BERLIN: Berlin have been growing by up to 40,000 people a year, says Michael Voigtländer, a real estate expert at the Cologne Institute for Economic Research. Fifteen other metropolitan regions are experiencing similar developments.
As a result, a shortage of living space is pushing up rents and property prices at a terrific rate. Last year, tenants in the big cities had to pay an average of 9 percent more for a new rental contract — a boon for property investors.
Premium apartments in Berlin-Mitte promise an annual profit of 10 percent or more. The rent control introduced with great ceremony by the CDU and the SPD in the last legislative session has done nothing to change the situation.
The administration of this alternative land policy happens not far from Ulm’s famous Minster. The local authority real estate office oversees the plots of land and buildings in public ownership.
“The city often buys up land decades in advance, with the specific aim of using them one day for a plot exchange, as construction land for its own projects, or for the development of industrial parks or residential areas,” explains the head of the department, Ulrich Soldner.
In 2017 the city of Ulm invested €33 million in buying new plots. Soldner’s team has now bought so many adjacent plots of construction land in 16 future residential areas that they’re ready to take the next step.
“The crucial aspect is that, with us, a development plan becomes legally binding once we have all the plots. Not before.” Specifically, this means that, in Ulm, construction land can only be purchased from the city itself, at a predetermined price set by an evaluation team. The private investor cannot sell on the plot of land purchased in this way to third parties at a higher price, and the circle of speculation is broken.
If the land is not used for its intended purpose, a clause in the Ulm contract says the plot must be sold back to the municipality. “It’s not possible to sell it on to third parties as property speculation,” Soldner explains.
For people renting in the city, this means the municipality has considerable influence on the development of new residential areas. Investors are bound by the condition that they must offer housing at a reduced price on 30 percent of the new-build in order to be allowed to buy the land.
Some 4,500 hectares of public land is now managed in this way. That equates to a third of the total surface area of the city. This is why Ulm doesn’t have the severe shortage of living space Berlin, Frankfurt or Munich are dealing with.
And this is the case even though the university city is a desirable location for many high-tech companies. Meanwhile, the state government of Baden-Württemberg has declared Ulm a model for all cities, and wants to end the taxation of land.