REFIRE
Charles Kingston - REFIRE
One thing looks sure. The rise of the Greens, and the accompanying pressure on their political opponents to match their voter-friendly social outlook, will require more and more political lobbying from the array of real estate interests to ensure a fair hearing and the overdue reform of the constipated planning and regulatory structures that are in danger of strangling future growth. Not an easy path ahead.
With the voting and the counting over, and the dust almost finally settled, the record six political parties who will be taking their seats in what will be the largest parliament outside the People’s Republic of China are knuckling down for a prolonged period of jostling, horse-trading and finally, old-fashioned compromise.
We’re in for a torrid time. Angela Merkel’s CDU/CSU grouping can be said to have won the election as the largest party, but this period of legislature is destined to be characterised by the smaller parties – the liberal FDP, the Greens, and the hard left (Die Linke) and hard right (AfD) – flexing their muscles in what could become a very unruly parliament.
It’s expected to be several months – and certainly not before next month’s state elections in Lower Saxony – before Frau Merkel can knock her Jamaica coalition of CDU/ CSU, the liberal FDP and the dogged Greens into a workable entity. The Greens and the FDP loathe each other viscerally, and it will take all of Merkel’s renowned adroitness to keep those two snarling bedfellows from permanently snapping at each other’s heels.
The left-of-centre SDP, Merkel’s coalition partners in the last government, are piously making a virtue out of necessity by clamouring to provide the main opposition to Merkel’s ruling party, sacrificing themselves for the wider good by preventing the hardright Alternative für Deutschland, as third-largest party in the Bundestag, becoming the de facto Opposition, with all the operating privileges that entails.
Years on the Brussels-Strasbourg gravy train had left the Great White Hope, ex-EU Parliament chief Martin Schulz unable to make any impact on the SPD’s natural constituency, leading to the party’s worst performance since the founding of modern Germany in 1949. The slack was picked up by the hard-core left, Die Linke, and the silent protesters who slunk off to the AfD. Despite Schulz’s protests, his party will have to regroup over the coming four years – hopefully under a new leader – and attempt to rebuild a credible opposition party for the first time in seemingly years.
Still, real estate investors will have breathed a qualified sigh of relief at the outcome of the election, although its contours were already visible well in advance of voting day. Many will be pleased that the SPD have been ousted from their close proximity to the levers of power, where their well-documented machinations to intensify the discredited Mietpreisbremse, or rental brake, are likely to be put on a longer finger.
Over on Merkel’s side, Christian Lindner’s FDP have been at the forefront of scotching many of the shibboleths spouted by the left as to how to promote affordable housing. Despite the Greens’ unfeasible demands for Germany to become THE energy nirvana, both their own and the FDP’s experience from government participation at Länder level have thrown up a variety of new initiatives to be concretely pursued based on hard-won experience at local level, notably in Schleswig-Holstein, Baden-Württemberg and North Rhine-Westphalia.
These include the unwinding of the Mietpreisbremse, the scaling-down of illusory ecoand energy regulation, a lower threshold for the Grunderwerbsteuer or land transfer tax, the mobilisation of private investors through tax incentives for affordable housing projects, and several other tangible reforms. Under Mutti Merkel’s coaxing supervision, if she plays her cards right, there is a real chance that the forces of realism can prevail with this government.
And not before time, as pressure, particularly for housing in the larger cities, builds up. Finally, Merkel must be thinking, those heroic SDP pseudo-firebrands are consigned to the opposition benches, rather than forcing me to compromise on their latest concocted doomed-to-failure wheeze to dampen down housing pressures. Here in our new government, let’s steady the ship. Divide et impera, keep the young crusaders of the FDP and Greens warring amongst themselves, and trust that some good will come out of it all.
In REFIRE’s view, the CDU/CSU’s indifference to real estate has been pronounced – the exigencies of coalition provided the main impetus for any action in the last governing partnership with the SDP. Now there is a chance for some fresh ideologues to pick up the property baton and run with it. The prospect does indeed offer somegrounds for hope.
The rise of the AfD, while giving pause for considered reflection, is not of the magnitude of a Trump, a Brexit, or even a Marine Le Pen with nearly half the French vote. They will cause a lot of noise in Parliament, but given the paucity of their actual policies, may yet tear themselves in half and burn brightly before either marginalising themselves like their ultra-nationalistic predecessors, or fanning the flames of the next right-wing European cause celebre. Only time will tell.
As the German real estate industry prepares for the annual pilgrimage to Munich next week for the EXPO REAL, a spirit of optimism will prevail – a sense that, while times are good now, and Germany in particular is in rude good health despite the upheavals in Europe over the past four years, the challenges facing the incoming government in four years time will be of a different order.
What they may be, we will find out. But Germany’s strengths, its economic realism, and its commitment to democratic principles, will see it remaining the predominant real estate investment market in Europe for the next while yet. The deals are still flowing. On to Munich.
