The Federal Government and the Berlin authorities in particular are seeking to impose heavy-handed regulations and sending the wrong signal to investors, experts agreed at Real Asset Media’s European Outlook H2: Germany Investment Briefing, which was held in Frankfurt this week.
‘The big picture is that Germany is and will remain a hot spot for international investors, but there are developments in the residential sector that I find frightening,’ said Norman Nathan Gelbart, Partner, PricewaterhouseCoopers. ‘The Federal Government and Berlin’s State Government are creating an unfriendly atmosphere for investors, spreading rumours about confiscation and rentals freezes and creating a crisis that doesn’t exist’.
The problem the authorities are trying to solve is the lack of affordable housing, but the approach they have chosen is misguided, he said, and freezing rents while leaving construction and labour costs to rise creates an imbalance.
‘National politics can have a big impact on what is happening in the real estate market,’ Gelbart said. ‘Talking about rental freezes sends a message that the Government wants to solve the problem for one group at the expense of another group and also it creates uncertainty for international investors, as they don’t know where this is going to end’.
In addition the measure does not solve the problem because there are no guarantees that the people who really need affordable housing will get it, as the landlords are not required to rent the rent-controlled apartments to those most in need, he pointed out.
‘I share the view that what is happening in the residential sector in Berlin is completely mad and very unfriendly to investors’, said Lars Schnidrig, CEO, Corestate Capital Group. ‘Politicians can promise rental caps but at the end of the day they have to provide land plots in the top 7 or top 15 cities where people cannot afford to live anymore’.
It is right to address the needs of the many who feel left behind, said Carsten Loll, Partner, Real Estate, Linklaters, but what is happening in Germany is ‘pure political propaganda. The City and the State have land, so if they really want to solve the problem they should get together with developers and build social housing. Taking it away from people who have paid for it is not going to work’.
We’ll have to wait and see if and when the new regulations will become reality, Loll said, but at least they will not have an impact on the commercial real estate sector.
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