Interior Ministry to loosen immigration laws to address skills shortage

The German government is loosening its immigration laws to make it easier for highly-skilled vocational workers outside the EU to work in Germany - including in the real estate sector - in a move designed to address Germany’s burgeoning skills shortage.

The Ministry of the Interior’s paper regarding the new law, or Fachkräfteeinwanderungsgesetz, will be discussed in the Bundestag later this month.

Under the terms of the proposal, skilled workers from Drittstaaten,or non-EU countries, will be allowed to come to Germany for six months to search for work. As a prerequisite, they will be obliged to show proof of a professional qualification and means of supporting themselves in the country, according to the paper. The former Vorrangprüfung,or ‘priority review’ which involved establishing if there was a German worker available for the job, is being abolished.

‘This is a really new step for Germany; it’s been in the works for many years,’ Klaus-Peter Hesse, director of the German Property Federation (ZIA), told REFIRE: ‘It’s very important for the real estate sector because we have a lack of specialists across every part of the business.’

However, qualifications will be crucial. As the paper states: ‘We don’t want unqualified workers from non-EU countries. Rather, we’re adjusting our efforts in terms of what the economy needs, taking into account a person’s age, linguistic capabilities and verification of a concrete job offer as well as securing their livelihoods in an appropriate way.’

German Interior Minister, Horst Seehofer, has described the paper as a ‘good basis’: ‘This will give us the right framework for the properly managed immigration of qualified professionals,’ he said.

Others agree: ‘The people I have talked to think it’s a good paper,’ Professor Axel Plünnecke, head of education, immigration and innovation at the Cologne Institute for Economic Research (IW Köln), told REFIRE. ‘I expect it to pass into law early next year. We have a lack of many vocational workers in Germany, including in the construction sector. This law, assuming it passes, will benefit both the construction and logistics sectors because we have a lack of both tradesmen and lorry drivers.’

However, the one sticking point could be that workers coming in will be expected to have a similar qualification to their German colleagues, Plünnecke said. ‘The real issue will be how to define this. In Germany, for example, school-age trainees go to school and learn on the job at the same time. This doesn’t exist in all countries though, so it will be about coming up with a definition that takes that into account.’

Hesse agrees: ‘There are very different education systems in other countries, so we need to be flexible. Even after getting your first qualification, you might still have to learn new skills or technologies. It should be possible to learn on the job, too.’

Germany needs a net inflow of foreign workers of between 300,000 and 400,000 a year, according to Plünnecke. ‘In the past, Germany used to attract a lot of workers from countries such as Poland and Romania but this is expected to decrease going forward, so we need to also look elsewhere,’ he said.

There is already a ‘Blue Card’ system in Germany, which was introduced in 2012 to attract highly-skilled workers from overseas, particularly Indian IT workers. The new proposal will further address the skills shortage, according to Dr. Andreas Mattner, president of the ZIA: ‘As one of the most important sectors in Germany, the real estate industry needs skilled workers,’ he said. ‘We need qualified workers who are sometimes hard to find in Germany. As a result, the recruitment of international skilled workers represents a great opportunity for us.’

In addition, it marks the first step in the simplification and reduction of red tape for real estate companies, Mattner said. ‘We have called for well-managed immigration for highly-skilled workers for a long time.’

Germany’s struggle to find enough highly-skilled workers in the real estate sector has been well documented. According to data released by the Federal Employment Agency in June, for every 100 advertised positions in plumbing, heating and climate technology, only 55 are being filled. For civil engineering, the figure is 49 out of 100.

The latest immigration proposal is also designed to help foreign students who have just finished studying in Germany, Dr. Konstantin Kortmann, head of residential investment at JLL Germany, told REFIRE. ‘The government is trying to set up a systematic approach to immigration,’ he said. ‘This topic has been very hotly debated in Germany.’

Kortmann bills the proposal as ‘good news for employers as it is aimed at lowering thresholds for immigrants and could facilitate hiring from a wider pool’. However, he points out that it still falls short of a nationwide USA/Australia/Canada type point-based immigration system and does not allow asylum seekers to later become labor migrants (Spurwechsel),which the SPD and FDP parties favoured.

Berlin Hyp Trendbarometer: Germany in the grips of a bubble

Germany is already in the grips of a real estate bubble, according to more than half of the 320 real estate experts surveyed for Berlin Hyp’s Trendbarometer this month.

The general consensus is: ‘We won’t recognise the bubble anyway until it bursts, so a lot can still happen,’ according to the survey. Just 45% of those surveyed do not believe that we need to fear a bubble.

There is also a slight disconnect between what those in the industry assume lenders are doing and what actually comes to pass. For example, 76% of respondents assume that banks are taking higher risks in order to safeguard adequate margins. Yet in the current late phase of the real estate boom, many real estate lenders are actually acting cautiously and are providing less, albeit very selective, lending, which has resulted in a shortfall in real estate financing. In addition, the decline in prepayments means that new lending can be recognized more quickly on the balance sheet and Basel IV is gradually requiring more equity needed to back operational risk.

‘Due to the high degree of market maturity, we are taking a more selective approach to new lending and are very risk-conscious,’ Nicole Hanke, head of marketing at Berlin Hyp, told REFIRE. ‘Basel IV affects the lending market in an important way. The regulatory costs have to be earned and the banks have to meet the equity requirements.’

Nonetheless, new lending is expected to remain stable, according to the survey respondents, of whom 69% said they expect new lending to remain stable or increase over the next 12 months. Just 28% expect new lending to decline. The average credit volume is expected to be between €10 and €50m. An additional 26% of people surveyed expect to see lot sizes of between €50m and €100m, with 12% predicting average volumes in excess of €100m. Margins are also expected to remain stable or even rise over the next 12 months, according to 61% of respondents. Another 37% expect margins to fall.

‘According to our survey, resi is the most interesting asset class (followed by offices and logistics),’ Hanke said. ‘It’s very stable and lower risk relative to other asset classes. There’s also very strong demand for housing in Germany. The market will become more risky because we’re probably almost at the end of the cycle.’