PRESS RELEASE

The Grounds Surrounding Area Report Berlin 2022:Surrounding area grows more strongly than Berlin

• Expert's report by IW Cologne commissioned by The Grounds
  analyses housing markets in Berlin and 53 surrounding communities
• Number of inhabitants increased in the last 10 years in all municipalities studied
• Purchasing power per household in surrounding area is around 27% higher than in Berlin
• Kleinmachnow and first neighbourhood ring lead in the levels ranking
• Strong catch-up tendencies in Bernau and other outer surrounding communities
• Highest surrounding area rent levels in Grünheide and Gosen-Neu-Zittau
• Local public passenger transport connections in eastern hinterland significantly worse

Berlin, 19 October 2022 – Berlin's surrounding area has developed remarkably dynamically in recent years. The number of inhabitants grew more strongly than in the federal capital itself, and its purchasing power is significantly higher. The housing markets of the various surrounding communities display a heterogeneous picture in detail, but overall show positive development prospects. These are the findings of The Grounds Surrounding Area Report 2022, a market report on location and housing market development prepared by the Institut der Deutschen Wirtschaft Köln e. V. (IW Cologne) on behalf of The Grounds Real Estate Development AG (The Grounds / ISIN: DE000A2GSVV5).

The economic situation and development as well as the price structure and price trends of the housing markets in Berlin and in 53 surrounding municipalities were analysed for the first time for this report. Rankings for individual indicators as well as overall rankings were created based on the economic and housing market indicators that were analysed.

Population growth in all surrounding municipalities without exception

Regarding population development, it became apparent that the surrounding area has always grown more strongly than Berlin in recent years, and this trend recently intensified. Whereas Berlin's population increased by an average of 1.1% per year from 2011 to 2021, average growth in the surrounding area was 1.2% per year. For the last three years, average annual population growth in Berlin was only 0.4%, while in the surrounding areas it remained at 1.2%. In this respect, it should be noted that all the surrounding municipalities - regardless of local differences - recorded positive population development in the last ten years. Population growth was particularly dynamic in Schönefeld (+2.9%), Bestensee (+2.6%) and Wustermark (+2.5%).

Purchasing power in surrounding area is significantly higher than in Berlin -
Berlin scores points for broadband

Regarding purchasing power, there is a clear difference between Berlin and the surrounding area. Thus purchasing power per household in the surrounding area is on average 27% higher than in Berlin, and purchasing power per person is 12% higher. Purchasing power per household is highest in Kleinmachnow, followed by Stahnsdorf. In the past three years, however, the increase in purchasing power in Berlin was somewhat greater, averaging 2.2% per annum, than in the surrounding area, which had 2.0% per annum.

Berlin has a locational advantage over the surrounding areas in terms of broadband availability. 97% of Berliners have access to fast Internet connections, compared to only 86% in the surrounding areas. However, there are considerable differences between individual municipalities in this respect. Thus in thirteen surrounding municipalities, between 25% and 50% of the population have no access to fast Internet, including for example Grünheide (Mark), among others.

Overall, municipalities in the first neighbourhood ring around the federal capital occupy leading places in the levels ranking, which is based on the indicators of population, density, purchasing power, unemployment and broadband provision. Kleinmachnow achieved top place, followed by Glienicke/Nordbahn and Panketal. In the development ranking, on the other hand, Bernau is in first place, while Gosen-Neu-Zittau and Wustermark are in second and third place respectively, which indicates strong catch-up tendencies in the outer surrounding municipalities.

Large differences in the structure and development of housing markets

Considerable differences were visible in the structure and development of the housing markets. With regard to the simple price-rent ratio for existing properties, the average price level in Berlin was 43 annual rents, while in the surrounding area it was 31 annual rents. For new-build properties, on the other hand, around 38 annual rents were payable in Berlin, while in the surrounding area the figure was 33 annual rents. The fact that the rent level in new buildings is generally higher than in existing buildings should be taken into account.

For single- and two-family houses, the highest purchase prices for existing properties were recorded in Kleinmachnow, Potsdam and in the Berlin sub-districts of Charlottenburg and Steglitz. Overall, prices in Berlin varied from EUR 4,800/m² in Marzahn-Hellersdorf to EUR 7,900/m² in Charlottenburg-Wilmersdorf. In the surrounding area, prices were above EUR 4,000/m² in 30 out of the 53 municipalities surveyed.

Highest surrounding area rents in Grünheide (Mark) and Gosen-Neu-Zittau

Apartment rents in Berlin range from EUR 8.70/m² per month in Lichtenberg to EUR 14.30/m² per month in Friedrichshain-Kreuzberg. In the surrounding area, the highest rent level was recorded in Grünheide (Mark) at EUR 12/m² per month, closely followed by Gosen-Neu-Zittau at EUR 11.50. In contrast, average rents in Bernau and Strausberg are still below EUR 10/m² per month. As a result of large rent increases, however, rent levels in the surrounding area are increasingly converging towards levels in Berlin.

Clear differences in local public passenger transport connections

The analysis of the accessibility of individual municipalities by local public passenger transport (ÖPNV) was based on the average car journey time to the nearest railway station. This showed that there are good connections to the local public passenger transport network not only within Berlin, but also in many surrounding communities, especially in the southwest and northwest. In contrast, the accessibility of some eastern municipalities is significantly worse. For example, all four municipalities in the Oder-Spree district are at the bottom of the rankings (Gosen-Neu-Zittau/52^nd, Grünheide (Mark)/51^st, Erkner/50^th and Spreenhagen/47^th place).

Further catch-up trends expected in the surrounding area

Prof. Dr. Michael Voigtländer of the IW Cologne sums it up: “Overall, we observe a strong tendency for the surrounding areas to catch up with Berlin, especially in the second ring of surrounding areas. The current energy crisis may possibly slow down the development somewhat, but will not fundamentally change it, so in the long term we expect a trend similar to that in the Munich area, for example.”

Jacopo Mingazzini, Management Board of The Grounds, says: “The research on which the Surrounding Area Report is based allows us and other market participants to substantiate for the first time, using objective indicators, the trends in Berlin's surrounding area that have been subjectively observed for some time. We aim to update this report regularly in the future in order to provide investors as well as apartment seekers, potential property buyers and other interested parties with as transparent a picture as possible of an inherently heterogeneous but highly attractive housing market.”

The full version of The Grounds Surrounding Area Report Berlin 2022 is available for you to download at the following link: https://www.thegroundsag.com/umlandreport

Company contact:

The Grounds Real Estate Development AG

Arndt Krienen/Jacopo Mingazzini, Management Board Members

Charlottenstrasse 79-80, 10117 Berlin, Germany

Tel.: +49 (0) 30 2021 6866

Fax: +49 (0) 30 2021 6849

E-Mail: [email protected]

Web: www.thegroundsag.com

Investor relations:

UBJ. GmbH

Ingo Janssen, Managing Director

Haus der Wirtschaft, Kapstadtring 10

22297 Hamburg, Germany

Tel.: +49 (0) 40 6378 5410

E-mail: [email protected]

Web: www.ubj.de

Press contact:

RUECKERCONSULT GmbH

Peter Dietze-Felberg

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10179 Berlin, Germany

Tel.: +49 (0) 30 284 49 87 62

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Web: www.rueckerconsult.de

About The Grounds

The Grounds Group implements residential projects in German metropolitan regions. The Grounds Group also holds a steadily growing residential portfolio in its fixed assets. The Grounds Real Estate Development AG is listed in the upper free market segment of Düsseldorf Stock Exchange’s primary market (ISIN: DE000A2GSVV5), and has its headquarters in Berlin and an office in Stuttgart.