Dwindling investments in the new building: Berlin construction companies reduce expenditure by 26 percent, warns the BBU association

Dwindling investments in the new building: Berlin construction companies reduce expenditure by 26 percent, warns the BBU association

Title: shrinking investments in the new building sector and impending expropriation - housing shortage in Berlin is also acute

by Hildburg Bruns

According to a membership survey by the BBU association (Berlin-Brandenburg housing company), many construction companies reduce their investments in the new building by 26 percent. This has drastic effects on the housing market in the capital. While 7152 apartments are still completed this year, the number will probably fall to only 5224 in 2024.

"Maren Kern, head of the Berlin-Brandenburg-based housing company (BBU) Association (BBU), commented on this development and described it as questionable for the future of the city," says a report by the association. For the first time in 16 years, the investments in the new building declined and now amount to 2.6 billion euros, which corresponds to a decrease of 300 million euros.

The Damocles sword of impending expropriation contributes to the tense situation. According to the successful referendum "Deutsche Wohnen & Co. expropriate", the CDU/SPD coalition is currently working on a possible framework law for large real estate companies. This increases uncertainty in the industry.

Already today there are no around 100,000 apartments in Berlin. Urban companies, cooperatives and private investors are therefore supposed to create 20,000 new buildings annually in order to meet the need. However, the continuing willingness to invest of the construction companies is a major challenge.

For tenants, this brings at least positive news: The BBU residents who provide almost half of all rental apartments in the capital have been moderate in recent years. Within one year, the net rents only rose by 2 percent to an average of 6.54 euros per square meter. In comparison, the rent index in Hamburg is already 9.29 euros per square meter, which corresponds to a difference of 37 percent. Nevertheless, rental prices in Berlin are only nine percent lower compared to gross income, while in Munich with 14.58 euros per square meter even twice as high prices as in Berlin.

An important factor for this price development is the rising interest rates for building loans. For example, interest rates for an apartment with a 200,000 euro loan have increased from 2,000 euros to 7,780 euros per year since January 2022. Experts assume that interest rates will not develop to the earlier level. The exploding construction prices and lengthy building permit procedures also contribute to the falling willingness to invest.

In order to act more sustainably in the future, the BBU companies are increasingly relying on measures such as rainwater use, the permeability of surface coverings, infiltration and green roof. However, only 16 percent of the apartment companies are ready to green their facades. Tenants are skeptical about this project, as they fear that this will increasingly get into the building.

The current developments on the Berlin housing market show that the housing shortage in the capital is becoming increasingly acute. There is an urgent need for new apartments, but the investments of the construction companies shrink. At the same time, the topic of expropriation increases uncertainty in the industry. This situation requires comprehensive solutions and political measures to ensure housing care in the German capital in the long term.