Rent freeze in Berlin ends calls for expropriation, but may spark disinvestment

City’s biggest landlord could face losses of 330M euros ($363M) over 5 years

Nov.November 29, 2019 12:30 PM
Berlin, Germany (Credit: Getty Images, iStock)

Berlin, Germany (Credit: Getty Images, iStock)

Berlin’s rent freeze may spark disinvestment, according to the city’s largest landlord.

Deutsche Wohnen CFO Philip Grosse said in an interview with Bloomberg that the firm is holding off on construction in Berlin, and instead will look to other cities to make new investments. The company said earlier this month that limits on raising rents and potential mandated rent cuts put cash flow at risk. The damage done to its bottom line, the landlord calculated, could be to the tune of 330 million euros ($363 million) over five years.

Relief may be on the way for the city’s landlords, however. German Chancellor Angela Merkel’s party, the Christian Democratic Union, has vowed to challenge the municipal measures in Germany’s constitutional court. But that can only happen after the legislation is in full effect, which won’t be until the first quarter of next year. In the meantime, said Grosse, the uncertainty will chill investment.

The rent freeze, according to Grosse, does have one advantage: calls for the government to take over big apartment owners, including Wohnen, have ceased. Now, only 29 percent of Berliners are in favor of a proposed referendum to expropriate landlords, according to a recent survey, while 71 percent backed a rent freeze in the same poll.

“It’s losing steam, and it’s not going to happen,” said Grosse, who attributed the loss of momentum to the other measures passed targeting landlords. “If there’s one good thing about the rent freeze, it’s that.” [Bloomberg] — Georgia Kromrei

Related Articles

Blackstone CEO Steven Schwartzman and Stuyvesant Town (Credit: Getty Images)

After authorities vowed review of Stuy Town deal, Blackstone changes course on vacancies

Real Capital Analytics data showed that New York’s multifamily market had a very slow July. (Credit: iStock)

New NYC rent law “beginning to shut down investment”

Some landlords say they plan to close the door to vacant apartments and wait for the laws to change (Credit: iStock)

Creative ways NYC landlords are getting around the new rent rules

Governor Andrew Cuomo (Credit: Getty Images, iStock, and Pixabay)

Analysis: Here’s what the new rent law will do to the average stabilized apartment

(Credit: iStock)

“Indentured landlord” in rent-reg lawsuit vents at politicians

A&E Real Estate Holdings principal Douglas Eisenberg and the properties along Queens Blvd and 65th Avenue (Credit: The Rego Park 18 Portfolio)

A&E Real Estate buys huge rent-stabilized portfolio at deep discount

Clockwise from left: 5203-5207 Church Avenue in Brooklyn, 119-40 Metropolitan Avenue in Queens, 855 East 217th Street in the Bronx and 31-35 Steinway Street in Queens (Credit: Google Maps)

Going once, Going twice! Rent-stabilized portfolio hits auction block

Taconic Investment Partners’ Charles Bendit and A&E Real Estate Holding’s Douglas Eisenberg (Credit: Getty Images, iStock)

Multifamily heavyweights pitched rent plan before Albany hammered landlords