Berlin's re-run election highlights role of housing among voter concerns
As Berliners went to the polls on 12th February to vote again in a re-run of the botched Senate (state) election in 2021, the issue of housing was foremost on the city's inhabitants minds, as the German capital develops a chronic housing shortage.
As the construction of more and more residential housing developments in the city and its surroundings gets cancelled, the regional housing association umbrella organisation BBU (Berlin-Brandenburgische Wohnungsunternehmen) is demanding a new programme of subsidies to prevent the sector from drying up completely.
Presenting its latest Market Monitor recently, the BBU's chairperson Maren Kern said that at the current costs of building, modernising or maintaining properties, the provision of social or affordable housing was no longer possible. "If the state does not take swift and efficient countermeasures here and now, then we're right up against the wall in terms of both new construction and CO2 savings targets," Kern warned. Politicians must take countermeasures without delay, she demanded - with a stimulus package, known as "Future Housing".
According to the BBU's figures, an apartment completed in 2023 will cost about a third (29%) more than an apartment completed in 2020 (€2,790), with construction costs averaging €3,600 per square meter of living space (excluding land). "In the case of currently newly launched construction projects of our companies in Berlin, they are now €5,000 per square meter and above - not even including land," Kern said.
The "Future Housing" stimulus roadmap presented in BBU's Market Monitor outlines the key demands being made on the new Berlin government to alleviate the housing problem. These include: reducing VAT on building services from 19% to 7%; expansion of federal funding for new-build and modernisation to €10bn per annum, along with supplementation of state subsidies; more systematic support for innovation; a range of measures to streamline bureacracy and red tape in planning legislation; and an acceleration of the digitisation of work processes in state administration and planning offices.
The worsening housing situation, in Berlin as well as in other large German cities, has elicited a number of ad hoc studies from the private sector, particularly in the area of digitisation to help boost new building and productivity in the construction sector.
REFIRE spoke recently to Moritz Koppe, the CEO of software group PROBIS Software GmbH and an 'old hand' in construction cost management and quantity surveying, about the potential for short-term alleviation of the Berlin housing shortage. We discussed re-densification, or building on top of existing buildings, as a potential solution to shortages in all of Germany's biggest cities.
PROBIS, along with three other companies Syte, PriceHubble and LiWooD, recently produced a study based on AI-supported search tools of Berlin's land registry offices. They concluded that between 430,000 and 510,000 sqm of new housing capacity could be created by adding stories to existing buildings. This represents a potential capacity of between 7,000 and 8,000 additional new apartments, based on an apartment size of 50 sqm.
In terms of potential, the Berlin districts of Neukölln (up to 1,167 apartments), Tempelhof-Schöneberg (up to 906 apartments) and Pankow (up to 834 apartments) ranked the highest. The potential is lowest in Treptow-Köpenick (up to 285 apartments) and Marzahn-Hellersdorf (up to 77 apartments).
To qualify, existing buildings with flat and low-pitched roofs were identified where they had one or more stories fewer than the neighbouring development. They also had to be located on residential or mixed-use lots and could not exceed seven stories in height to avoid falling under the high-rise guidelines if built upon.
Syte's CEO Matthias Zühlke said that redeveloping and adding stories to existing buildings offers an opportunity to create inner-city living space without further soil sealing, a very relevant factor in Germany which has a 30-hectare a day target for sealing.
Stefan Stenzel is head of product development at Munich-based LiWooD, which specialises in modular timber construction. He believes that adding stories to existing buildings is a more sustainable alternative to simply 'more construction' in creating living space.
"Whereas large amounts of energy are required for the production of concrete and a corresponding amount of CO2 is emitted, wood stores carbon. This makes building with timber modules much more sustainable than conventional construction methods. From an energy perspective, adding a new attic additionally significantly improves efficiency, especially in unrenovated existing buildings. Moreover, by avoiding composites as far as possible and adopting a materials reuse concept, we can ensure a high degree of circularity."
Christian Crain, CEO of PriceHubble, which specialises in real estate data and valuation, sees potential for re-densification in Berlin housing at many price points.
"Our assessment of achievable cold rents shows a range of €14.50 per square meter in locations far from the centre to €28.00 euros per square meter in the city centre itself", said Crain. "Despite the increased construction costs, the rental potential shows that for existing owners, the expansion can still be profitable. And with appropriate funding from the city of Berlin, this is one way that affordable rental housing can be created."
PROBIS's Moritz Koppe says, "Re-densification is always the more cost-effective option from an urban development perspective. Applying our Probis benchmark database, additions in modular timber construction offer monetary advantages - particularly in view of the average 17% increase in construction costs in 2022. Plus, this method helps to avoid the normally lengthy planning processes new building is generally subject to, which helps to reduce construction costs."
