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16 of January 2012

Rent price trends in Paris and Berlin


Rent prices in both European cities have increased by an average of around 7% in the last 12 months. However, this increase hardly reveals anything about the actual rental market situation as the trends in the capitals of both neighbouring countries could not be more different.

Paris and Berlin certainly have a lot in common, but in terms of the housing market, both European cities could not be any more unlike one another. While rent prices in the Parisian capital have already been exploding for a number of years, Berlin has only observed rent increases in the past 2 years and still has a great need to catch up with Europe.

Paris in central France has always been ranked no. 1 in France. Current rent prices are at 25-30 EUR per square metre depending on the neighbourhood and are therefore more than double the level of most provincial cities in France.

In contrast, with an average square metre price of 7.60 EUR (for basic rent without utilities), Berlin still remains the most affordable big city in Germany despite its capital status. One of the reasons for these comparably low prices may be that Berlin is a traditional city of tenants with a wide range of rental properties and a home ownership rate of just 14%.

This year’s high rent increases by Berlin standard are essentially due to the capital’s growing attractiveness and its great need to catch up. The sharp increase in average rent prices was also due to recent high-end modern property developments ("The Charleston" near Postdamer Platz, "Diplomatenpark" near Tiergarten and "Yoo Berlin" in Berlin-Mitte). The rent table published every two years allowed landlords to revise rents for already rented properties upwards in 2011.

However, rent prices in Berlin also differ widely depending on the neighbourhood. The most varied housing options appeared after the reunification from traditional renovated or unrenovated period properties to prefabricated housing estates and luxury flats. However, prices are still moderate even in excellent residential areas compared to other cities such as Munich and Paris. A recently renovated 60—70 m²  3-room flat in a good residential area of Berlin barely costs more than 550 - 600 EUR. For the same price in the centre of Paris, you can find a so-called “Chambre de bonne” (attic room) of barely 15m² under the roof without a lift or its own toilet. You usually have to pay around 2,000 EUR for a comparable 3-room flat which is called a 2-bedroom flat in Paris and up to 3,000 EUR in the highly sought-after residential areas in the 6th and 7th arrondissements.

Paris’s property market has already been recording high annual growth for many years, often in double digits.  This is because of sustained high demand associated with a shortage of rental properties. Many foreigners are still very interested in relocating to the Parisian capital and do not hesitate to spend a lot of money to be able to live there. It is not without good reason that the 19th century French author Jules Renard was already comparing Paris with paradise:  “Ajouter deux lettres à Paris, c’est le paradis”, (Add two letters to Paris, and it becomes paradise). Who would then be surprised to hear that you also have to add one or more zeros to the rent prices?

Photo: © istockphoto.com | ralfgosch

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