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The mood in the building is worse than ever. The housing companies are running out of costs and there are a lot of cancellations. In some cases, companies are putting all new building plans on hold.
When Dennis Rossing walks through the abandoned buildings of his listed factory in Kassel, he cannot believe that everything on the 37,000 square meter site is still at a standstill and the building is gradually falling into disrepair. “You look at it with sadness, but nonetheless there is still hope,” says the investor.
Collapsed ones financing
One of Kassel’s largest residential projects is actually supposed to be built here. He wants to invest 80 million euros, but Rossing is now despairing of the construction crisis: “If we can realize the project and there is no loss for us in the end, then we are now satisfied,” he explains resignedly. “Unfortunately, the general conditions have changed so massively in the last two years that many construction projects across Germany have been stopped. But we continue to fight.”
500 apartments, a parking garage with 600 spaces and a commercial and hotel complex are to be built on the site. The building permit has been available since 2022 and things could get started. But the financing has completely collapsed, explains the investor: “The costs have increased in some cases by 400 percent, from 0.5 percent to 3.5 and four percent. In addition, there was a shortage of materials, which meant that construction costs exploded and suddenly there were no other framework conditions.” The crisis is leading to additional costs in the double-digit million range. Standstill instead of living space, which is urgently needed.
Rents have skyrocketed
A problem that the construction industry is struggling with nationwide. A survey by Hessian radio among all Hessian housing construction companies shows how serious the problem is. For example, rental prices have exploded. In 2020, Hessians still had to pay an average of 9.50 euros per square meter for their rental apartment in a new building. In 2023 it was already 14.46 euros – an increase of 52 percent, but not yet the end.
Housing companies expect that rents will be more expensive than ever before. Prices of more than 20 euros per square meter are their forecast. None of the companies believe that the construction crisis will end quickly, which also affects the willingness to invest: in 2020, almost 790 million euros were invested in new buildings, last year only 480.5 million, a drop of 39 Percent.
“No light at the end of the tunnel”
One of the companies that is no longer investing is ABG Holding Frankfurt, one of the largest housing companies in Germany. Managing director Frank Junker leads a tour of a recently completed residential building in Frankfurt’s Ostend. It has 119 apartments, half of which are reserved for tenants eligible for social housing and half for people with middle incomes.
The price per square meter is between 5.50 euros and 10.50 euros; Normal here – near the European Central Bank – is 17 euros. The building was completed despite the crisis. “Unfortunately, this is no longer a given today. It is an object that comes from the good times in terms of construction. Today we would no longer be able to realize this object in this way,” says Junker.
Rents over 20 euros “simply not affordable”
The construction crisis is bringing massive cuts for the ABG Holding: “We have put new projects that we would now initiate and start construction on hold because we would then end up with rents that are beyond 20 euros, and that is simply not affordable,” says the managing director. They wanted to build 3,800 new apartments in the next five years, including many projects with affordable housing.
“At the moment I see no light at the end of the tunnel, there is no signal from the federal government that gives hope that things will move forward again,” said Junker. “In subsidized housing construction it is even more drastic; the subsidies from the state and city are not adjusted accordingly, so that currently subsidized housing cannot be realized.”
Those in need are losers in the crisis
The lack of social housing is one of the most pressing problems nationwide. According to the survey by Hessian radio The crisis particularly affects socially disadvantaged people. Only one in ten people in need gets an apartment; there is a total shortage of around 100,000 social housing units in Hesse alone. The companies’ clear demand: Politicians must get the crisis on the housing market under control in order to ensure social peace.