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03 05 2018
Shrinking Residential Development Volumes in Germany’s Metropolises

Although German metro areas are plagued by acute housing shortages, the scale of residential developments in the so-called “Big Seven” cities is actually contracting. This is the upshot of the 2018 Property Developer Survey published by the economic research institute bulwiengesa.1 The survey suggests that the floor area created through residential property development in 2017 declined by 2.0 percent or roughly 350,000 square metres year on year. It is the first such dip in the residential segment since the annual survey was launched eleven years ago. The 2017 edition had still registered an increase by 3.4 percent, but even this was already a decline from the growth rates between ten and 20 percent annually that were seen in previous years.2

The sharpest downturn in housing developments was registered in Hamburg with a drop by 5.1 percent or 147,000 square metres. In Berlin, too, the volume declined noticeably by 3.5 percent or 214,000 square metres.3 By contrast, the volume in Munich actually increased, by 6.9 percent.

The figures from the bulwiengesa survey are complemented by the planning permission data released recently by the Federal Statistical Office. The stats show that the number of planning consents dropped by 7.3 percent year on year in 2017—making it the first time since 2008 that the statisticians diagnosed a downward trend in planning permissions.4 In Berlin, the number of approved flats decreased by 1.2 percent in 2017.5

Deteriorating Parameters for Housing Construction

Andreas Schulten, member of the board of bulwiengesa, observed that the metropolises suffer “from the lack of available land and under regulatory constraints.” He went on to say that the construction of new housing is delayed and hampered by the backlog in planning applications waiting to be processed by the zoning authorities as well as by price-driving qualifications attached to building permits. Another factor is the high capacity utilisation in the building industry. A recent poll among the member of the BFW Federal Association of Independent Property and Housing Companies revealed that a majority of companies has noted a deterioration of the housing construction parameters. The main reason why housing construction has stalled is the lack of zoned land, according to the polled companies.The new federal government has therefore set itself the goal to improve the parameters in housing construction. The Grand Coalition intends to ensure the development of 1.5 million flats before the end of 2021, which would imply an annual completions rate of 375,000. Moreover, Christian Democrats and Social Democrats want to launch a “housing offensive” that will include the accelerated zoning of development land, a harmonisation of the building laws, and tax incentives for housing construction. To clear the goal of a million and a half flats by 2021, housing construction will have to be jump-started quickly in any case. In 2017, barely 350,000 new residential units were approved, while the number of completions was probably around 300,000 units only.6

1 bulwiengesa.de/sites/default/files/pressemitteilung_pe-studie_2018_0.pdf
2 bulwiengesa.de/sites/default/files/pe-studie_2017_pressemitteilung.pdf
3 immobilien-zeitung.de/1000051851/immobilienbranche-geht-puste-aus
4 destatis.de/DE/PresseService/Presse/Pressemitteilungen/2018/03/PD18_095_31111.html
5 statistik-berlin-brandenburg.de/pms/2018/18-03-15.pdf
6 www.accentro.de/service-leistungen/branchennews/detail/das-wohnungsdefizit-wird-immer-groesser