Housing construction badly distributed

Germany should construct housing space more intelligent, claims the Institut der deutschen Wirtschaft. In large cities, 50% more flats should be build while some rural areas have already too much housing space.

The Institut der deutschen Wirtschaft Köln (IW) counts 245,000 in 2014 freshly build flats in Germany but only 66,000 of those have been build in cities with more than 100,000 citizens despite a much higher demand for living space here. The IW estimates that 50 percent more flats have to be build in cities - a total number of 102.000 apartments per year. In rural areas, this is totally different. Some areas have already too many flats.

The main reason for this development is the false policy of municipalities. Rural municipalities try to activate new and cheap development land in order to attract corporations and citizens. At the same time, people move from the rural to urban areas, where development land is restricted. Due to this movement, real estate prices increase in cities while the vacancies rise in rural areas.

To tackle this development, the IW advices cities to active not used land for the construction of apartments and to relax rules regarding building height.
Moreover, vacancies and a lack of apartments may geographically lie close together. One example of this are the cities Düsseldorf and Wuppertal. “I such cities, politics must invest in infrastructure to attract commuters”, claims Michael Voigtländer, real estate expert at the IW. Cities with high vacancies such as Wuppertal can easily be made more attractive.

Some institutional investors may have found a suitable solution as well. Michael Stüber, CD Deutsche Eigenheim AG, says that institutional investors are increasingly investing in housing terraces at the periphery of cities. Those are relative to the expensive city locations cheaper and development costs are lower compared to higher buildings. “Not just national but also international institutional investors have bought areas with homes at the periphery of large cities. Especially cities like Berlin, Leipzig, Munich, Stuttgart and Hamburg will profit from the investment trend housing terrace,” says Stüber in his article “Institutionelle entdecken das Reihenhaus als Investment” on altii.