Turbulent times for real estate owners: In Berlin as well as in Brussels, legal regulations are being put in place in the name of climate protection, which will have massive consequences for the housing market. Prof. Dr. Michael Voigtländer, Head of the Global and Regional Markets Cluster at IW Cologne, assesses the possible consequences for WELT.
WORLD: Mr. Voigtländer, with the Building Energy Act and the EU Building Directive, the German real estate market is subject to strict regulations. What effects will this have in the medium to long term on a market where living space is already scarce?
Michael Voigtländer: Both regulations mean that considerable investments have to be made, and this will lead to higher rents in one form or another. In addition, it is to be feared that not all properties will be up to par by 2030 or 2033. So it could be that some of the apartments can no longer be rented out, which further reduces the supply – especially of cheap apartments.
Housing will therefore become more expensive and living space even more scarce, which will ultimately lead to restrictions in space consumption, for example. In some cases, this is easy to cope with, for example because there are many rooms available, but in other cases further overcrowding can be assumed. Around a third of families in large cities already live in apartments that no longer have a room for each family member.
This article first appeared in our real estate newsletter “Question of the situation”. You can subscribe to the newsletter here:
WORLD: With millions of houses outside the metropolitan regions, the costs of forced renovation are likely to exceed the book value of the objects. Does this make the phenomenon of "stranded assets" a major problem - and is there another option than demolition?
Voigtländer: There are a few regions with strong migration tendencies where this could happen - fortunately this remains the exception. But: Vacancies are an increasing problem because there is a strong pull into the metropolitan areas. In terms of regional policy, but also in terms of sustainability, I think it is urgently necessary to counteract this trend.
Among other things, through better train connections, faster internet and clever educational offers, prospects could also be developed away from the big cities. This would take the pressure off the big cities – and thus reduce the need for new construction because we are using existing real estate. Unfortunately, this idea of regional balance is found far too little in housing policy and climate policy.
WORLD: In most cases, the planned subsidies will not be nearly enough to cover the costs of renovations. Many owners will have to use all available funds for this, including current income. What does such an absorption of purchasing power mean for the national economy?
Voigtländer: We have to realize that climate protection initially costs prosperity, because of course the potential for consumption is reduced. But: We should also see climate protection as an investment in our future and that of our children, because without this investment, living conditions will probably be significantly worse. For this very reason, however, it is also necessary to proceed as wisely as possible.
Both the EU Parliament's plans for minimum energy standards and the GEG amendment set deadlines that are too short, which creates the risk of bad investments. It would therefore be better to give people more time. On the one hand, so that the innovative forces can work better, but on the other hand because the specialists for so many renovations are simply not available.
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