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Rise in Housing Construction in Berlin, Drop in Further Densification

On 08 August, the Berlin-Brandenburg Statistics Office circulated a press release titled “Modest Growth in New-Build Housing Construction in Berlin during First Half-Year of 2017.” But the rather upbeat ring of the headline is somewhat misleading, and the main news published by the statistics office not quite as positive as it may seem.

On the one hand, the press release refers not to the actual construction of new homes, but merely to planning permits issued – this just as an aside to set the record straight. Much more relevant is the fact that the number of planning permissions for new flats has not gone up at all, but has slightly declined, disproving the buoyant headline. During the first semester of 2017, a total 11,318 flats were approved, which implies a year-on-year drop by 33 flats or 0.3 percent.

The key word in the press release headline is “new-build” as in “new-build housing construction.” It is true that the number of approved new-build flats increased by 7.7 percent during the first six months of the year. And that is all very well. Yet at the same time, the number of new flats created through further densification, e.g. by topping up buildings, has taken a nosedive. No more than 1,276 flats are going to be created through further densification, down from 2,029 units during the prior-year period, which is a drop by 37.1 percent.

Further Densification Hampered by Red Tape

Previous issues of this industry newsletter already discussed the difficulties that the Senate of Berlin creates for the housing industry through its incessant regulatory efforts that are not helpful in getting further densifications projects approved. The latest tally of planning permissions present yet more evidence of the havoc wreaked by the strategy of the city’s coalition government of social-democrats, leftists and greens. Although the number of approved new-build flats has increased, the total number of planning consents for new flats is unchanged or indeed in slow decline – because the opportunity of further densification is being discouraged.

The figures clearly suggest that the housing shortage in Berlin will not be remedied unless both the construction of new houses and further densifications are boosted, not just one of the two. At some point, the options for increasing the number of new-build flats become limited simply because the supply in vacant plots will be exhausted. More so than elsewhere, the potential for further densification remains vast in Berlin with its many undeveloped backyards and attics.