The proposed plans of the Left Party to municipalize apartments in Berlin are already having a “devastating effect,” according to Olaf Demuth, president of the construction industry. Demuth indicated to the “Neue Osnabrücker Zeitung” that construction companies looking to secure loans in Berlin to create new housing are now being denied fresh capital, noting that creditors are suddenly showing reluctance, which he says is also noticeable among state-affiliated actors.
A central pledge of the Left Party during the election was to bring real estate corporations owning more than 3,000 residences under public ownership. Following the party’s electoral victory, the Left has agreed to enter into coalition negotiations with the Greens and the SPD to form a government.
“Even these plans are irritating the markets,” said Demuth. He added that international investors are pulling back. Although foreign entities do not fully grasp Germany’s federal system, Demuth asserted that the belief is growing that housing stocks belonging to real estate corporations could soon be municipalized not only in Berlin, but also in Hamburg and Munich, calling this development “truly dangerous.”
He warned that such measures would not alleviate the housing crisis in Berlin. Demuth calculated that the state nationalization of 200,000 apartments would cost between 20 and 30 billion euros. He stressed that under such circumstances, municipal funds would be exhausted, leaving no money for necessary renovations or new construction. Furthermore, the private sector would withdraw from the construction business if the threat of socialization remained looming.
In Demuth’s view, the only way out of this impasse is to revitalize the construction sector, making it appealing once again to all stakeholders, including private individuals, cooperatives, and institutional investors.
