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The message from the so-called “real estate sages” in their spring report for 2024 is that the ongoing construction crisis in Germany is going to get worse. Instead of the 400,000 building completions per year targeted by the German government, the market is heading towards just 150,000, the experts warned in Berlin on Feb. 20—barely half of the 270,000 projects completed in 2023.

There is currently a shortage of 600,000 apartments in Germany, with the gap set to grow to 720,000 in the coming year, and with a shortfall of 830,000 units expected by 2027. “With the current levels of interest rates, building land prices, construction costs and rents, the construction of new apartments does not pay off,” the experts said.

Whereas Construction Minister Klara Geywitz (SPD) does not see the situation as quite that bad, citing a “record sum” of €18 billion invested by the government in social housing by 2027, president of the German Property Federation ZIA, Andreas Mattner, sounded the alarm: “We are no longer competitive in Germany, even in construction,” he complained. The industry, which accounts for 19% of total economic output, is “more critical than ever in post-war history.”

Real estate expert Harald Simons complained that the rise in interest rates has made many projects uneconomical, as an average rent of €21 per square meter must now be charged in order not to make a loss. According to ZIA President Mattner, this means: “So if you build, you go bankrupt.”