The rules on socially just use of land (Sobon), which were tightened by the city council in the summer, could for the first time contribute to the failure of a major residential construction project in Munich – at least if you follow the description of the investors.
It’s about up to 700 apartments that the ECE company wanted to build on areas next to the Olympia shopping center (OEZ) in Moosach. So far there are parking decks for up to 2,800 cars on Pelkovenstrasse and Riesstrasse. But now ECE and a fund company behind it have put their plans on hold. This emerges from an accountability report of the fund company to which the OEZ belongs. At first she had Real Estate Newspaper reported about it.
ECE operates the shopping center and was also tasked with driving the housing project forward. “The new requirement that housing developments in Munich now have to be built with a share of 60 percent social housing (previously 40 percent) has a significant impact on the profitability of the planned project,” says the report. In addition, “further uncertainties and risks” emerged during the planning phase. Thereupon the fund management “decided that the project will not be actively pursued until further notice”.
Upon request, ECE announced that the project was “at least not economically feasible on the basis of previous plans”. There are various reasons for this, “including changed planning framework conditions and the further increase in building prices”. ECE does not explicitly name the Sobon. But they are still working “on a possible implementation” and are in “ongoing exchange with the city of Munich”.
The fact that the construction of several hundred apartments could burst is politically explosive. The opposition city council factions of the CSU and FDP / Bayernpartei warned of the adoption of the new Sobon that it would stifle private housing in Munich. In addition, the planning department came under considerable pressure two years ago when an investor in Parkstadt Schwabing canceled the construction of 800 apartments in favor of additional office space. He justified this with lengthy negotiations about the applicable Sobon rules.
Politicians could decide on exceptions to the Sobon rules
In response to an inquiry about the project at the OEZ, the planning department sends a detailed statement, which begins with the fact that they are “very interested in a cooperation and we therefore regret that such a report has been made by ECE. We are extremely interested in large-scale residential projects to lead to implementation. ” The report also announced that ECE presented new plans “a few weeks ago” and pointed out that “the application of the new Sobon could cause the project to fail”.
The presentation offered “in-depth discussions”, also on “planning solutions with regard to profitability”. In addition, ECE was “asked to provide rough evidence of the inefficiency”. This is customary and can then be presented to the city council by the department. Politicians could decide whether to make an exception to the new Sobon in order to allow housing to be built. “Unfortunately, it did not get that far,” said the presentation. However, further discussions have already been offered.
When asked whether there have been any further withdrawals by investors since the new Sobon came into force, the unit replied: “Some projects cannot be continued for various reasons. In individual cases, the application of the Sobon is mentioned.” If, however, the investors do not provide the requested proof of inefficiency, “one can at least cast doubt as to whether other economic considerations (for example higher returns on commercial uses) are not hidden behind it.”