It's all still to play for in the upcoming German elections, which will see Angela Merkel bow out after 16 years at the top. Now that the competing political parties are allowed to put their election posters up on the lamp-posts, the gloves are off in earnest and the real battle commences.
In this issue of REFIRE we highlight the real estate manifestos of the big four political parties - the CDU/CSU union, the SDP, the Greens and the liberal FDP. Traditionally, the German real estate industry is typically aligned with the sentiments and policies of the liberal Free Democrats, and this year is no different.
There is a good likelihood that the FDP will have a role to play in whatever coalition government combination manages to cobble together a ruling majority after the election. That's because the biggest parties - the CDU/CSU and the Greens - have all lost a lot of support over the past year, while the SDP and the FDP have seen their stock rising in recent polls. gained support.
In the case of the beleaguered current junior coalition partner, the SDP, their bounce is largely because their chancellor-candidate Olaf Scholz is marginally less unpopular than the CDU's Armin Laschet and the Greens' Annelena Baerbock. The FDP's Christian Lindner has seen his small party's popularity double over the past year to its current 13%, leveraging the COVID-19 pandemic to burnish its civil liberty credentials and its aversion to government interference.
It's worked well enough that Lindner feels he can lay claim to the upcoming job of Finance Minister, quite probably under the chancellorship of the CDU's Armin Laschet. His party's platform is built on fiscal prudence, private investment, and a rejection of tax increases, so a good performance by the FDP would be warmly welcomed by most of the active real estate investment community.
The FDP brand has benefited strongly by putting civil rights front and foremost throughout the pandemic, and the party has succeeded in showing up the incumbent ruling parties as antiquated, out-of-touch, and intent on much greater state interference. However, the FDP's well-established antipathy to the Greens, with their radical plans for major public investments to counter climate change, has proved a stumbling-block in the past, causing Lindner to walk out of talks about forming a coalition with Merkel and the Greens last time around.
The recent devastating flooding in the western part of Germany recently rattled even the most sceptical voters into paying attention to the climate change warnings of all the parties. Imagery from such natural disasters has proved decisive in German elections in the past - notably when Gerhard Schröder donned Wellington boots to help out when the Elbe flooded its banks just before the 2002 election, and put paid to his rival Edmund Stoiber's electoral chances, who continued to vacation with his family while the flood waters rose.
This time around, all the leaders are wary of being found guilty of electioneering at flood victims' expense. The Greens have been cautious, trading instead on their long-term commitment to the environment and climate change, and expecting to reap a natural reward for their zeal in pursuing a radical reduction in carbon emissions in line with Europe's looming deadlines.
It's fair to say that the recent relationship between Germany's politicians and its real estate industry has been characterised by mutual mistrust, along with a barrage of new regulations, all of which have collectively led to the failure of both the public and the private sector to address the shortage of affordable housing in a constructive manner.
We may well be headed from bad to worse, no matter who takes power after September 26th. The drive to introduce some form of nationwide residential rental cap is - if anything - gathering steam, while unthinkable measures such as expropriation of privately-owned housing are becoming...well, thinkable in certain quarters. We're not there yet, but... stranger things have happened before.
Calls across the industry are getting louder for a dedicated Building and Planning Ministry in the government. It's easy to forget that this ministerial responsibility DID originally exist after 1949, but since 1998 found itself integrated into the Transport Ministry, and then in 2013 saw the functions of Building, Construction and Federal Buildings firstly merged with Urban Development, Housing, Rural Infrastructure and Public Building Law, and then swallowed up by the Federal Ministry for the Environment, Nature Conservation, Building and Nuclear Safety, before the whole lot was folded in 2018 into the Interior Ministry, currently headed by the CSU's affable but bumbling Horst Seehofer.
It's little wonder that Mr. Seehofer regularly fails to turn up at important real estate industry gatherings. In REFIRE's experience, it's almost a given that he will be called away on the day to a more pressing engagement, sending along an underling at the last minute to address thousands of leading property industry delegates. Almost understandably, with a brief that big, who could blame him for not mastering the nitty-gritties?
But the complexity of modern German real estate, in a world oppressed by myriad regulatory, environmental and compliance issues, now simply demands to have a single government ministry dedicated to dealing with the pressing housing and building problems facing the state. The make-up of the incoming government will determine whether this is seen as a priority or not.
Lobbying group ZIA has done a good job over the last fifteen years consolidating the voices of Germany's largest single economic sector under one roof, representing the views of 37,000 companies and 28 member associations. It needs a dedicated government ministry as a counterpart, as Germany embarks on a programme of long-overdue innovation.
