MAGAZINE: Berlin’s residential buyback petition puts investors on alert

A petition pushing the city authorities to take back ownership of private rented apartments is spooking institutional investors in Berlin’s residential market.

Institutional investors with a focus on German residential are taking note after a Berlin petition gathered enough signatures to force local politicians to consider buying back large housing portfolios.

The German capital looks set to hold a vote on whether to take back ownership of 200,000 private rented apartments, spurred by a tenant revolution over rising rents, and the fact that the vast majority of Berliners rent. It could reportedly cost in excess of €35 bn to expropriate the 200,000 apartments, located across the German capital of 3.7 million residents. It could also take years of legal wrangling and possibly delay housing construction in one of Europe’s fastest growing cities, which is already short of stock.

With the average rent for a two-bedroom apartment costing between €550 and €600 a month, rents may not seem that high compared to other European capitals. But tenants in Germany have long enjoyed robust legal protection, and have a history of renting. Traditionally, home ownership in Germany is low, at around 46%. But in Berlin, 85% of residents rent. The activists’ proposal, called ‘Expropriate Deutsche Wohnen’, requires Berlin authorities to buy back properties from any private landlord that owns more than 3,000 units.

Deutsche Wohnen is one of the city’s largest landlords, although the market remains disjointed. Matti Schenk of Savills’ research team, Germany, says: ‘Germany has a very fragmented market with a lot of residential developers active in the market. You can’t say there is a single major player.’

15 large owners
Savills’ research suggests there are 15 large owners of rental apartments in Berlin, ranging from listed companies such as Deutsche Wohnen with 115,000 units and Vonovia with 44,000, to housing associations such as Beamten-WohnungsVerein zu Berlin with 7,200.

Unsurprisingly, institutional investors are now starting to monitor the protest. Savills says Berlin has accounted for around 23% of all apartments transacted in Germany over the last 10 years, although the city accounts for 7% of the nation's rental apartments.

‘Expropriate Deutsche Wohnen’ has until June to collect 20,000 signatories and then a further 7% of Berlin voters have to back the movement to force a referendum by next February. Many left-leaning local politicians are in favour of the movement, with some even backing it on their campaign posters for the imminent European Union elections.

Felix von Saucken, Colliers’ head of residential, Germany, says: ‘Berlin is a little bit special in Germany, because it is politically totally different to other German cities. And, in the end, it doesn’t matter if authorities take all these apartments from these companies because the problem is the same. The only thing to do is to build more apartments in Berlin.’

Von Saucken argues that planning processes in Berlin should be less complicated, because it could deter investors when the city needs more flats to house the annual influx of new residents.

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