Germany's largest real estate group, Vonovia, is putting on hold plans to build tens of thousands of new apartments due to high interest rates and construction costs.
CEO Rolf Buch told the Funke Mediengruppe newspapers that the company has plans for 60,000 apartments but is waiting for building to become "worthwhile and profitable again." He estimates that Germany currently lacks more than one million apartments and needs to build 700,000 apartments a year to keep up with demand, including from immigrants.
In Buch's view, the problem is not one million apartments, but several million apartments missing in a very short time.
Vonovia is hoping that costs will come down in the future so that it can start building again. A company spokesperson added that construction costs have increased from €3,000 to €5,000 per m2. while the average rent in existing buildings is around €7.50.
Because many people with medium or low incomes live there, the company wants to keep rents affordable at around €10 to €12 for new buildings. However, the high construction and financing costs would lead to a rent of €20 per m2 in a new building, which many people can no longer afford.
This is a problem for Germany, which already has a shortage of housing and needs to build more apartments to meet the needs of its growing population.
For its part, the construction union IG BAU has accused Vonovia of putting pressure on politicians by stopping construction. The union argues that the government should use its influence over Vonovia to ensure that the company continues to build affordable housing, even in times of crisis.
The union also argues that short-time work or layoffs must be avoided due to the lack of housing.