The real estate industry as a scapegoat

This year’s ZIA Real Estate Industry Day was both well attended and highly interesting. Besides representatives from all major industry players, a small group of activists had also made its way to Berlin to demonstrate loudly in favour of more affordable housing and against the, in their eyes, wicked real estate industry. Of course, affordable housing is also a hot topic of discussion outside the local Berlin scene. And yet, the monocausal accusations levelled on the day simply do not stand up to scrutiny.

Sometimes it helps to take a look at the challenges we are currently facing. Based on current reckoning, a good 400,000 new residential units are needed every year in German cities – that’s the equivalent of one Vonovia per year! Faced with figures like these, the calls for state intervention and the “success model” of German state housing development rapidly get louder. Yet, in view of the budgetary restraints and the often questionable impacts of mass social housing development on the wider urban environment, it soon becomes clear that the answer is not quite so simple after all. Even ignoring all other factors, the number of required apartments that are supposed to be completed within a relatively short period is simply enormous. At the same time, the political sphere is unwilling to climb down from its high constructional standards which, important as they may be, currently only exacerbate the situation.

The state itself or, to be more precise, the communities are often a stumbling block in the creation of new housing. Development land is reluctantly designated and then marketed at top prices. This is understandable in light of ailing municipal budgets, but fatal for the development of affordable rental apartments.

My point is: in order to gain control over the housing crisis in metropolitan areas, the state needs the real estate industry that the protesters so vehemently deride. It is not part of the problem, but rather part of the solution. Naturally, private investors want to earn a return on the money they put in – and this is entirely legitimate. Even the construction of higher-quality housing will lead to an improvement in the rental housing supply for the lower-income groups. This was once again confirmed in very clear terms by a recent study from LBS. However, a prerequisite of this is that adequate amounts of new housing are created. The real estate industry will do its part, if only one would allow it to. VALTEQ will also be making its contribution to the solution.

Dr. Gabriele Lüft, Managing Director of VALTEQ Gesellschaft mbH