Berlin Multifamily Market Report – H1 2025

In the first half of 2025 the Berlin real estate market showed noticeable stabilization following the sharp interest rate increases of recent years. The total number of purchase contracts rose from 9,404 to 10,864 cases, which represents an increase of around 16 percent. At the same time, total transaction volume increased from 6,120.8 million € to 6,901.4 million €, a rise of roughly 13 percent. This indicates renewed market activity without translating into strongly rising average prices.

On a citywide level the data from the Committee of Valuation Experts indicates a stabilizing price environment. The change in the average purchase price across all submarkets is approximately minus 5 percent, reflecting more of a post interest rate adjustment than a continued downward trend. At the same time several submarkets already show slight upward tendencies, suggesting a convergence of price expectations between buyers and sellers.

An important reference point in the pricing of residential property is the land market. In the Ad hoc land market reports for building lots in individual residential construction the ratio of purchase price to standard land value (Purchase Price/Land Value) for all of Berlin is reported at 93, 93, 93 and 92 percent across the four three month periods March to May, April to June, May to July and June to August 2025. Most transactions therefore take place at levels close to the standard land values established as of January 1st 2025, with only low monthly volatility.

These levels serve as a meaningful benchmark for investors. They demonstrate that despite tighter financing conditions there is no structural decline in land prices. Instead the market accepts moderate discounts relative to the standard values, indicating generally robust demand for residential land and indirectly supporting pricing for multifamily and mixed use buildings.

Conclusion:
Macroeconomically the Berlin real estate market in 2025 presents itself as normalized and stabilized, with rising transaction numbers, a roughly 13 percent increase in total transaction volume and largely stable price levels. The Purchase Price/Land Value ratio of around 92 to 93 percent in the land market underscores that values remain closely linked to standard land values, with no evidence of broad based depreciation.

The multifamily sector, reported as rental apartment buildings without commercial units, shows a clear structural shift in the first half of 2025. The number of purchase contracts increased from 170 to 190 cases, a plus of around 12 percent. At the same time transaction volume declined from 788.7 million € to 642.8 million €, a drop of nearly one fifth. Nevertheless the Committee of Valuation Experts reports a 6 percent rise in the median purchase price. This indicates that smaller or mid sized assets are being traded more frequently, while prices per square meter or relative to income remain stable or slightly rising.

In the mixed use segment the pattern is similar but even more pronounced. Here the number of transactions increased from 109 to 133, a rise of 22 percent. However, transaction volume declined from 912.0 million € to 574.3 million €, a drop of about one third. Despite this, the median price level increased by 2 percent. Investors are acting selectively and are distributing capital across smaller assets with more manageable risk, without fundamentally reducing their willingness to pay for well positioned stock.

The Purchase Price/Land Value ratios by residential location class from the Ad hoc reports further highlight the role of location. In the period March to May 2025 the average ratios are 93 percent in simple locations, 92 percent in medium locations and 100 percent in good locations. In the subsequent periods April to June, May to July and June to August 2025 this pattern remains stable. Medium locations consistently remain at around 91 percent, while simple locations vary between 93 and 100 percent and good locations between 94 and 105 percent.

For institutional and professional investors this means that multifamily and mixed use buildings in good residential locations trade at or near standard land values, sometimes above, while medium locations generally experience structural discounts. Buyer groups thus differentiate clearly between long term stable micro locations and average residential areas, which is reflected both in risk appetite and target yields.

Conclusion:
Microeconomically the Berlin market for multifamily and mixed use assets is driven by more numerous but smaller transactions and strong differentiation by location. Rising transaction counts alongside falling total volume and rising median prices show that investors prefer smaller deals and accept price levels near or above standard land values in good areas, while medium locations trade at clear discounts.

Market dynamics in income producing residential real estate show a clear decoupling of transaction count and total volume. In the multifamily segment the number of transactions rises from 170 to 190, while transaction volume falls from 788.7 million € to 642.8 million €. Setting the first half of 2024 equal to an index of 100, the 2025 transaction volume corresponds to an index of approximately 81.5. The market is therefore more active, but average deal size is smaller.

This effect is even more pronounced in the mixed use segment. While the number of deals increases from 109 to 133, transaction volume decreases from 912.0 million € to 574.3 million €. Relative to an index of 100 in the first half of 2024, the 2025 transaction volume corresponds to an index of roughly 63. Despite this, the median price level increases by 2 percent. Supply appears to be adapting to tighter financing conditions with smaller, less capital intensive assets coming to market.

Other segments such as single and two family houses and condominiums show rising transaction numbers and only moderately changing price levels. Single and two family houses record 1,246 instead of 1,142 transactions and a slight decline of 1 percent in median prices, while condominiums show plus 14 percent in transaction count and plus 4 percent in price. This underlines that multifamily and mixed use properties, although under more stringent risk scrutiny, remain attractive in relative terms.

The Purchase Price/Land Value results across the four consecutive Ad hoc periods, at 93, 93, 93 and 92 percent, provide a stable valuation framework. They indicate that the ratio between actual purchase prices and standard land values remains just below 100 percent with virtually no change over several months. Against this backdrop the decline in transaction volume in the multifamily and mixed use segments is better explained by deal size shifts than by any fundamental price decline.

Conclusion:
Transaction dynamics in Berlin's income producing residential market are characterized by higher activity but significantly smaller deal sizes. Rising transaction numbers combined with sharply lower total volumes and slightly rising median prices indicate that smaller single asset transactions dominate, while large scale deals recede, without challenging overall price stability.

The analysis is based on the official market reports of the Committee of Valuation Experts for Berlin. The primary data source is the automated purchase price database in which all notarized purchase contracts are recorded that were available and processed by mid August of the respective year. For the market report covering the first half of 2025 the Berlin property market is compared systematically to the same period of the previous year across submarkets, transaction counts, volumes, areas and changes in median prices.

For the multifamily and mixed use segments the reported figures refer strictly to single asset transactions. Portfolio transactions are included in aggregate totals but not in the subsegment statistics for multifamily and mixed use buildings. The values therefore reflect the granular nature of the market in which individual buildings are traded.

The Ad hoc land market reports for individual residential construction are produced monthly in rolling three month periods. They use the purchase price database and focus on open construction areas with typical floor area ratios up to 0.6, referencing all values to standard land values as of January 1st 2025. Only groups with at least three recorded transactions are reported. Key indicators include number of cases, mean Purchase Price/Land Value ratio, 95 percent confidence interval, minimum and maximum.

The Purchase Price/Land Value values used here come from the rows for all of Berlin and from the location classifications (simple, medium, good) for the four periods March to May, April to June, May to July and June to August 2025. All percentage values represent the mean without smoothing or aggregation. Derived indicators such as the transaction volume index are based solely on the reported transaction volumes for multifamily and mixed use submarkets.

Conclusion:
All results rely strictly on official data and include only explicitly published metrics. Where indicators are derived, such as the transaction volume index, calculations are transparent and based directly on reported transaction volumes, ensuring methodological clarity.

Given the stability of Purchase Price/Land Value ratios in the land market and rising transaction counts market wide, there is strong evidence for a stable pricing environment in Berlin’s income producing residential segment. The moderate minus 5 percent correction in average prices across all submarkets appears largely completed and is offset by positive price changes of 6 percent in multifamily and 2 percent in mixed use assets in the first half of 2025. This combination suggests that the market has settled at a new equilibrium after the interest rate shock.

For institutional investors the current environment offers opportunities to build or expand positions under revised risk and return profiles. Data show that smaller and mid sized single asset transactions have increased significantly, while large scale and portfolio deals play a more limited role. Strategies focused on active asset management, energy optimization and nuanced understanding of regulatory frameworks therefore move into the foreground.

The Purchase Price/Land Value development across the four periods from March to August 2025, with values of 93, 93, 93 and 92 percent for all of Berlin and consistently higher ratios in good locations compared to medium locations, speaks against any broad further downward price adjustments. Instead continued differentiation is to be expected, with good areas trading near or above standard land values and medium areas pricing in significant discounts to compensate for higher target yields.

Risks remain in the development of interest rates, regulatory changes in residential leasing and requirements regarding building energy performance. However, the documented stability and transparency of the Berlin market make these risks more quantifiable than in previous market phases. For long term oriented investors with clear return and governance requirements the Berlin multifamily and mixed use market remains strategically important.

Conclusion:
The outlook for Berlin's multifamily and mixed use market indicates stable to slightly positive prospects for prices and transaction activity. Under current conditions well positioned assets in strong locations continue to offer attractive and predictable return opportunities, while assets in medium locations require more pronounced pricing adjustments and active management.