[ChuckMcM]

Generally, but I don't know about Berlin specifically, the cost of building new apartments has gone up over time. There is also the sunk cost of building them. So if you imagine the whole transaction from start to present, you get a big investment (say $10M) and you build a building with 100 units which you rent out at $1000/month. After say 22 years[1] your apartment building has recovered its costs and actually returning free cash flow.

What I have seen is that it takes time to get a project started. And the costs of building can go up faster than rents do, and you get to a point where it is economically infeasible to build a new building given the maximum possible rent you could charge to live there. At that point no one builds new housing because nobody likes to lose money on purpose. So all new housing stops.

There is an interesting 'bubble' here in that with nearly 0% interest rates you can get away with higher costs, but that won't last.

[1] it is going to depend on interest rates on the building loan, city taxes, maintenance, etc. Every time I've looked at building an apartment it seems to flip over to generating cash 20 to 25 years after its built, assuming single owner etc.

[pgeorgi]

About 44% of newly built units in 2014 are privately owned, so the other more-than-half are not.

I couldn't figure out how much of that is actually publicly managed (versus some potential third class), but they're already a significant part of the housing landscape of Berlin - and they have less of an issue with recovering costs over 25 years than individual house owners.