Berlin fact of the day

Berlin has some catching up to do. Apartments in Berlin cost just 25% more in 2010 than in 1977, whereas prices in Hamburg and Munich—Germany’s second- and third-largest cities—rose by 55% and 135%, respectively, over the same period, according to real-estate association Immobilienverband Deutschland, or IVD.

Last year, the average price paid for apartments in popular Berlin locations was €1,700 ($2,221) a square meter, up from €1,625 a year earlier, and rose to €1,300 a square meter from €1,200 in standard locations, according to IVD. (One square meter equals 10.8 square feet.) This compares with €2,230 a square meter for high-quality condominiums in Hamburg, and €2,890 in Munich.

That, in a nutshell, is why Berlin is probably the best city in the world right now.  The article is here.

Comments

For a capital city, Berlin is surprisingly cheap. And it's a cool place with a lot happening.
I can recommend Berlin anytime!

Germany has "right to build" in its constitution. This means that the city government can't artificially constrain housing production the way they do in many other cities in the world.

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By way of comparison, my rent on a not-particularly-nice semi-central London house is £390/m^2/yr.

That many pounds per square meter is a lot of pressure on a renter.

It is spread out over a year. Only 1 psig/day.

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But a typical renter only takes up about a quarter of a square meter standing up, so it's not so bad.

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Did part of Tyler's post disappear? I see some stuff about rents but nothing about why Berlin is probably the best city in the world.

Aren't there a lot of Germans there?

There are. But I haven't been to Berlin in a while.

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Are the low rents also why it seemed to me that the Berlin metro had such a high density of panhandlers and musicians? Sometimes it feels they have more than Chicago or NYC metros. Funny part is the ones in Chicago seem quite scared of the cops; the ones in Berlin not so.

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Isn't housing socialized in Berlin. I thought I remembered that everyone lived in public housing.

That was before 1989. In the Eastern part of the city.

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Dear professor cowen

I saw your article about the big freeze

I just want to tell you

You are welcome and invited to come to us to see our inventions they are definitely inventions of all time

We just have to find investors to translating our inventions to money

few start up companies from israel

yizi

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I see Berlin started privatising housing in the 90s. At this point only 15% of the city is public housing. But, still almost everyone is a renter.

http://dare.uva.nl/document/199674

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Don't you think that low apartment prices actually contradict the claim that it is the best city in the world? I mean, if it was so good, the prices would have to be way higher.

It may be "best value for your money" or "good bargain" or something like that, but "the best"? Probably not.

wait a second? You mean Washington DC rents are high because it is one place in the US where college educated kids can get a job right now? That is insane. It is clearly the parking minimums.

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I love Berlin. But a lot of the housing (especially in the eastern sections) is still in pretty terrible shape. For example, it is still not uncommon to have to carry coal up from the basement to heat your apartment. Perhaps this explains the relative affordability?

I wonder how rents in the upscale western and southwestern districts of Berlin compare with other German cities.

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I remember being in Germany in 1990 and my artsy friends were decrying the inevitable end of Berlin as a cool boho hangout. I guess they were wrong.

No, Chris -- they were right. And you know that the final nail in the "cool coffin" has been hammered when Berlin gets an endorsement from MR.

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So... doing a little math here... $2200/yr/m^2 means $2200/mo for a 120 sqft apartment or $22,000/mo for a 1200 sqft apartment? That doesn't seem cheap to me...

I'm guessing $247k to buy. Not a bad deal. These are condo prices, not apartments.

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There's always Dresden!

Nice apartments in the Outer Neustadt are running around €1900/sqm.

Back in 1977... let's just say they were far less for many reasons.

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Berlin is low rent because there are very few high paying jobs there. It is primarily a city of politicans, creative types and immigrants. There are very few good corporate or finance jobs there. Germany's economic hubs are Hamburg, Frankfurt and Munich - where the cost of living, not surprisingly, is much higher. Berlin is basically Portland, Oregon with some government officials thrown on top of it. Berlin is a great city if you are in your 20s, single, and looking for fun rather than a career. Good place to be a writer, or a journalist. It is a fairly mediocre city if you want a job in finance, banking, law, consulting or a corporation. Berlin is also considered a fairly bad place to raise a family - the public schools are some of the worst in Germany, and drug use is rampant among young people.

Wasn't their tagline "Poor but Sexy"?

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so I guess it should be attracting single 20 somethings looking for fun,so with its many immigrants and artsy typea, along with some writers and journalists thrown in. Rents cheap so they can afford to stay and to top it all off there's precious few bankers and consultants. That, in a nutshell is why it's probably a great city to spend time in, but I wouldn't know because I didn't make it there - something about "the processes that rule my life" as tea sea says.

Man that's an error ridden post.

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vanya, how old are you? I mean no disrespect, but you wrote as a mid 40s guy with two children. rampant drug use? that may be paradise for lots of people =)

Yup, Axe, you got me pegged. Berlin is not a paradise for 40 somethings, for the most part. Rampant drug use and a pretty libertine sexual culture is paradise for lots of people, hence I said great city for 20 somethings. I'd be surprised if drugs and sex are Tyler Cowen's criteria for "best city in the world right now", but who knows?

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There’s always Dresden!
Back in 1977… let’s just say they were far less for many reasons..

Go back another thirty some years--even cheaper cause of the fire-storm.

Yup, the firestorm was just one of the reasons, and it was still a problem in 1977.

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"That, in a nutshell, is why Berlin is probably the best city in the world right now."

Ummm... rent prices as a summary of value?

The best city is decided based on culture, cuisine, architecture, governance, secularism, immigration, music, affordability, people and weather. I'm really not sure why you chose to pretend like affordability is THE issue. It makes you sound flat-out robotic.

Missing the point a little?

Do you think the price of housing may have any affect on the availabiilty or quality of culture, cuisine, etc.?

Yes.

But I also think it's nowhere closest to the most important factor.

I live in New York. I think Manhattan is too expensive, so I live in Brooklyn. It's too expensive in Brooklyn as well. But I still think New York is a better city than Detroit. If prices determine value... well there's really nothing left for culture/people to do.

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secularism??

Prices do not determine value, they reveal value.

Secularism because I don't see how any respectable person can enjoy themselves in a city where drinking alcohol is a crime, women showing skin is an arrest worthy offense and alternate lifestyles (homosexuality, Judaism, musical performance, etc.) can't be practiced.

P.S. If prices reveal value... why is Cowen saying the lowest priced city is the best? :D

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Rent prices would tell us whether Berlin is a good or bad city. But weren't the above prices selling prices, not rent prices?

If so, they tell us that either Berlin is a bad city or the buildings are in a bad shape (as somebody commented above) or that there is lots of hidden price - and there is: Berlin is leftist and heavily in debt, kind of a Greece.

The latter leads to a vicious circle: taxes will go up and house prices go down, good taxpayers move away and idle people move in, no use to take care of the buildings because of falling prices, these new people vote for still more leftist politics, taxes must still be risen, etc.

Taxes won't go up because they are set at the federal level. If Berlin doesn't take in enough money, the 15 other German states pay. Germany is like a mini-EU, and yes, Berlin is Greece.

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i enjoy your article. great job. keep it simple

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That, in a nutshell, is why Berlin is probably the best city in the world right now.

Ugh. Berlin is poor, dirty, run-down and drug-riddled. It's like living in an ashtray.

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