The Berlin housing market is considered overheated. Politicians are therefore pursuing the strategy of not only building new apartments, but also buying stocks. Now a spectacular deal is taking place.
After months of negotiations, a multi-billion dollar deal for the municipalization of apartments in Berlin is wrapped up.
Three state-owned companies are buying 14,750 apartments and 450 commercial units from the Vonovia and Deutsche Wohnen groups for which they pay 2.46 billion euros. All those involved announced this on Friday.
The deal a week before the House of Representatives election is considered the largest of its kind in the capital for a long time. Originally, the companies had offered the country up to 20,000 apartments. The red-red-green state government is pursuing the goal of expanding the municipal housing stock through new construction and acquisitions. In this way, she hopes to have more influence on the tense housing market and to be able to curb the rise in rents.
“Buying a house is an example of a social Berlin,” said Finance Senator Matthias Kollatz (SPD). The estimated 30,000 affected tenants would now have security “that their apartments will be permanently in the low-cost segment”. The heads of Vonovia and Deutsche Wohnen, Rolf Buch and Michael Zahn, were just as satisfied with the deal, which knows many winners and no losers.
Both groups, which are numbers 1 and 2 on the German housing market and want to merge in the course of a tough process on the stock market, are selling around ten percent of their holdings in Berlin. A good 10,000 of the apartments come from Deutsche Wohnen and 4,250 from Vonovia. The stock of communal apartments in turn increases to around 355,000. That is a good fifth of the 1.67 million rental apartments in the capital.
The three municipal companies Howoge, Degewo and Berlinovo finance the business with loans. They rejected fears, for example from the Berlin House of Representatives, that they would have to cut back on urgently needed housing due to this additional burden. “We will continue the new building as before, it can even be more,” said Howoge managing director Ulrich Schiller.
The apartments in the package are spread across all twelve Berlin districts and are rather small with an average size of 68 square meters. Entire settlements are included, such as the Falkenhagener Feld in Spandau, the thermometer settlement in Lichterfelde and the high-deck settlement in Neukölln, but also smaller stocks.
The Senator of Finance Kollatz named the average purchase price around 2400 euros per square meter. That would be an average of 163,000 euros per apartment. It is the earnings value, which is below the market value. They are to be assessed as “affordable housing stock,” said the Senator. Vonovia boss Buch spoke of a “fair price”.
Some of the apartments have already been in municipal hands. One to two decades ago, Berlin sold around 200,000 apartments at comparatively low prices – which is now generally seen as a mistake.
Regarding the condition and age of the quarters, it was said that some were from the 70s or 80s, others were only built a few years ago. Some of them have been renovated, but some – as was common in the 70s and 80s – asbestos panels were built into the flooring. The municipal companies put the additional investments they want to make in the coming years for renovation or technical repairs at around 380 million euros.
The company bosses Buch und Zahn evaluated the housing business as proof that their companies were “reliable partners” of politics and society in solving problems on the Berlin housing market. They recalled the voluntary commitment of both groups to limit rent increases in Berlin until 2026 and to build 13,000 new apartments.
In the capital, asking rents have risen faster in recent years than in other metropolises. In some parts of the city, even average earners have a hard time finding affordable accommodation. Queues to view vacant apartments are long.
This situation, along with headlines about how tenants are dealt with and the rent cap with state-set upper limits, which the Federal Constitutional Court has now collected, increased the pressure on landlords. In addition, Berliners will be able to vote on the expropriation of large housing groups in a referendum on September 26th parallel to the parliamentary and Bundestag elections. Against this background, the bosses of Deutsche Wohnen and Vonovia have been adopting conciliatory tones for some time.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
