Price vs. value: why €/m² alone is misleading

Most people compare properties by price per square metre. That’s understandable – but incomplete.

The long-term value of a property is driven by a combination of factors, including:

• Energy standard (KfW 40 vs. KfW 55 vs. existing stock)

• Rental yield and rentability

• Appreciation potential

• Financing conditions (e.g. access to KfW loans)

• Tax benefits

• Building quality and developer track record

• Location and long-term demand dynamics

• Land vs. Build Value split

Two properties can have the same purchase price, but very different lifetime costs and returns once you include energy efficiency, financing conditions, rentability, and taxes.

We explicitly filter:

• Projects in weak locations (shrinking population, poor infrastructure)

• Projects with low building quality or unrealistic timelines

• Developers with unproven track records or risky financing

Our 5-layer valuation system (from Hypofriend)

Before we offer any project on Investfriend, it is evaluated through five independent valuation layers, building on Hypofriend’s established systems and real transaction data.

I’d like to walk you through this process step by step, using a 64 sqm unit in our Teltow project as an example.

1. Bank lending values

We go beyond basic property assessments, leveraging five advanced valuation systems to optimize lending decisions. Our process utilizes professional tools such as on-geo and Sprengnetter. The same tools are trusted by banks to determine final property values during mortgage credit checks and define the percentage of financing that is offered by the banks.

The unit in our example project in Teltow has a size of 64 sqm and is priced at 380.000 € (≈ 5.950 €/sqm). This price aligns almost perfectly with the market value determined by Sprengnetter. As banks typically lend below market value, the official Beleihungswert (loan value) is set at 340.000 €.

Before we decide to list any project, we conduct a thorough review of the project documentation and the developer’s track record. We then consult with our banking partners, and only if they are willing to approve financing of 95 % or more do we consider listing the project.

For the example unit in Teltow, our banking partners approved a maximum loan amount of 361.000 €, corresponding to 95 % financing. 

This level of bank-approved financing has already been granted multiple times for our customers and serves as a strong, real-world indicator that the property is aligned with market value, rather than being overpriced.

2. Market comparables

We use recent transaction data and benchmark our prices against comparable new builds and existing properties in the same micro-location, not just city-wide averages. With tools like PriceHubble, we look deeper than standard listing platforms such as ImmoScout and Immowelt, enabling us to compare our properties with both historical transactions and currently active listings in the area.

3. Hypofriend valuation engine

In addition to market data, we apply our proprietary valuation models built on insights from more than 10.000 properties we have financed. This extensive dataset allows us to assess whether a property’s purchase price lies within a reasonable and sustainable value corridor.

We also evaluate long-term appreciation potential by analyzing population growth and local demand dynamics. Population growth is a key indicator of future price development, which is why we closely track factors such as infrastructure expansion, job creation, and overall housing demand.

Towns such as Teltow, Wustermark, and Zossen are growing faster than Berlin itself, as affordability pressures push renters and buyers into the surrounding regions. Good infrastructure, proximity to Berlin, and remote work trends make these locations particularly attractive for families, commuters, and remote professionals.

Germany’s housing shortage has reached a historic high. According to the ‘Wohn-Monitor’ of the Pestel Institute, Germany is currently short of around 1.4 million homes, the largest deficit ever recorded.

This imbalance is also reflected in the BPD Wohnwetterkarte 2025, which classifies housing markets as “hot” where demand significantly outpaces new construction.

While southern Germany also faces strong demand, property prices there are substantially higher. As a result, investments in these markets typically require more upfront equity and tend to offer lower returns compared to opportunities in the Berlin periphery.

In the Teltow region alone, approximately 1.140 new homes are needed each year through 2028. Current construction activity falls well short of this requirement, creating a persistent supply-demand gap.

To assess future growth potential, we incorporate forward-looking analyses such as the Postbank Wohnatlas, which forecasts regional housing trends and growth prospects through 2035. The strongest growth regions are identified in Leipzig, the Berlin metropolitan area, and selected parts of southern Germany.

4. Rental Expectations

We assess expected rental income, projected rent increases, and long-term cash flows to ensure the investment makes sense from a yield perspective. To determine the rental yield, we compare the annual rent to the purchase price:

Example: 1.155 x 12 € / 380.000 € = 3,67 %

For new-build properties in stable locations:

• A yield of around 3 % is generally considered solid

• A yield of 4 % or higher is considered very attractive

Expected rental income

We compare local rents (i.e. Mietspiegel) with active and historic listings from all platforms (i.e. ImmoScout, Immowelt, Kleinanzeigen) through PriceHubble.

For our example property in Teltow, current market rents for new-build properties are approximately 18 € / sqm.

Rent Price Evolution

When purchasing a new-build property, it is important to estimate the future rent you will receive once the property is completed. Our tools allow us to make an initial projection by analyzing rent growth over the past three years and predicting the likely evolution of rental prices in the area.

To further strengthen this analysis, we also commission independent market assessments from established real estate consulting and valuation firms such as Bulwiengesa.

Bulwiengesa estimates a yearly rental increase of 4,5 % until 2027, resulting in a rent of 20,55 € / sqm for new builds with high energy efficiency (EH 40 QNG+ Standard) in Teltow.

Combining all of this information, we are confident in projecting a net cold rent of 20 € / sqm once the property is completed in mid-2027.

5. Project and cost plausibility

Beyond pricing and market assumptions, we conduct a comprehensive project-level plausibility and risk review to identify execution, planning, legal, and structural risks before a property is offered to customers.

Construction costs & timelines

We stress-test construction costs, developer margins, timelines, and contingency buffers and benchmark them against comparable projects across Germany.

Floor plans & building layout

We review floor plans and building layouts to ensure:

• Efficient and functional use of space

• Long-term rentability and tenant appeal

• Practical layouts of common areas and accessibility

Micro-location, access & tenant profile

We analyze the immediate micro-location, as it strongly influences rentability and long-term demand. This includes:

• Accessibility and connectivity (public transport, roads, commuting times)

• Local amenities and daily infrastructure (shopping, healthcare, childcare, green spaces)

• Schools and educational facilities are especially relevant for family households

• Tenant profile and demand structure (e.g. families, commuters, professionals, remote workers)

• Neighbourhood quality and development outlook

Permits & legal review

We verify that the building permit is in place or realistically obtainable and conduct a full legal review of all relevant project documents, including:

• Land register (Grundbuch)

• Declaration of division (Teilungserklärung)

• Purchase agreements and contractual structure

• Altlasten (contaminated sites) and environmental risks

• Baulasten and other public-law encumbrances

Developer vetting

We work with developers who combine cost leadership, high construction quality, and efficient execution. Vetting includes:

• Review of the developer’s business model and build quality

• Creditworthiness and background checks via Creditreform (CREFO)

• Assessment of the developer’s equity position and project financing

If a project fails to meet any of these criteria, we simply don’t offer it – no matter how attractive the headline price may look.

Why KfW 40 QNG+ is more expensive than KfW 55 – and why that can be rational

Because we work with numerous developers and track hundreds of projects, we consistently see that the cheapest option today is rarely the smartest long-term investment. This is particularly true in residential real estate, where construction quality, energy efficiency, and location have a far greater impact on long-term returns than the initial purchase price.

Our KfW 40 QNG+ properties typically cost more upfront than KfW 55 units because they meet significantly stricter energy and sustainability standards, are built to higher technical quality, and are located in stable or growing micro-locations. These requirements increase construction costs, but they also create measurable and durable long-term value.

Higher construction and regulatory requirements

Upgrading from KfW 55 to KfW 40 requires substantial technical and regulatory measures, including:

• Mechanical ventilation systems with heat recovery

• Photovoltaic (PV) systems installed on the roof

• Significantly improved insulation throughout the building envelope

• Barrier-free design, including wider corridors and step-free access

These measures not only increase material and installation costs but can also lead to usable floor space loss, as thicker insulation and accessibility requirements require more space.

QNG+ certification and quality control

The QNG+ (Qualitätssiegel Nachhaltiges Gebäude Plus) standard goes beyond pure energy efficiency. It introduces strict requirements around sustainability, materials, and long-term building quality.

To achieve and maintain the QNG+ seal:

• Independent energy-efficiency consultants must accompany the project through audits and construction supervision

• Certification, mentoring, and audit costs typically amount to around 50.000 € per construction project

• All materials used must be QNG-compliant

• Continuous on-site inspections by external bodies such as DEKRA or TÜV ensure full compliance

This higher level of oversight reduces execution and quality risk—but also increases development costs.

What the price difference looks like in practice

A 64 m² KfW 40 QNG+ apartment priced at 380.000 € reflects these higher standards. A comparable KfW 55 unit in a similar location would typically cost 330.000–345.000 €.

This represents a price premium of roughly 10%, driven by higher construction quality, stricter supervision, and certification, while also enabling lower operating costs and access to public funding.

Why the higher price can make financial sense

Although the higher standard leads to a higher purchase price, it often delivers meaningful financial benefits over time:

1. Cheaper financing
KfW 40 / QNG+ properties generally qualify for better KfW funding programmes and lower interest rates than KfW 55 or existing properties.

Indicative example:

• Market interest rate (95 % financing): ≈ 4,0 %

• KfW loan (e.g. 150.000 €): ≈ 2,44 %

By blending the KfW loan with the main mortgage, the effective interest rate can be reduced to approximately 3,38 %. Over a 25–30year financing period, this can result in interest savings of tens of thousands of euros.

In addition, KfW funding includes up to five repayment-free years, which significantly improves early cash flow and can materially enhance returns on invested capital, especially during the initial holding period.

2. Tax benefits for climate-friendly new builds

For qualifying climate-friendly new-build properties, current tax rules allow accelerated depreciation:

• 5 % per year for 4 years

• Total: 20 % of the building value

Simplified example:

• Building value: 300.000 €

• Extra price for KfW 40 / QNG+ vs. KfW 55: +5–10 %

• Tax depreciation: 5 % × 4 years = 20 % of 300.000 € = 60.000 € depreciation base (over 4 years)

Depending on the investor’s personal tax situation, these tax benefits can offset a significant portion of the initial price premium during the first few years. Our role at Investfriend is to ensure that projects remain within this economically sensible corridor.

Important: This accelerated depreciation currently applies only to properties purchased and completed by September 30, 2029.

3. Future-proofing and resale value

Energy efficiency is becoming increasingly important due to regulation, energy prices and tenant preferences. As a result, KfW 40 / QNG+ properties are generally:

• Easier to rent

• More attractive to future buyers

• Less exposed to future retrofit requirements

Recent market data shows that this is not just a long-term trend but is already visible in price dynamics. 

During the latest market correction, highly energy-efficient properties experienced smaller price declines and recovered more quickly, while inefficient buildings saw significantly deeper and more persistent discounts. As buyer demand has shifted toward lower operating costs and regulatory security, energy efficiency has become a key factor for both downside protection and long-term value preservation.

In addition to stronger demand and better resale prospects, higher energy efficiency also has a direct and measurable impact on ongoing costs, which further strengthens the long-term investment case.

4. Lower running costs with KfW 40 QNG+

Higher energy efficiency and new-build quality translate into lower monthly running costs and better cost predictability for both tenants and owners.

Heating & hot water (Berlin average):

• Existing apartments in Berlin: ~1,00 € per m² / month

• KfW 55 new build: ~0,80–0,90 € per m² / month

• KfW 40 QNG+: ~0,60–0,70 € per m² / month

Example, 64 m² apartment:

• Existing building: ~65 € / month

• KfW 55: ~50–58 € / month

• KfW 40 QNG+: ~38–45 € / month

That’s 120–300 € per year in heating and hot-water savings compared to KfW 55 and significantly more compared to older stock.

Maintenance reserves: new build vs. existing stock

Beyond energy costs, maintenance reserves are materially lower in new builds, particularly in the first years after completion.

• KfW 40 new build: ~0,25 € per m² / month
  (lower due to new components and developer warranty)

• Existing buildings: ~2,5–3,5 € per m² / month, depending on age

Example, 64 m² apartment:

• New build: ~16 € / month

• Existing building: ~160–225 € / month

Taken together, stronger demand, better resale resilience, lower energy costs, and significantly reduced maintenance reserves mean that a KfW 40 QNG+ apartment offers lower ongoing costs, more predictable cash flow, and a more stable long-term investment profile than both KfW 55 and existing buildings.

Side-by-side comparison: Bonava KfW 55 vs. KfW 40 / QNG+

We’ve put all of this into a concrete side-by-side calculation:

• KfW 55 property vs.

• KfW 40 QNG+ property

Same city, similar size, different energy standard, different price by 450 €/sqm. 

We compare purchase prices, KfW funding, interest costs, tax effects, and long-term cash flow so you can see the full picture, not just the headline price per m².

You can apply this calculation framework to any property you are considering to compare investments properly beyond just the headline price.