Location Analysis

Berlin is the capital city of Germany and has been since reunification in 1990. Prior to this, the city was divided into East and West Berlin. East Berlin was the capital of East Germany, a socialist country with a planned economy. The capital of West Germany from 1949 was Bonn, which was considered an unusual choice, as Berlin has always held an iconic status within German culture.

The origins of the division lie in the occupation of the city from 1945-1949 by US, British and Soviet forces. The separation into two countries happened in 1949.  Many people migrated to West Berlin prior to the construction of the Berlin Wall in 1961 and used it as a way to gain West German citizenship; the East German government were therefore worried that their population would fall and the economy would become unsustainable. The Wall was built to prevent East Germans from leaving the country and this was made easier for the government by the fact that the Eastern state of Brandenburg surrounded the entirety of the city. 

The fall of the wall in 1989 and the subsequent reunification of Germany in 1990 meant that massive economic development was able to happen in Berlin. The government began envisioning Berlin as a tourist destination but realised that many parts of the city needed to be modernised. This redevelopment has resulted in a new government quarter near the Reichstag and a new central station, which opened in 2006.

Political power in Germany is largely decentralised to 16 states, which have their own parliaments and decision-making ability. As a result, many laws and regulations are made at this level. This is response to the National Socialist era, when power was held centrally in Berlin by the state and the federal chancellor. 

The population of Berlin in 2023 was 3.8 million (Statistisches Bundesamt, 2024) and it is the largest city in Germany by population. There are around 1 million foreign-born residents living in the city and the city benefits from an ethnically and culturally diverse population (Berlin Business Location Center, 2024). 

Germany is traditionally not a country of homeowners. Over 50% of Germans do not own their own home (Pieper, 2024) and in Berlin, over 75% of residents are renters (Madden and Vasudevan, 2021). 

The city is divided into 12 administrative districts. Wealthier residents have traditionally tended to live in western districts, and the less affluent in the east. As in other European cities, working-class districts with a history of heavy industry have undergone significant gentrification and this has impacted local demographics, as well as the housing market and residential developments.