Berlin's new building is stalling despite record investments: What's behind it?

Berlin's new building is stalling despite record investments: What's behind it?

The housing construction situation in Berlin and Brandenburg remains tense, despite record-breaking investments by housing companies. The Association of Berlin and Brandenburg Housing Companies (BBU) forecasts only 5,300 new apartments in Berlin by 2025. This number essentially corresponds to the previous year, but is significantly lower than the construction activity in 2022, which showed some positive developments. According to information from rbb24 The companies, which ultimately make up around 45% of the rental housing stock in Berlin, are also claiming a massive increase in investments to almost 3.9 billion euros in 2025 - an increase of almost a third compared to the previous year.

For urban planning and new construction, over 50% of these investments go into housing construction, which represents an increase of more than 40% compared to the previous year. Nevertheless, market players face significant challenges, including high costs, bureaucracy and an acute shortage of skilled workers. Also worrying is the fall in the value of construction money, which last year was a third less than five years ago, while the price of new housing increased by around 50%. Additionally, maintenance costs increased even more.

Growth forecasts despite hurdles

On the other hand, Berlin's state-owned housing associations are showing remarkable determination. They are planning investments of 2.6 billion euros for 2025, which corresponds to a remarkable increase of around 38 percent compared to the previous year. The largest increase is expected in new construction, which will increase by 470 million euros to a total of 1.6 billion euros, according to information from developmentcity.de.

Previous investments in 2024 already amounted to 1.9 billion euros, of which 1.2 billion euros went into the new building. The challenges are not ignored either: around 22,820 apartments were completed between 2020 and 2024. More than 5,600 foundation stone layings and more than 4,700 completions are planned for 2025, which will include not only living space but also social infrastructure, such as a HOWOGE school building project.

Political support and social stability

The political leadership in Berlin recognizes the importance of the state-owned housing companies. Berlin's Governing Mayor Kai Wegner described them as essential partners for the city. Urban Development Senator Christian Gaebler emphasized the contribution of these institutions to social stability, while Ute Bonde, Senator for the Environment, Transport and Climate Protection, praised the investments in climate-friendly new buildings. Ingo Malter, Managing Director of STADT UND LAND, discussed the critical role of construction activity for the social fabric of the city.

Demand on the market is reflected with a constant vacancy rate of just 2.1 percent and an increasing average length of residence in the apartments of 27 years. The existing rent in 2024 averaged 6.76 euros per square meter net, while the net rent for first-time and re-lettings, at an average of 8.81 euros per square meter, was still 44 percent below the Berlin offer level. Despite these positive indicators, the housing construction project remains a challenging task.