Germany and the world's obituary writers have been bidding goodbye to the Angela Merkel era for the last year. After 16 years at the top, it's time. But it may yet be a while until she disappears from the scene.
Germans go out to elect a new government this Sunday. We'll know the share of the vote within hours. But the likelihood thereafter is a long protracted period of negotiation between the parties to hammer out an acceptable coalition. This could last for weeks, or into 2022.
Until then, Angela Merkel will still be in charge - eager to be released from her duties, to walk into the sunset and enjoy a life pursuing her interests in the opera, particularly Wagner and Webern, and enjoying bracing hikes in the mountains. She'll have deserved it.
Real estate investors in Germany are likely to have more mixed feelings. With COVID beginning to appear in the rear mirror, the likelihood of a red-green-yellow government emerging from post-election talks is now viewed as quite high. The SPD and the Greens are planning further heavy costs on the real estate industry, the CDU are neutral, and only the FDP liberals are waving the entrepreneurial flag.
Olaf Scholz, the SPD candidate, has the momentum to bring his left-of-centre party over the line and become the senior partner in the new coalition. His SPD and the Greens (and the minority hard-left Die Linke) are planning tightened regulation on housing nationwide, while the CDU/CSU and the FDP are talk of lightening the regulatory framework to facilitate new construction.
Still, despite the Bolshevik tones on housing pronouncements coming from the Berlin Senate, it is important to remember that Berlin is not Germany. At a last-gasp real estate roundtable discussion this week, politicians issued final pointers to their parties' true intentions after the voting.
Bernard Daldrup of the SDP echoed the sentiments of SPD candidate Olaf Scholz in saying that his party is for a rent moratorium in very tight housing markets, but rejects in principle any form of nationwide Mietendeckel, of the sort Berlin experienced for several months, ultimately leading to chaos for both landlords and tenants.
Scholz appears serious when he says the next government must ensure the overseeing of building 400,000 new homes a year, rather than the current 300,000. He has form here, as a previous mayor of Hamburg, where rent increases have been less severe than in other big cities, due in large part to a comprehensive building programme. This is encouraging - if he can manage to prevail against the more rabid left-wing elements of his party.
The CDU/CSU, who pollsters predict will finish second to the SPD this weekend and would thus be squeezed into opposition, are for more 'social market economy' rather than imposing further straitjackets on investment.
Even the Greens have more moderate aspirations nationwide than do their comrades in the Berlin parliament, committing so far only to limiting rent increases to the rate of inflation. Closer scrutiny of local upper rental limits is also appropriate, said the party's Chris Kuhn. The FDP's Daniel Föst, true to form, wants to tackle the causes of the housing shortage and smooth the path to more building.
All the parties agreed unisono on the need for a root-and-branch reform of the country's building laws and regulations, along with its planning processes. Many of these are still unchanged since the Dark Ages. So - hopefully - change of some sort is coming. The question is, just what?
REFIRE believes that the new coalition - when finally agreed upon - will be a Traffic Light coalition of SPD, the Greens, and a more pliant FDP - after seeing off the threat of a centre-left coalition from the first two by bringing in the hard-left Die Linke.
If we are right, and German voters finally overcome their inherent resistance to change, then we can all embrace the vision of a greener, more digital Germany over the coming years.
The Greens' demands of a further 1.5% of GDP in public investment in each of the next 10 years, along with the FDP's promotion of financial incentives to entice the private sector to participate, could go some way to help build the greener, more modern future that Germany is slowly recognising it really needs.
We hope that the SPD, as the likely senior partner in the coalition, does not prove to be a drag on the imagination needed for any really worthwhile reforms. As a member of the government for all but four of the last 23 years, it is an old-style labour party, fixated with blue-collar industry and redistribution of wealth, and with little natural affinity with the world of the internet and future-oriented technologies. It wants to start spending straight away. Inevitably, increasing taxes will be high on its agenda. There will be little escape from this.
Astonishingly, nearly 40% of German voters are over 60. Now, that doesn't have to be a hindrance to progress, but in a largely risk-averse society, it is a hurdle to overcome for the modernising Greens and the FDP. Their mutual animosity led in the past to the tired SDP and CDU/CSU tie-up that has seen us through the last of the Merkel years.
This time it could be different. For if the FDP and Greens could agree to really collaborate, their support for the lumbering SPD in leading the country forward into a new era may yet prove fruitful. Germany has prospered mightily from the labour market reforms introduced by Gerhard Schröder when last the SPD governed as the senior partner, and the country has been living off the competitive advantage conferred on it since then.
But those golden days are coming to an end, and everyone somehow feels it. Germany now has a chance to initiate reform, of the sort that will help it remain at the top of the European totem pole - and as the most attractive market for real estate investment in Europe. We hope the voters embrace the need for change - but we know it's going to involve higher taxes - maybe much higher. Roll on, brave new world.
