ZIA Open Day confirms onset of sober reality for German real estate industry

It was her first public appearance before a full audience of real estate people, and the new Federal Construction Minister, Klara Geywitz, received a warm reception at the ZIA annual summer gathering in Berlin last week. Up to 2,000 delegates showed up for the biggest event in the German real estate calendar - and were left with plenty of food for thought as they come to terms with a much more sober real estate climate than they were used to after a ten-year property boom.

Concentrating on real estate issues is now Frau Geywitz's sole job, with the position of Bauminister(in) being especially created after intensive lobbying by ZIA on behalf of the collective real estate industry, following years of the job being subsumed into many other responsibilities by overworked government ministers.

Frau Geywitz held out the prospect to the industry of reliable subsidies for new building, stressing that, without subsidies for the building of energy-saving housing and the renovation of old buildings, the federal government's target of building 400,000 new apartments has no chance of being met.

Her specific goal, she told us, was to harmonise the 16 different federal state building codes and to introduce a spatial planning law to the cabinet that would use digitalisation to combine various steps in planning procedures, and to enable digital participation in building projects, as is increasingly common elsewhere. A huge new push to digitalise all construction files is now urgently needed, she said. Serial building must be pushed to the top of the agenda, she said, and this requires much more standardisation of the rules and regulations in Germany's individual Länder.

Like ZIA president Dr. Andreas Mattner in his opening welcoming remarks, she exhorted her audience to embrace a new spirit of innovation to tackling the many problems now facing the industry.

To an audience that had been frustrated at the premature ending of two earlier KfW subsidy campaigns, she committed to ensuring that no third freeze would occur. Figures from the Ministry of Economics confirm that €300m is currently available, of which just under half has already been allocated. Details of the subsidy are still being worked out, but will focus on greenhouse gas emissions over the entire life cycle of buildings.

In integrating the Proptech of the Year award into the middle of proceedings, the ZIA - along with Frau Geywitz - made their view clear that the new generation of young start-up entrepreneurs along with their digital DNA are now needed to spearhead a pioneering new era in clever building construction and management. Don't count too much on help and direction from government sources, was the unmistakable message.

In a later presentation by Finance Minister Christian Lindner, he left the audience in no doubt that, given his commitment to a balanced budget, tough discussion about the distribution of scarce financial resources still lie ahead between his department and the Ministry of Economics, headed by Green minister Robert Habeck. Lindner used the occasion - and several other media interviews he gave in the preceding days - to warn his audience that dark days lie ahead for the real estate industry. And for the economy as a whole. We are already IN the feared economic crisis, he told us.

His key takeaway message from his address this time - and Lindner has not failed to attend this event even once over the past 13 years or so - was that, as we look ahead, it's all going to be about the "warm rent", or the "cold rent" plus all the extra add-on for energy and other costs that tenants and landlords will have to bear. Any easing of the pressure on the housing market will have to come from self-regulation, in other words market solutions to matching supply with demand. A definite warning to his audience not to be hanging around waiting for new subsidy pipelines to come on stream.