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Residential new-build housing in northern Germany
At this year’s Future of Living Day (Wohnzukunftstag 2025) held at Berlin’s EUREF-Campus, the German housing sector came together in what should have been a rallying cry for change. Instead, it sounded more like a cry of frustration. While the goals—climate neutrality, affordability, digital integration—are clear, the problem is turning them into policy and practice.
A standout example of real progress came from Munich. In Bavaria’s first Building Type E pilot project—E for Einfach, or easy—a nine-storey timber building is being constructed under loosened regulatory requirements. Known as Das große kleine Haus, the cooperative-led development is bypassing standard DIN norms (such as sound insulation and heating specifications), allowing for simpler, cheaper construction.
Architect and co-op board member Rainer Hofmann estimates a 10% saving on construction costs without sacrificing quality. “We’re not building a cheap house,” he said. “We’re building a good, decent house—and still significantly cheaper.” Rents are projected at €11 per square metre, unusually low for central Munich.
The project trims costs by prefabricating components, scaling back heating technology, and cutting parking space requirements. But it remains a protected legal case. Scaling this nationally would demand wholesale reform of federal building codes—something most developers view as unlikely in the current climate.
Insulation-first orthodoxy under scrutiny
But while the Munich project signals what’s possible when rules are relaxed, broader progress remains stuck in ideological habits—especially when it comes to how Germany tackles energy performance. Throughout the day, the issue of decarbonisation was very much front and centre. Professor Manfred Norbert Fisch, from Steinbeis Innovation, called for an end to Germany’s insulation-first orthodoxy. His argument: ditching oil boilers in favour of heat pumps offers the same carbon cuts at a fifth of the cost of full-envelope renovation.
The numbers were stark. Upgrading a building’s envelope costs around €1,000 per square metre. Installing heat pumps instead: €200. “Let fossil fuels rest in peace,” he urged.
Dr Thomas Hain of Nassauische Heimstätte supported the shift. Full retrofits, he warned, would require €180,000 per flat—pushing rents up by two euros per square metre. A CO₂-focused approach could do the job for €50,000 and result in a rent increase of just 60 to 80 cents.
Even the European Commission weighed in. Stefan Moser argued that the EU Buildings Directive (EPBD) allows more flexibility than many assume, permitting a balanced approach that combines efficiency with smarter energy supply. GdW President Axel Gedaschko criticised Germany’s interpretation of the directive as overly literal. “We always think in terms of insulation thickness first,” he said.
Digitalisation and data remain persistent barriers
Digitalisation returned as a theme—but optimism remained thin on the ground. A panel on heating systems and PropTechs revealed familiar complaints: poor data exchange, incompatible systems, lack of standards, and a persistent shortage of skilled labour.
A new GdW study—Überforderte Quartiere—highlighted the additional challenge of implementing tech solutions in socially fragile neighbourhoods, where retrofitting is as much a social task as a technical one.
Across the event, a clear pattern emerged. There is no shortage of viable ideas, but they struggle to get past the gatekeepers. Planning delays, regulatory entanglements and political hesitation continue to stifle momentum.
Whether the topic was the Hamburg Standard, serial renovation, or prize-winning newbuilds, the underlying sentiment was the same: without regulatory reform and political clarity, even the most promising models remain isolated exceptions.
Takeaways for investors
For institutional investors, three strategic points emerged from the day. First, carbon-reduction strategies that prioritise heat pumps and energy-supply reform are not only more cost-effective than full retrofits but also more likely to align with social affordability goals. Second, isolated regulatory exceptions like Building Type E may offer opportunities in specific federal states, but remain difficult to scale without national reform. Third, the digital transition remains slow and fragmented. While promising platforms exist, integration issues and skill shortages remain significant barriers to implementation.
REFIRE’s view: Germany’s housing sector doesn’t lack imagination. It lacks implementation. Pilot projects show what’s possible—but unless politics catches up, the housing crisis will remain mired in its own deadweight.