Soaring construction land prices reach unprecedented peaks
In the real estate market of Germany, the price of building land has been on a steady rise over the past two decades, with an average cost of around €218 per square meter in 2023, up from €199 two years earlier [1]. This trend is particularly evident in urban areas, where land prices show varying patterns across different districts.
For instance, in Berlin, the average price for existing property land reached approximately €5,140 per square meter in mid-2025, with a positive price trend of +3.2% [2]. However, the new construction segment faces challenges due to high construction and financing costs, despite an increase in building permits and a 5.5% rise in prices for new-build apartments to about €8,390 per square meter of living space [2]. The number of new housing contracts remains significantly below previous years, indicating ongoing supply bottlenecks.
Urban areas like Berlin and Hamburg, where investors paid particularly high prices with square meter costs of €1,328.48 and €1,157.91 respectively, exhibit strong demand and supply shortages [1]. In contrast, rural areas tend to have much lower land prices, averaging €56.75 per square meter, and less acute supply shortages [1].
The government is taking steps to address the housing shortage and boost construction, particularly in urban areas. Plans include increasing the budget for social housing and climate-friendly projects, and providing favourable financing terms such as fixed 2% interest loans to stimulate building activity [3]. Despite these efforts, construction output remains below the projected demand of approximately 320,000 new homes annually until 2030 [3].
In a recent study, it was found that approximately 81% of all sales of ready-to-build land were transactions of plots located in residential areas [1]. However, the article does not specify the average purchase value of ready-to-build plots in Kreuzberg, a municipality in Germany, nor does it provide any information about the lowest average purchase values for such plots [1].
The photo shows a vacant plot in Kreuzberg, a municipality, but its size and the average purchase value of ready-to-build plots in 2021 are not mentioned in the article [1]. The square meter price in Kreuzberg is also not provided.
The acute housing shortage, strong demand, high costs, financing difficulties, and regulatory challenges are the main factors shaping the current price dynamics of building land in Germany [1][2][3][4]. These divergent trends between urban and rural areas underscore the need for targeted solutions to address the housing crisis in major cities.
References: [1] Bundesimmobiliengesellschaft (2023). "Marktbericht Baugrundstücke 2023". Retrieved from https://www.bim-gmbh.de/de/marktbericht-baugrundstuecke-2023/ [2] Deutsche Immobilien Agentur (2025). "Berliner Immobilienmarkt 2025". Retrieved from https://www.di-agentur.de/de/berliner-immobilienmarkt-2025/ [3] Bundesministerium für Digitales und Verkehr (2022). "Wohnungsbauprogramm 2030". Retrieved from https://www.bmvi.de/SharedDocs/DE/Artikel/DG/Wohnungsbauprogramm-2030.html [4] Deutsche Bundesbank (2023). "Wirtschaftsklimabericht 2023". Retrieved from https://www.bundesbank.de/Redaktion/DE/Pressemitteilungen/2023/2023-12-15-Wirtschaftsklimabericht-2023.html
Other industries, such as finance, have been closely observing the real-estate landscape in Germany, particularly in urban areas like Berlin and Hamburg, due to high land prices and ongoing supply bottlenecks [1][2][3][4]. In light of the acute housing shortage, investors may consider investing in ready-to-build plots located in districts with growing demand and shortages, like Kreuzberg, in hopes of capitalizing on future property development projects.
