DHis time is of the utmost importance. The Berlin Senate wants to buy 20,000 apartments from the Vonovia and Deutsche Wohnen housing groups and transfer them to its state-owned enterprise. The transaction is expected to cost more than 2 billion euros and is part of a planned merger of the two companies. But because it is not clear when shareholders will approve the transaction, the red, red and green state government is now putting pressure on it. The assessment should be completed in mid-August, and the negotiations should be concluded “swiftly”. Elections will be held at the end of September, not only at the federal level, but also in the canton of Berlin. Politicians like to send signals that we are taking steps to deal with rising rents.
But is this really true? The main reason for the sharp increase in property market prices in recent years is that supply exceeds demand. A survey conducted by FAZ in the top ten cities in Germany shows that the ambition to create more living space is not the same everywhere. Frankfurt is one of the positive examples.
Housing problems in multi-cities for new immigrants
The number of apartments in the financial metropolis has increased by more than 6% since 2016, from approximately 378,500 to 401,900. The latest data is for 2019, so some apartments may be added during this period. Hamburg followed closely, with the housing stock increasing by 4.1% between 2016 and 2020, reaching 976,900. In contrast: During this period, the number of residents increased by only 2.3%. But something happened in Berlin: The number of apartments there increased by 3.5% compared to 2016, to about 1.98 million. The population has increased by 2.5%.
On the other hand, in cities such as Cologne, Stuttgart, Dusseldorf and Dortmund, housing supply increased by less than 2%. However, the number of residents there has only recently increased slightly. Essen has shrunk slightly since 2016. This may indicate that the housing problem is mainly concentrated in a few cities with more new immigrants, while other places no longer need to build more. The city where the situation is deteriorating is Leipzig: since the end of 2016, the city’s residents have increased by 4.6%. On the other hand, housing supply only increased by 2.8%.
There are more state-owned apartments
CDU has 1.5 million new apartments/Colorado State University And SPD will be the target of the legislative period in the spring of 2018. If Horst Seehofer (CSU), the Federal Minister of the Interior, is responsible for policy development, it will happen. However, this calculation only applies to the case where apartments that only exist on paper are included. It is estimated that there are more than 700,000 apartments under construction throughout Germany, that is, apartments that have been approved but not yet completed.
Because it’s obvious that it will take years for the supply of popular cities to keep up with demand, so we must first promise Social Democratic Party, The Green Party and the left provide more protection for tenants in their election manifesto. This includes rent caps, as Berlin tried to do so, until the Federal Constitutional Court denied the state’s power to do so. Another goal of the parties is to once again own more state-owned apartments, as it was before the big sell-off in the 1990s. For example, the Green Party said: “Many cities need to readjust their housing market for common interests.”
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In Berlin, six state-owned companies recently owned nearly 17% of the housing stock. In Hamburg, the municipal SAGA’s share is close to 14%, and there are 68,000 apartments in Frankfurt ABG and Nassauische Heimstätte, accounting for approximately 12% of the total offer.
Munich is still the front runner
The city’s efforts to increase its assets are not only reflected in the current buying debate in Berlin. For many years, the districts of the Capital Environmental Protection Zone have used their right of first refusal when selling real estate. According to data from the Senate of Finance, between 2017 and the end of 2020, a total of 50 preemptive rights in favor of state-owned housing associations were exercised. This includes 1,471 apartments. The pre-sale cost is 278 million euros, which is equivalent to nearly 190,000 euros per apartment. The State of Berlin provided a grant of 38 million euros.
Other cities also rely on pre-emption rights, albeit to a lesser extent. As of the end of July this year, Hamburg has exercised the right of first refusal on a total of 367 apartments. According to the Urban Development Agency, the cost amounts to 100.5 million euros. In terms of rent levels and real estate purchase prices, the undisputed front-runner in Germany has much higher funding: between 2016 and May 2021, the city of Munich purchased 934 apartments through the exercise of the right of first refusal. This cost about 515 million euros-more than 550,000 euros per apartment.
