can see why this area is seeing rising rental values.
Other investment opportunities in Mitte
Even though rental prices for high-class apartments are pushing up the housing cost ratios, there remains a high demand from renters. High-end tenants are particularly seeking top-floor and penthouse units which have been modernized and offer top of the line amenities. High-profile developmental projects which also offer residential housing units are receiving increased demand as well. In fact, it appears that the demand has exceeded the current supply for high-end housing – both existing and proposed developments.
The high demand for rental properties across the board is being driven by population growth and immigration and there are no indication that there is an end in sight. Combine this with an appealing overall location, the close proximity to the center of Berlin and moderate price increases – the district of Mitte-Berlin deserves serious consideration by investors.
