Real Estate Insights: The impact of amenities on residential rents – exploring the urban rent premium in Berlin’s vibrant community hubs

Purpose - Integrating amenity scoring into real estate investment strategies represents an innovative approach. The case study focuses on the impact of amenities on residential rents, with Berlin serving as an example of a tight rental market and a dynamic city. The scoring and modeling approach offers a scalable framework for identifying high-potential investment opportunities. Design/methodology/approach - The PATRIZIA Amenities Basic-Living-Need Scores© (BLNs) were developed to measure a location’s attractiveness based on the availability and quality of amenities. An AI-driven scoring algorithm takes the quality and quantity of all available amenities into account. The higher the scores, the better and more diversified is a location supplied with amenities for residential living. A generalized additive model is fitted to assess the strength and direction of impact of the BLNs on residential rents while controlling for other factors such as property and locational characteristics. Findings - The results indicate that amenities are a fundamental determinant of rental values and tenant satisfaction, providing investors with actionable insights to maximize returns in competitive urban markets. Focusing on areas with high BLN scores can lead to better investment outcomes due to higher rental premiums associated with these locations. The study also highlights the need to run a detailed location analysis to avoid the pitfall of amenities congestion. Practical implications - The results indicate that amenities are a fundamental determinant of rental values and tenant satisfaction, providing investors with actionable insights to maximize returns in competitive urban markets. By identifying and accounting for regional peculiarities, investors can make data-driven decisions that align with local tenant preferences and market conditions. Originality/value - The PATRIZIA Amenities Basic-Living-Need Scores© are calculated via an AI-driven, scalable algorithm and were developed to measure a location’s attractiveness in relation to diverse areas of residential living. This research is pivotal as it empirically validates the utility of amenity scoring in optimizing real estate investment strategies.