Because normally the financial, cultural, and governmental centres of a country are in the same city. In Germany that's not the case as the financial capital is

Because normally the financial, cultural, and governmental centres of a country are in the same city. In Germany that's not the case as the financial capital is in Frankfurt which means in Berlin you don't have the high-end of the market driven by bankers, executives and professionals like you do in other capitals. Throw in high-unemployment, a city which is huge physically compared to it's population (it's bigger than london with a third of the population), lots of low-income self-employed artists, writers, etc. All of these factors combine to make it a cheap city. I'm currently staying in a 4 star hotel in a nice fairly central area for £35/night. You'd pay more than that for a smaller studio flat in london.