Investors rush to cash in on Germany’s broken resi planning laws

It's a simple case of supply and demand, wrapped in politics

TRD New York TRD WEEKEND EDITION /
Mar.March 10, 2018 11:00 AM

From back: Charlize Theron in “Atomic Blonde;” Berlin. (Credit: BagoGames Flickr; Pixabay)

Housing prices in Germany seem to be going nowhere but up.

Here’s the situation: a shortage of land and skilled construction workers, in combination with strict energy rules and requirements for accompanying facilities like schools alongside developments, have kept a number of new housing projects from getting built in major cities across Germany due to costs. At the same time, an influx of German retirees and young professionals, both local and from abroad, are driving demand for housing through the roof, which means prices are skyrocketing, but legislative relief via existing planning laws is at least six years away, according to the Wall Street Journal.

As a result, last year prices in major cities like Berlin rose a national average of 10 percent while many investors saw their portfolios increase in value by 40 percent and a record of more than $19 billion in investment poured in.

With most of Germany’s urban residents renting, not owning, in markets devoid of options, rents in Berlin climbed 9 percent last year. Over the past decade, in Frankfurt’s median rent grew by 44 percent while in Munich the median rent is now 60 percent higher than it was in 2008.

The hot housing markets are piquing the interest of investors, particularly those from the UK, but local investors are preaching caution.

“You can still make stupid deals in Berlin if you don’t know the market,” investment strategist Jörg Schwagenscheidt told the Journal.

And government intervention is looming: Chancellor Angela Merkel’s recently formed coalition government as well as local lawmakers have promised to intervene to protect tenants from ever-increasing rents. [WSJ]Erin Hudson


Related Articles

arrow_forward_ios
102 Prince Street and Jho Low (Credit: Modlin Group; Low by Michael Loccisano/Getty Images for New York Times)

Jho Low’s former Soho condo sells at a discount

Jho Low’s former Soho condo sells at a discount
(Credit: iStock)

Loan applications to buy homes rise for fifth week

Loan applications to buy homes rise for fifth week
For the first time in six weeks, the number of Manhattan homes that went into contract increased. (Credit: iStock)

Manhattan home deals jumped 52% last week

Manhattan home deals jumped 52% last week
An institutional investor’s sale of a 7 percent stake in an exchange-traded real estate fund reveals deep concerns about the sector. (Credit: iStock)

Mystery investor dumps big stake in real estate fund

Mystery investor dumps big stake in real estate fund
The number of New Yorkers signing new leases plummeted in April 

Rental activity hits record lows in Manhattan and Queens

Rental activity hits record lows in Manhattan and Queens
Here are the latest numbers on the Manhattan housing market’s “tepid attempt at recovery” (Credit: iStock)

Signed contracts to sell Manhattan homes hit seven-week low

Signed contracts to sell Manhattan homes hit seven-week low
Small landlords, such as Jan Lee, a New York landlord who owns two buildings, say Wall Street players will take their place unless rent relief comes soon. (Credit: Twitter; background via BRYAN R. SMITH/AFP via Getty Images)

Small landlords call for rent relief package, fearing Wall Street takeover

Small landlords call for rent relief package, fearing Wall Street takeover
Former Twitter CEO Dick Costolo (right) and Lorin Costolo with 136 Grand Street (Credit: Costolo via Jesse Grant/Getty Images; Google Maps)

Former Twitter CEO scores sprawling Soho co-op for $8M

Former Twitter CEO scores sprawling Soho co-op for $8M
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...