Despite the persistently difficult macroeconomic conditions, Berlin’s economy continues to perform more robustly than the German economy as a whole. This is highlighted by Investitionsbank Berlin (IBB) in its latest economic report, which has been covered in recent days by the Berliner Morgenpost, the Tagesspiegel and the Frankfurter Rundschau. According to the IBB, while the German economy is now in its fourth consecutive year of stagnation and achieved a gross domestic product growth of just 0.2 per cent in 2025, Berlin recorded significantly stronger growth of 1.1 per cent. This marks the thirteenth year in row in which the capital has outperformed the national trend.
According to the IBB, Berlin benefits in particular from its service-oriented economic structure and its status as a hub for innovation and technology. Business-related services continued to perform particularly strongly in 2025. Overall, turnover in this sector rose by 4.9 per cent. The information and communication sector saw particularly dynamic growth, with turnover increasing by 9.3 per cent. The real estate and residential sector also recorded strong growth with an increase of 8.1 per cent.
At the same time, Berlin’s economic development remains closely linked to the international economic climate. The IBB particularly highlights the pressures arising from geopolitical tensions, rising energy prices and the potential impact on inflation and interest rates. Against this backdrop, the growth forecast for Berlin for 2026 has been revised downward from 1.8 per cent to 1.5 per cent. Nevertheless, in the IBB’s view, the capital remains significantly more resilient than many other regions in Germany. In addition to traditional growth sectors such as the healthcare industry, digitalisation and mobility, investment in infrastructure, residential construction and faster planning procedures is expected to support economic development in the future. The public investment volume of the State of Berlin is projected to amount to around 5.9 billion euros in 2026.
Berlin’s construction and property market is also benefiting from this comparatively robust economic performance. The positive developments in Berlin’s main construction sector are particularly significant for the property sector. Following the significant downturn of recent years, the sharp increase in building points to a renewed stabilisation of the market. Although the current level remains well below the record figures of previous years, the IBB explicitly describes this development as a turning point. This is supported by the sharp rise in the order book in the main construction sector, which increased by 147 per cent in the fourth quarter of 2025 compared with the same quarter of the previous year, reaching 4.58 billion euros.
At the same time, the structural excess demand in Berlin’s housing market remains high. Berlin continues to record strong net migration gains and has recently gained around 27,000 new residents through in-migration. Consequently, the vacancy rate remains low, whilst demand for rental and owner-occupied apartments in Berlin and the surrounding area remains high.
“The German capital is once again demonstrating that it is more economically resilient than many other regions in Germany. For the real estate market in particular, it is crucial that economic stability is now increasingly reflected in higher approval figures and a stronger order book in the construction sector. This underlines the fact that Berlin and its surrounding regions remain attractive long-term growth markets, despite all the challenges,” says Jacopo Mingazzini, CEO of The Grounds.
