The federal capital continues to navigate between considerable economic appeal and structural challenges in the provision of housing. As architect Eike Becker analyses in a contribution for the trade journal Immobilienwirtschaft, Berlin has recorded an increase of around 500,000 residents since 2010, which roughly corresponds to the size of the city of Hanover. In parallel, Berlin's economy has expanded by approximately 30 per cent in real terms since 2013, almost twice as dynamically as Hamburg and more than twice as strongly as Germany as a whole.
This vitality is also reflected in the corporate landscape: in 2025, more start-ups were founded in the metropolis on the Spree than in Munich, Hamburg and Cologne combined. The trend is complemented by large-scale investment projects such as the planning of the BESSY III synchrotron radiation source by the Helmholtz Centre in Adlershof, the redesign of the Kulturforum by Herzog & de Meuron, and the refurbishment of the Pergamon Museum on Museum Island with a volume of around EUR 1.5 billion.
Challenges in the housing market and new-build targets
At the same time, the housing sector faces significant strain due to interest rate developments and increased construction costs. According to experts, around 220,000 new flats must be built by 2040 to address the persistent overhang in demand. The municipal housing associations cannot handle this construction volume on their own. However, political debates surrounding the compulsory repurchase of properties or expropriations are placing a lasting burden on the investment climate for private players.
Key figures from the Association of Berlin-Brandenburg Housing Companies (BBU) clearly demonstrate that the core problem lies in the shortage of new-build supply: average in-place rents for BBU companies stood at around EUR 7.18 per square metre basic net rent at the end of 2025. The association's roughly 782,000 units represent approximately 44 per cent of the city's total rental housing stock and are practically fully occupied.
Levels of action for federal, state and municipal government
To keep the creation of new housing affordable, coordinated measures across all tiers of government are essential. Becker points to existing instruments and regulatory levers in this regard:
- —The federal government has steering instruments at its disposal through the Bau-Turbo planning accelerator, interest-subsidised KfW loans, targeted subsidy programmes and tax relief, extending to a reduced VAT rate on construction services.
- —The federal states determine building regulations, simplified standards, accelerated planning approval procedures and the design of social housing subsidies.
- —The municipalities are responsible for the swift designation of building land, planning law and the allocation of public sites via leasehold rights (Erbbaurecht), concept tendering or non-cash contributions.
Creating the required housing stock calls for reliable framework conditions and administrative acceleration across all tiers of government in order to reconcile the economic potential of the metropolis with functioning municipal infrastructure.
