The German real estate industry let out a collective sigh of relief when the incoming government coalition announced their governing programme recently, which included the establishment of a separate Bauministerium, focused on the needs of the real estate and construction industry. But nearly everybody (including REFIRE) was wrong-footed as to the identity of the incoming minister.
The new ministry is officially called the „Bundesministerium für Wohnen, Stadtentwicklung und Bauwesen“, the "Federal Ministry of Housing, Urban Development and Construction". The responsible minister is the hitherto fairly unknown Klara Geywitz (SPD), and not ex-Environment Minister Svenja Schulze, as had been widely anticipated.
The new ministry won't have responsibility for all aspects of real estate. For example, tenancy law remains the responsibility of the FDP-led Ministry of Justice, the issue of building energy answers to the expanded Ministry of Economics and Climate Change headed by Green Party leader Robert Habeck.
Still, new minister Klara Geywitz (SPD) is in charge of the building industry, construction and federal buildings, urban development, urban development programmes and housing, as well as regional planning, regional policy and state planning. These areas previously belonged to the Federal Ministry of the Interior. Geywitz will be supported by Cansel Kiziltepe (46) from Berlin and Sören Bartol (47), who will be parliamentary state secretaries in the newly created ministry.
German housing and property associations were quick to welcome the new ministry and the new minister. Sabine Georgi, the German director of the Urban Land Institute (ULI), said she was particularly glad to see that the new ministry would have responsibility for regional policy and planning, as well state planning (Landesplanung). She says it's a big step forward in taking responsibility for spatial planning, not the case with the predecessor ministry under Horst Seehofer.
The decisive factor now will be how the minister meets with those responsible for energy, digitalisation and mobility. "A smart urban development concept presupposes that mobility issues are also considered," says Georgi. The point is to develop an equal understanding of the issues. She cites the Hamburg Alliance for Affordable Housing as a model for a cross-sector and cross-thematic approach.
Georgi particularly welcomed new minister Geywitz's personal background, having worked as a local politician and with various state authorities, as well as her east German origins in Potsdam, which has encouraged a collaborative approach to "thinking about issues together". Her experience dealing over years with bread-and-butter issues - including housing - at a local political level can be advantageous - "She can appreciate the specific problems, which also gives her a different view of the broad overall challenges", said Georgi.
To those who know her, new minister Geywitz is considered pragmatic and hands-on, and she is close to Chancellor Olaf Scholz, having been his partner in their unsuccessful bid for the joint party chairmanship two years ago. Her first statements since taking office have been all about dialogue, co-operation and initial talks with departmental colleagues from the economic and judicial sectors - as well as by making clear her opposition to expropriation, and addressing the shortage of skilled workers that's currently holding up construction projects.
Axel Gedaschko, president of housing association GdW, also welcomed the new regime. "We are happy with the new ministry," he said. Although he would have liked central areas such as heat and energy efficiency to move under the roof of the new building for climate-friendly refurbishment, he conceded that might have been utopian. "And to hope, for example, that rental policy would come to the construction ministry would be absurd - that has never been the case."
Gedaschko also finds it regrettable that responsibility for rural areas lies with the Federal Ministry of Agriculture. He also refers to this in regard to the SPD's proclaimed goal of 400,000 new dwellings per year. This can only be achieved if action is taken in cooperation with the municipalities in the cities and the countryside. "Decisions and construction are made in the municipalities, and the Chancellor is dependent on their support," said Gedaschko.
Not everybody has been quite so bullish on the new Ministry's benevolence towards the real estate industry. Dr. Michael Voigtländer of the think-tank Institut der deutschen Wirtschaft (IW Köln), although conceding that the industry can't complain about what so far on the regulatory agenda, has been a sceptic of the new government's ambitious housing plans and believes some surprising new legislation may lie ahead.
In an interview with business newspaper Handelsblatt, Voigtländer is critical of the departmental structure of the new Ministry and the government's lofty construction targets. The top team in the Ministry is not exactly pushing a moderate housing policy, he says, with State Secretaries Sören Bartol and Cansel Kiziltepe having in the past advocated stricter regulation of the housing market.
Sören Bartol had already made headway in the past with his plans to abolish the "modernisation levy" while Cansel Kiziltepe has campaigned in Berlin for stricter rent regulation.
Whether they will continue their course in the new government will therefore much depend on Minister Klara Geywitz, says Voigtländer. As to the new Minister herself, Voigtländer is non-judgmental on her lack of experience in housing and building policy. "This can also be a good opportunity to open up a fresh dialogue. In any case, I hope that she is committed to her work and will tackle one or two things with a fresh and unencumbered mind."
"The industry's wish has been fulfilled and a separate ministry for housing and construction was established. Whether this will really lead to progress in the digitalisation of building offices or in the acceleration of planning and approval procedures depends very much on the people involved. Overall, however, I expect the housing policy of recent years to continue, with a little more regulation of existing rents."
However, Voigtländer also expects that the SPD-led Ministry will push for more far-reaching regulatory projects. What he no longer expects, however, is the abolition of the tax exemption rule on capital gains after ten years. "Unless there is a need for concrete financing again or if there is an overall discussion about property taxation" - which he does not expect.
Voigtländer expects that the coalition partners will still engage in intensive discussions on individual issues, such as the municipal right of first refusal or the introduction of the housing community benefit system. There could also be one or two surprises in the direction of regulation.
For investors, there will be no avoiding residential real estate in 2022, says Voigtländer. Even if the growth dynamic weakens and higher interest rates are are visible in the distance, residential investments in metropolitan areas continue to promise stable returns. "It's comparable to buying government securities: There is relatively little return, but great security."
On the issue of the 400,000 new dwellings planned annually by the coalition government, Voigländer's view has long been that construction resources are often misallocated. "Regardless of the feasibility, we don't actually need so much new construction. At least not in all places. According to our calculations, around 308,000 dwellings per year are sufficient. In the urban centres we should increase building activity. But there are many cities and districts that no longer have a great need for housing and are more likely to shrink in population. So we should build less there, otherwise we're just producing the vacancies of the future."
