Berlin Mietspiegel, the benchmark residential rent index for the German capital, showed that rates rose 3.1 percent a year in 2011 and 2012, a slower gain than the previous two-year period.
The index, published today by the Berlin Department for Urban Development, showed an average annual rise of 4 percent for 2009 and 2010. Analysts expected an increase of 2 percent to 4 percent a year based on estimates compiled by Berlin landlords GSW Immobilien AG and Deutsche Wohnen AG, said Thomas Rothaeusler, an analyst at Commerzbank AG.
Germany’s rental indexes are among the most important drivers of housing prices in cities where they applies because landlords use them as a guide to set rents. Owners are able to raise rents more sharply in the 12 months following the publication of an index. Cities such as Munich, Cologne and Hamburg also publish indices to help regulate rents.
“The Mietspiegel is the most important tool used to adjust rents,” said Rothaeusler. “Deutsche Wohnen, for example, raised its like-for-like rents by 4 percent after the Mietspiegel came out.”
Deutsche Wohnen, Germany’s largest property company by market value, has about 54 percent of its apartments in Berlin, according to its 2012 annual report. GSW, the fifth-largest by market value, operates only in the city. Gagfah SA, the third-biggest, has about 11 percent of its apartments in the city, according to its website.
The index, while influential, is not legally binding and is only used by landlords to avoid disputes with tenants over rent increases, said Daniela Augenstein, a spokeswoman for the Urban Development Department.
The Mietspiegel index isn’t considered an accurate reflection of the market because it is politically influenced, said Torsten Klingner, an analyst at Warburg Research.
The Mietspiegel is compiled based on data collected during a year-long survey of tenants and landlords, and numbers are fine-tuned following negotiations between tenant and landlord associations and local officials, said Augenstein.
The index, only compiled every other year, is partly to blame for the lag in German rent changes, said Rothaeusler.