> After tenant outcry, the city also saved at least two apartment blocks in Friedrichshain-Kreuzberg from being sold, using a legal tool known as the “right of first refusal,” which lets officials intervene if they can find funding for the purchase. In another case, the city recently stepped in and purchased a large disused freight station in the eastern district of Köpenick, which it plans to convert into affordable housing.
People like me, living in cities like Munich, Frankfurt or Hamburg, whose rents are much higher than Berlin's and whose taxes fund this, are always happy to help you, Berlin. Just tell us, when your airport is finished, (maybe in 10-20 years?) so we can take a look at what we paid for over there.
Berlin is complaining at very high level. If you want to talk about gentrification in Germany, Munich and Frankfurt are the cities to talk about. Berlin has a much easier situation, with much more open space. But when a developer comes along and wants to build skyscrapers on abandoned land, they also complain, because they want to keep their open spaces. The people over there complain about the Swabians, who want to live in these apartments, all that while being financed by the taxes of said people from Southern Germany.
I am all for liberal cities and unique culture, but Berlin does not seem to realize, that this is made possible, because Frankfurt, the exact opposite of Berlin, pays for it.
I think the question is: How big of a difference in living standard is acceptable in one Country.
Go to a public school in berlin, look at the toilets. Chances are very high they might be defect, stink and malfunctioning. I worked as a special eds teacher in Neukölln. We're supposed to train our students how to use the toilet. Half of the time the toilets in the first floor were broken. That means me had to stand in line for restrooms instead of doing some work. When the toilets got repaired after half a year the toilets in the basement broke down. Our students became very good at waiting in line.
Now i work in a school in the southwest of germany. If a toilet breaks down, chances are it will be repaired on the same day. If they need an external contractor in will take one day.
All of the students live in germany. Yet one get clean, functioning toilets, the others not.
(Fun fact: Berlin paid for my education, now Baden-Württenberg gets a university-trained teacher for free...)
I think parts of it can be solved, by centralizing education. In my opinion Berlin (as well as Hamburg and Bremen) really does not need its own Kultusministerium, money saved there can directly be sent to schools. Maybe also the funding for schools could come from federal sources to a higher degree, but I do not know the exact situation.
Btw, the state you live in is called Baden-Württemberg.
Your taxes do not fund "this" exactly. It's not like Berlin govt will let people live in those places for free, just at an affordable price point. They can do this because they are not oriented towards maximum profit, unlike private investors. Bundesland Berlin being a landlord in all this might end up effectively slightly subsidizing some of the rents in some more expensive-to-acquire-and-maintain buildings but operate at a slight margin in other cheaper buildings. In the end, if they do it right (and I admit that's a big if) they should be operating close to break-even, probably with a small profit to build some reserves for unexpected future costs.
Instead of complaining that Berlin tries to do something (too much) against rent price hikes and gentrification, complain instead that "cities like Munich, Frankfurt or Hamburg" do not do enough to prevent rent price hikes.
If the government rents out places below market races, it is subsidizing those renters. It is leaving money on the table that it could use to pay for things that it pays for with taxpayer money from Munich instead.
How do you define utility cost - isn't it kind of equivalent to market rate (what it is worth for people to pay)? I can not really make sense of your statement? If the prices are over market rate, how to they find renters?
Utility cost was the wrong idiom, I meant, like, the overall expenses.
Keep in mind the OP before you
> ... and that's a big if ...
In other words, If the government can operate housing over a long term at break-even, a stabilizing market needs to be converging towards that limit, otherwise they couldn't break even.
I was implicitly limiting my remark to the market rate of the expenses, not the income of the operation. The same can be applied to the other side of the equation, the price the inhabitants have to pay. The market can be stable only if both sides match. Of course that's a gross simplification, but so is the term market rate.
I would love to see some actual numbers on this, but here is another perspective on this:
A) Students educated in Berlin are far more likely to move to other cities, since there are e.g. no jobs in production. How many engineers working at Daimler did study in Berlin (i.e. costing the city money, without contributing by paying taxes)?
B) A lot of large companies are currently opening offices in Berlin. They are gladly using the services of the city, as are their well-payed employees, effectively raising the rent. However, they will still pay taxes at their headquarters in a different city.
As I said, I have no numbers on this, but the situation is way to complex to just say that Berlin is wasting tax money. It certainly is - in a lot of areas - but so are others states.
Instead of being pissed that Berlin is trying to improve the situation and keep the city affordable for everybody, maybe we should start asking how we can achieve the same in other sought after locations as well.
Economics of housing is econ 101: if there are more people than available apartments, prices rise so that at some point the number of people who can afford to rent becomes equal to number of apartments available to rent.
You can't house more people without building more apartments. That's the only way to provide housing for everybody. It becomes affordable as a side effect of building more apartments.
The other "solution", as practiced by NY, SF and apparently Berlin, is to artificially keep prices down with government regulations like rent control.
This strategy has been torn to shreds by Nobel-winning economics but more importantly it's clear that it doesn't work. SF's city government keeps talking about "affordable housing" since forever and yet we get to be in the top 2 of the most expensive US cities.
If Berlin follows the same "keep prices down, don't allow more buildings" strategy, it'll end up much more expensive 5 years from now.
It's not about keeping prices down, though - it's about existing inhabitants living there instead of being displaced by wealthier immigrants to the city. That's certainly not uncontroversial; I think it's bullshit, but that's what these people actually want.
The only solution to this problem is new, denser housing. That way you can accommodate the people who've lived there for awhile plus all the new arrivals. But unfortunately it won't happen with rent control, strict zoning regulations, and restrictions on knocking down existing apartment buildings (to replace them with bigger ones). That's why SF has such a terrible housing crunch that is growing worse over time. I don't know why Berlin would want to go down that road too, but it seems to be their desire.
>if there are more people than available apartments, prices rise so that >at some point the number of people who can afford to rent becomes >equal to number of apartments available to rent.
Your last argument is exactly the same as Ive seen in other places in the world (rich areas pointing to the lazy bastards that dont want to work)
I understand it, but at the same time you cannot (and gladly) have all the cities shaped for maximizing profit in the capitalistic world.
Berlin is amazing (used to live there before) but its hard to have a decent job there...
Sometimes things cannot be quantified in numbers, and I think Berlin offers a lot to Germany, Europe and the World that goes beyond finance and cars.
And all the money and jobs you have there in Frankfurt and Munch is because rest of us in EU pay for it by buying cars and other crap. This kind of finger pointing is utterly counter-productive. Without Berlin and rest of europe "your" city is a poor dead starving wasteland and we don't go around debating whether Frankfurt can enact a policy because Polish farmers are feeding them are we?
What you're doing is essentially trying to move the conversation away from what Berliners think is important - keeping their quality of life.
> And all the money and jobs you have there in Frankfurt and Munch is because rest of us in EU pay for it by buying cars and other crap.
Your are welcome to build better cars. Tesla for example is trying to do it, lets see how we respond to that. This is the point of a market-based economy. It is not like we force them to buy stuff.
> Without Berlin and rest of europe "your" city is a poor dead starving wasteland.
These cities did well, when half of Berlin and most of todays Europe was behind a wall, so I think you are wrong here.
> What you're doing is essentially trying to move the conversation away from what Berliners think is important - keeping their quality of life.
They can keep there quality of live, I am just asking for a balanced budget. We are happy to pay our share for the additional expenses Berlin has, for being our capital, but other than that, please finance yourself.
> Your are welcome to build better cars. Tesla for example is trying to do it, lets see how we respond to that. This is the point of a market-based economy. It is not like we force them to buy stuff.
You're missing the point. Your own city leaders and government lobbies to sell more of that stuff. Without that you wouldn't be able to "finance yourself" - and that's my point. In your arrogance you're forgetting that subsidies are made to keep other germans and europeans buying your crap so you can "finance yourself".
> They can keep there quality of live, I am just asking for a balanced budget. We are happy to pay our share for the additional expenses Berlin has, for being our capital, but other than that, please finance yourself.
The whole point of existence of a nation-state is that it can improve overall quality of life and security because it redirects and pools financing around and creates environment on which your Frankfurt can "finance itself". Again, without those people that "can't finance themselves", you have little economy and customers to run your market-based economy to finance yourself.
Allendoerfer's point was that West Germany did well during the D-Mark times, so it is unfair to attribute Germany's economic success entirely to a low Euro.
You have a point about Frankfurt's income sources of course, but they apply to any financial metropole.
> The whole point of existence of a nation-state is that it can improve overall quality of life and security because it redirects and pools financing around and creates environment on which your Frankfurt can "finance itself". Again, without those people that "can't finance themselves", you have little economy and customers to run your market-based economy to finance yourself.
I think you are just plain wrong here. Frankfurt would do just fine without Berlin. Your points would make sense for the state of Hesse, where Frankfurt is the main source of income, while others have negative budget. But there the relationship you described, is indeed true: People are commuting to Frankfurt, that is why all the taxes are getting paid there. If not for the rural parts of Hesse, Frankfurt would look different.
Berlin on the other hand does not really benefit Frankfurt at all, from a tax point of view. In the contrary: If Berlin wasn't there, maybe Frankfurt would be the capital of Germany.
Germany is a nation-state, but also a federal nation-state. The whole point of federalism is, that each entity can decide, what quality of live means for them and what they want to do culturally. It also means, that these entities are responsible for collecting their own taxes and paying for their stuff.
Thankfully, German states are soon constitutionally mandated to have a balanced budget, so this will end.
> In the contrary: If Berlin wasn't there, maybe Frankfurt would be the capital of Germany.
Don't kid yourself. If it wasn't Berlin, it would be Bonn, Munich, Hamburg, or Cologne.
Berlin has the disadvantage of being separated and isolated for decades while Frankfurt has been able to exist in a world with a free market and heavy investments by the allied forces for more than 70 years. To blame Berlin for not becoming as rich as Frankfurt in about 25 years time is just stupid and ignorant.
>> In the contrary: If Berlin wasn't there, maybe Frankfurt would be the capital of Germany.
> Don't kid yourself. If it wasn't Berlin, it would be Bonn, Munich, Hamburg, or Cologne.
None of these cities have any history of being a German capital. To imagine Munich as the capital of Germany is outright funny, since they make it very clear, that they are the capital of the free state of Bavaria. Especially Bonn was chosen exactly for being not an important city, to show that it is a temporary solution. Frankfurt might have been able to keep the status as capital, because German democracy was basically founded in Frankfurt. It would have weakened the West in the cold war. Choosing it as a capital would have marked a historical endpoint, while the West bet on having that endpoint only after the reunification, which eventually happened [0].
Of course it is hard to argue about stuff like this, because if Berlin would not exist, maybe the wall would have gone through Frankfurt instead.
> Berlin has the disadvantage of being separated and isolated for decades while Frankfurt has been able to exist in a world with a free market and heavy investments by the allied forces for more than 70 years. To blame Berlin for not becoming as rich as Frankfurt in about 25 years time is just stupid and ignorant.
Nobody does that. There are plenty of other poor states in Germany, but Berlin combines it with it's unique attitude, which I sometimes find a bit provoking.
Thank you, this was a very enlightening discussion. Kind of makes more sense now why some in Berlin don't have much respect for the Schwaben -- at least of the condescending, finger-wagging kind.
Berlin is awesome as it is, and it's being changed by people who don't live in Berlin and who only want to make a quick buck. No wonder people are upset (I know I am).
> German states are soon constitutionally mandated to have a balanced budget, so this will end
I think you have a misunderstanding here. A balanced budget means no new debt can be raised. It has nothing to do with redistribution of tax income. In fact, just a few months ago the states agreed on a new redistribution scheme up until at least 2030.
Redistribution between federal states has always been a thing, even under Bismarck. It's a vital part of federalism.
I'd say redistribution is vital if you're sharing a currency (because normal monetary policies will only work over the whole monetary zone, so you want a mechanism to keep the sub regions in sync)
And that's why the Eurozone is currently not doing so well, we either need more redistribution (but the richest countries are kinda opposed to it) or we need to break it up somewhat.
I suspect having to pay for their own stuff would make Berlin's politics and administration better. There seems to be a bit of a "we can do whatever we want and someone else will pay for it" culture. Perhaps voters would punish the SPD for the BER disaster if money had to be taken from the BVG to fund it?
I'm not sure why people always bring up the tax redistribution. We speak about small volumes. It's about 10 billion from the states plus 10 billion from the federal government. Berlin get's roughly a third of that. We are talking about a few percent of the states' budgets. The amount of money changing hands is by no means enough to pay for major developments let alone an airport. It's certainly less than the (hard to quantify) advantage of having the market of 12 out of 16 states receiving money in your nation.
I don't see a feasible way of changing Berlin's economic situation drastically, given it's a landlocked city state in a unique historical situation. Berlin will for the foreseeable future always be on the receiving end of redistribution.
I brought it up, because to me, the state buying back the houses, was marketed as the solution in this article. You could also articulate the numbers differently: Every Berliner gets ~2000€ per year from Southern Germany (based on your numbers, did not check it).
> I don't see a feasible way of changing Berlin's economic situation drastically, given it's a landlocked city state in a unique historical situation.
Berlin has fast access to rich Northern Europe by plane, cheap, but people rich, Eastern Europe by car, huge open spaces for development, the advantage of being culturally very rich, already quite international, being known internationally and being financed by other states. And inspite of this article: It also still has cheap rents.
Berlin also has a tech scene, which is very much hyped, but in reality tiny compared to SV. Maybe we could try to make this something, which actually creates some bigger companies.
I give you, that around Berlin there is basically a green desert, but Berlin itself has a certain size and is growing. How much more advantages could a city possibly have?
Mmm, in every nation-state there is going to be some economic redistribution. For example, I pay two state taxes (NY and MA). Both of these states contribute far more to the federal government than they retrieve in services rendered. Compare that to a state like Alabama, sure it looks like I'm getting mucked over.
From an economic POV, I should be outraged that I'm continuously paying money for services that states that consistently run significant net-negatives (e.g. Alabama). I'm fine with that[1] - it's a component of the nation-state, and it provides allows states like Alabama can to keep their highways operational and their schools funded. I accept this as being a member of a modern nation-state so that my fellow countrymen with less opportunities can have a shot at a better life.
There are some institutions like the Corporation for Public Broadcasting that take tax dollars so I can watch the PBS Newshour, even though it doesn't generate revenue. I am a-okay with the National Endowment of Arts because it produces 'culture', which we'd both agree creates value, despite us not being able to put that numerical value into a spreadsheet.
I'm not a German national but I spent a few months in Berlin. It started out as a stint for CCC (back when it was in Berlin not Munich) and I extended my stay because I met some incredible locals. I'm quite fortunate to have traveled extensively enough for work and pleasure to be jaded. You travel enough and you end up meeting the same types of people doing the same things with minor (but very extensive and often very subtle, primarily cultural) differences. Some guy you did a 3 week stint for in in Joburg will have the exact same mannerisms as someone Nicaraguan you end up having a chat with at the airport bar waiting for your flight out of JFK. I say all this as a preface to establish this: I'm not really very much impressed by the novelty of this city versus that city.
However, Berlin is one of the few cities that provided a certain unique je ne sais quoi ('feel'? 'ambiance'?) to it, that I'd imagine must have been similar to being in Vienna during the 1920s for philosophy, Greenwich Village NYC for folk-music in the 1960s, or Silicon Valley during the hay-day of NatSemi. Not just in tech, mind you, but take the local music scene there, absolutely spectacular, as is the broader category of arts. The city just overtakes you if you let it, and makes you want to create.
Why do you think the population is increasing? I couldn't say for certain but I'd argue it's because others feel similarly. I'm not sure what ingredients or at which proportions to make that specific cocktail, but I'd argue when you have it, it's worth a few extra greenbacks, pounds or Euro to sustain it.
==
[1] Other than the large percentage which goes to fund the everlasting 'war on terror' and all of the beneficiaries of the military-industrial complex. Let me ask you, if there's a 'war on terror' or a 'war on drugs', Who do I sue for peace if I want to surrender and start negotiating resolution terms? How do you win a war against a concept?</rant>
Thanks for the nice anecdote. The next sentences might be offensive to some people living in these places, so excuse me for phrasing it this simple and subjective:
Nobody wants to move to a provincial place like Alabama. They have no political centers, they have no media, they are not a loud voice. If you live in a richer, more urban state, you are okay with financing them to catch up. I am a big fan of the infrastructure investments, the EU does in Eastern Europe. I hope their budgets can survive the current anti-EU sentiments.
In Germany, there are places like this, too, but Berlin is the exact opposite. Here it is actually the province that finances the culturally rich political center with a high quality of living. Financing them feels not like an investment at all, it feels more like a luxury.
Added to that there is the outright provocation and contradiction of the radical left in Berlin (a few Berliners, not all of them of course): On every 1st of May in Berlin, radical leftist will throw stones at police forces, to protest against the bad state.
You're forgetting that the avg income in most major German cities that are not Berlin is higher than there. Living costs in Berlin have gone up massively over the last few years, income however has not changed at all. Having worked as a freelancer for a time, there was a big difference in daily rates I could ask for. In Berlin, 300-350 Euros often were considered high already, where 400-450 was quite normal in the south.
I would greatly appreciate it, if the exporting of neo-liberal ideology and the resulting civil wars, could be limited to the capitalistic hellholes in other countrys.
One of the reasons there still exists some affordable housing in Munich is that the city builds housing itself and rents it out at affordable prices. While other cities sold their housing in the 90s/2000s - because privatization is king, free market loves you, and so on - Munich didn't do any of that, because we recognized that people which don't earn high wages are needed in a city, too. Housing market is still tough, but without any public housing it would be far worse.
Long story short: If Berlin acknowledges that a city cannot exist without affordable housing I'm all for it. There are far worse investments of tax money.
The need for state-financed housing is per definition a failure to leverage natural market forces and points to regulations being the culprit when investment conditions are better than ever at the same time.
If the city of Munich has to pay subsidies for public housing, then that's tax payers money being wasted for no reason other than housing and construction laws missing their goal.
I may sound like a harsh capitalist, but the money for housing has to be earned somewhere. Right now its being taken from tax payers, when it'd be much better to reduce taxes so people can buy their houses themselves.
>"The need for state-financed housing is per definition a failure to leverage natural market forces and points to regulations being the culprit when investment conditions are better than ever at the same time."
And what do you call it when a city becomes a place that only the wealthy can afford to live in? There are so many people that contribute and make a city function who are not even remotely middle class. Where do they live? Isn't that also a failure? Real-estate in desirable cities is increasingly being used to stash cash[1][2], and there are no shortage of developers who are developing property specifically to attract these types of "tenants." So no simply relying on "natural market forces"is not really an inclusionary solution.
If there are indeed buildings being constructed for the sole purpose to "stash cash" as you say, then the law against misuse of real estate property ("Gesetz gegen Zweckentfremdung") can and should be applied. However, it doubt that this is the case in significant quantities.
My argument is a principled one: the city/state/fed should strive to let the market sort it out. That sounds neo-lib, but should be easy to achieve in times of lack of alternate investment possibilities. And while they're at it, they should make it so that investment in housing becomes a good investment opportunity for the middle class, helping with the demographic problems before us.
Proposing the state should invest in housing is really just the civil society declaring bankruptcy, and leads to corrupt and unsustainable structures, as happened in the 1970s in Germany (or worse, go ask women of the former east block what they had to do to get housing).
The problems (if they are real) are entirely the consequence of decades of misguided policies in construction and housing/renting laws. And also a consequence of lack of sustainable investment opportunities (ECB "QE" and negative interest rates) so people are turning to real estate.
>"If there are indeed buildings being constructed for the sole purpose to "stash cash" as you say, then the law against misuse of real estate property"
I wasn't speaking about Berlin specifically for that comment only that its happening in many places in the world - San Francisco, New York, London. I linked to two articles describing it different cities. So the "market will sort itself out" neo-lib doctrine you mentioned has largely failed working class and indeed middle class which are the majority compared to the wealthy.
Ok, because there are cases of real estate in NYC, SF, and London being bought to merely keep money from loosing value you conclude that capitalism has failed?
The reason for this real estate bubble (money loosing value) being the ECB's and the Fed's inflationary policies and low interest rates (hence a consequence of state action)?
And as a remedy you propose the state or city should buy real estate to keep housing affordable (rather than changing regulations)?
So that some pseudo hipsters in Berlin's fashion quarters can keep living on social welfare (ok I'm taking that one back :) but I can tell you the taxpayers of Southern Germany, Hesse, Hamburg (and Saxony I believe) aren't amused to finance Berlin decadence [1].
I can only appeal to your computer science skills to analyze the situation rationally, rather than buying into social-romantic nonsense.
[1]: since over half the residents of Berlin have their hands in the pocket of the state in one form or another, the strategy of the Senate of Berlin seems to be to "buy" their electorate with money they get from other German countries, when actually Berlin rents are much lower than in all other big German cities
>"Ok, because there are cases of real estate in NYC, SF, and London being bought to merely keep money from loosing value you conclude that capitalism has failed?"
Nice try, nowhere did I even remotely find fault with capitalism. Capitalism and a urban planning are two completely orthogonal concepts. You seem to be conflating the two an maligning a vote for some kind of housing policy as a vote against capitalism which is just ridiculous. They are not mutually exclusive.
>"The reason for this real estate bubble (money loosing value) being the ECB's and the Fed's inflationary policies"
And try to remember why central banks had to loosen the money supply. Because in 2008 the global financial system was brought to its knees by banks who believed that "the market will look after itself." And who bailed those institutions out? The taxpayers did what amounted into a systems of "privatize the rewards and socialize the risks." Typical neo-liberal bullshit hypocrisy, you have no problem accusing everyone else of "social-romantic nonsense" though.
>"I can only appeal to your computer science skills to analyze the situation rationally"
Spoken like a true technocrat, your'e right there's probably a good formula to explain the problem away.
>"So that some pseudo hipsters in Berlin's fashion quarters can keep living on social welfare"
So you have just reduced a multi-ethnic city with a population of 3 million people to a single narrow demographic. You are obviously trolling.
Concerning the so-called financial crisis: I remember it all started with sub-prime real estate credits in the US, the reason for their existence being politically motivated ("everyone should be able to afford housing" or, less favorable, "we're going to buy our electorate by keeping interest rates low")
I can't speak to other places but in SF the disease is ridiculous zoning. City doesn't allow dense/tall buildings despite plenty of developers would be happy to build them because there is demand for it.
It also happens to be an attractive place to be so every year we have more people coming in than new apartments being built so rent and cost of houses raises every year faster than in other places.
If you were a rational investor, would you rather buy a house in SF, where the price will raise faster than S&P 500 or in Kentucky, where it'll remain the same?
Rational investing strategies make housing even less available, prices going up even faster, creating a vicious circle.
Note, however, that the only way to get out of this is to allow construction keep pace with population growth, as it mostly happened in Seattle in the past 5-10 years.
If house prices will not rise then people will not be using them as investments.
Free market is capable of sorting this out. It didn't happen because the market isn't free because the government of the city of San Francisco doesn't allow it to be by responding to one of the highest population growths in the nation with one of the most restrictive zoning in the nation and trying to "fix" the problem with rent control.
You don't have to be a Nobel-winning economist to see how that leads to disaster but if it makes a difference, Noble-winning economists agree that restrictive zoning and rent control inevitably leads to disaster.
I fail to see how neo-lib doctrine has failed in this instance. If the middle class is priced out of a certain area, then fine, they go move somewhere else. We see this in NYC today: lots of businesses and restaurants have closed shop and left Manhattan because the real estate values (rents) are too high, and the people who shop there are moving out. Instead, Brooklyn is now the hip place where all the good restaurants are opening, as rents are cheaper there. Many employers are moving over there too.
So what exactly is the problem? There seems to be an underlying assumption to your writing that it's somehow a "disaster" if a city (or in this case, one district of a big city) loses its productive members and just has a bunch of wealthy people holding property there. Why is it? Sure, it sucks if you're middle class and can't afford the rent there, but you're free to move somewhere cheaper. Then businesses will have to pay higher wages to get service workers to commute farther, and if that fails, they'll just close shop or move to be near the workers. If it gets bad enough, the property values in the city (or district) will collapse, a bunch of rich bastards will lose a lot of money, and things will eventually return to normal.
If there's any government intervention needed, it's to encourage companies to move to where the workers are, perhaps with tax deductions. But cities already do that kind of thing. And don't forget, cities are in competition with each other. So cities which do a better job of managing themselves and doing urban planning to make sure service workers can live there are going to do better long-term than cities which don't. So I can see how municipalities have a good argument for getting involved (just as they already do with things like zoning and permitting and construction approval) but I don't see how this is in the interest of national governments. If a bunch of stupid NIMBYs in one particular city want to price out all their janitors and convenience-store workers, and then they can't get anyone to clean their toilets and don't have any local restaurants or shops, then let them.
>And what do you call it when a city becomes a place that only the wealthy can afford to live in? There are so many people that contribute and make a city function who are not even remotely middle class. Where do they live?
I'm not sure how this is a problem. Shouldn't it be self-limiting? You're absolutely right: you need lots of people in a city to make it function who aren't high earners: janitors, retail workers, cab/bus drivers, etc. So what happens when a city becomes so expensive these people can't live there? For a while, they live farther away and commute, but at some point even that won't be viable. What then? Well, that seems like it'll be a big problem for the wealthy inhabitants of the city to solve, right? Why is it our concern? Those wealthy people are the ones who created the problem, and also the ones with the most resources to devote to fixing it. The rest of us are struggling to make ends meet and pay the exorbitant rents that are the result of these wealthy people; we certainly don't have time or money to deal with the problems they've brought on themselves.
So if I'm missing something critical here, someone please point it out to me because I'm not utterly convinced of the correctness of my argument. I can't think of any historical examples of places where rich people priced all the service workers out of an area completely; I think this is a modern phenomenon. But it does seem that this should be one area where "the free market!!" really should work, in a way, though it might result in a bunch of wealth people really losing their shirts in the real estate market (which is fine with me; lots of people, including non-wealthy people, in 2008 learned that lesson the hard way, that real estate does not always hold its value; I'm especially not concerned about a bunch of wealthy foreigners losing their investments).
I see this line of reasoning a lot, and find it somewhat bewildering.
The people most desperately in need of subsidies are also the people who earn little enough income to pay very low taxes already, or none at all. Reducing taxes doesn't do shit when you don't make enough income in the first place. It's not a recipe for giving people in need better opportunities, just a recipe for people in less need to keep their money.
Which is a reasonable (if somewhat selfish) point of view, but don't sell it as a solution that actually helps people who can't afford their housing.
I would blame biology. People want to live in cities, I moved into a city myself. Economically, this is just a fact, you cannot really complain about.
You have to build housing to handle the stream of new people and try to avoid empty apartments. In my city, buildings are being build, sure it can always be faster, but there are already whole new districts being build from scratch.
It pisses me off whenever I'm walking around Manhattan and I see new buildings going up that are only a few floors tall. It's such a poor use of limited space. And yet there are zoning regulations that limit vast swaths of even Manhattan to low heights (often lower than many of the existing structures that were built awhile ago). Check out this PDF of East Village as an example: http://www1.nyc.gov/assets/planning/download/pdf/zoning/zoni...
All of those R7* and R8B zones only allow floor area ratios of 3-4, meaning that if a building takes up the entire lot, which is common, it is limited to those numbers of floors.
Berlin is a very large city. This article covers two districts, Friedrichshain and Kreuzberg, which are experiencing a boom that is starting to raise the rents from insanely dirt-cheap to something people outside Berlin would consider "normal".
As it turns out, those two districts also happen to be the most trendy in Berlin. There are many other districts in Berlin that are not affected. For example, I haven't heard much about a rent crisis in Wedding, Alt-Moabit, or any place outside of the Ring-bahn.
To put the "crisis" in Bay Area terms, it would be like if it were impossible to find a place to live in the Mission, even though you could still get a place in the Panhandle, and therefore there was an article about a rent crisis in San Francisco, ignoring every other district in the city.
A rent increase is not the same as a gentrification crisis.
The fact is, this issue is not a product of a supply issue. There is plenty of housing in Berlin, if you're willing to live in a non-trendy area and maybe take an extra stop or two on the train. In places like the Bay Area, there simply is no supply, and therefore there is a crisis.
I assume Wedding gets hit by the price hike pretty badly because it's next to Mitte and the rents were particularly low despite the central location. As long as people don't get displaced, I don't see it as a bad thing, Wedding still looks kinda sketchy and will benefit from more affluent residents in the long run.
Not sure how many do this, but you're basically describing my situation, 8 min commute to Mitte, and relatively cheap. Due to the rent control, rents only jump after tenants change. An identical flat to mine, below me, was just now online available for rent for about 20% more than my rent is - and got rented out within a month, so there's demand.
I don't think there's a fear for displacement yet, there's quite a few plots to build up, or abandoned places that are torn down (e.g. Stattbad), and a bunch of new modern apt buildings coming up. But for now, it looks like Neukölln is the more desirable next-hip-thing.
From the article it sounds like Berlin has tried everything they can think of, aside from actually creating supply to match the demand...
In Berlin's case, is it a question of "wanting to keep the cities character", or is it more like the Swedish variant where it's "gotta keep the housing bubble growing"?
Berlin has supply, the limited resource are vintage buildings (pre-war or rebuilt in the same layout) and no market force can create more of them. The abundant 1970ies style developments will never see gentrification.
It's called Altbau and is usually combined with Blockrandbebauung, which the other commenter mentioned. I don't understand why this style hasn't seen a comeback yet.
Its most charming qualities are high ceilings (3-4 meters), historicist ornamentals / stucco, natural ventilation (Fugenlüftung), wooden flooring and boy-type windows. All of these increase quality of living substantially and I wouldn't want to live in any other kind of building if given the choice.
Thanks! Indeed this is what I was asking about/referring to. I spent a few months in one and the ventilation and the light due to the windows facing into the courtyard made for a pleasant living experience.
Blockrandbebauung. I don't know a name for the opposite though, parallel lines on an open lawn. The latter wouldn't even be so bad of it wasn't usually scaled out of proportion. One of the earliest examples is also in Berlin ( https://en.m.wikipedia.org/wiki/Großsiedlung_Siemensstadt ) and it's actually quite nice. But it is incompatible with ground floor business, a key element of gentrification in cities that are not New York or London (but I guess in this case, being an UNESCO world heritage site wasn't too bad of a substitute, again something you can't just pot into the design specification of a new development).
That picture wasn't quite what I was thinking of. I think the name might be "Mietskasernen"? Basically you have a square "Hof" or courtyard in the middle of a square apartment complex where the bike rack and recycle bins will be and apartments look down into it. And through the courtyard is how you enter the individual apartment. Is Mietskasernen the correct term?
Sorry for the confusion, everything after the initial "Blockrandbebauung" was about the opposite, for contrast. "Mietskaserne" is really just a derogatory nickname and could be applied to any form of high density, low quality rental apartment building.
Yes it is, although it implies community toilet on the floor and general resemblance to barracks (ger. Kaserne). So proponents wouldn't generally call it that.
I don't get the fascination with this. Sure, it's prettier than the Soviet blocks, but that's all they've got going for them. People don't build new buildings that way for a reason. The Soviet blocks are a bad alternative because they were made so cheaply, not because they're newer. I would much rather live in something from this millennium than something "vintage".
>The abundant 1970ies style developments will never see gentrification
If the city keeps growing and getting wealthier then it will. Ok, maybe they'll have to tear them down and build new or something, but those areas are not "safe".
> Sure, it's prettier than the Soviet blocks, but that's all they've got going for them.
That's not true, the big thing they offer is lively streets.
First by providing the necessity density (houses in the backyards) and usually come with a commercial space in the ground floor that can be used for a shop, a bar or restaurant.
You simply don't find those with new developments, or rather it's the exception then the rule.
I guess it's easier to sell a house with a big garage in the ground floor than a bar, but in the end that just leaves the street dead.
That's strange that new development wouldn't have commercial ground floor space, even more so if the torn down building had it. Everywhere in the USA that has urban gentrification strongly encourages retail on the first floor and apartments/condos on top. It's a huge attraction to residents above as well. Worse case, cities could mandate it.
Newer developments will have commercial spaces on the ground floor, but a problem is that rents are generally higher, so it limits the types of shops that open up there.
In San Francisco, I've talked to the owners of a few bikeshops, and they have good relationships with their landlords. The landlords are willing charge less rent because they feel the neighborhood needs certain types of shop. A commercial developer may not share these same ideals.
Berlin goes through--I would say--a normal gentrification process. Before 2010 Berlin hadn't have any significant industry and just few jobs. Since then companies, jobs, everything is sky-rocketing and rents get obviously much more expensive. But Berlin is still far below London or Paris. I think we haven't even reached the level of Eastern European capitals price-wise, such as Warsaw.
But the actual problem is that the city is super slow in building skyscrapers and rather tries to avoid them 'because they aren't Berlin's DNA'. Skyscrapers offer a much higher density and now is the time to really plan for a couple of them. They are just two new small skyscrapers planned for the next 5-10 years. But it's a very tedious process: everybody is fighting with each other, the city wants guarantees that the real estate funds build and operate schools and other public facilities in those districts, the funds don't want of course. Then there is the subway operator BVG which is kind of blackmailing the funds: They say that the skyscrapers are so heavy and they need money to stabilize the subway tunnels underneath. BTW, they do this with every bigger real estate project (recently with a huge mall).
In general, the city's council has a very good feeling about how to plan and build the city, they are really good compared to other cities. Infrastructure is great and you have many small city centers while Berlin-Mitte where the government resides is the busiest and most expensive one (no surprise). They are just lacking one important skill and this is managing large scale projects. Just an example: our new airport which was planned to open 2010 hasn't been opened yet. The new airport seems to be ready but doesn't get the approvals and it seems that it will never get the approvals and has to be shut down again (news from last week). Germany's general overregulation might also play in here. The city currently operates just two small airports.
However, they really need to plan proper skyscraper districts which seamlessly integrate with the rest of the city, complement Berlin's DNA and which should have also a good mix of business, leisure and living. So you don't face dead districts at night. The Potsdamer Platz which was created 20 years ago is an ok place which pairs all of those + two tiny skyscrapers.
Berlin is built on a swamp. It's the reason neighbourhoods with ongoing construction have streets lined with "large pink pipes" [1]. I would imagine this would make building skyscrapers difficult and was apparently one of the factors which condemned the famous Volkshalle to fiction[2].
The airport is a disaster. Are you sure it's fair to attribute the delays to regulation? The problems seems to stem from bad design with the effect of being unable to put out fires [3]. It might not be accurate to call it "ready".
It's not just atrocious design. It's also a supervisory board that managed to change the plans so often it confused everyone (leading to bad planning) and a bureaucracy that didn't actually check if contractors did what they were supposed to do.
I think the final blame lies with the SPD politicians that have effectively been in charge of this. The buck stops at the top. Sure, a lot of heads have rolled, but it seems like the Berlin SPD's culture isn't compatible with managing this kind of thing. I mean, when Wowereit was pushed if they could have razed the airport, started from scratch and executed as originally planned that would still have been cheaper than the current situation. This clearly indicates that the people in charge kept fucking up long after Wowereit and perhaps they are still doing so. Why the fuck does the federal government (which pays for part of it) go along with this?
This seems to be a trend in Germany when you look at the projects to build a railway station in Stuttgart or a music hall in Hamburg. Hell, even the subway extension in Helsinki is a good example how a project can be screwed up.
I think a lot of it has to do with the way politicians make decisions. They are not professional project managers, they primarily manage their own career and advance their ideologies and political ambitions. If a public project is expensive, there is debate over whether it should be done or not. So the budget is tightened and there is haggling here and there, some things are left outside the project scope, etc. Then, in the course of the work, it will be noticed that of course those mandatory parts that were left out of scope are still mandatory. So the scope increases, budget increases, and the schedule slips.
But there is huge pressure to keep the schedule. Managers of various sub-projects see the situation of their peers and often they can safely deduct that even though they are late, someone else will be even more late, so that other sub-project can be the fall guy. Thus, each sub-project reports "everything in control, on schedule" regardless of actual problems.
All the sub-projects are optimistic about their own situation and think someone else will draw the "Schwarzer Peter" card (the game is known as Old Maid in English) and be blamed for the final delay. Thus, the overall project manager gets all green sub-project reports and scorecards that yes, we're opening in schedule in June 2012. Since the project manager is not a professional in construction projects, he's unable to assess the actual situation. He also thinks that his political power is enough to override things like fire safety regulations, should these become a nuisance.
Then, a few days before the planned opening, the actual situation is revealed, and the recurring delays begin.
Here in Helsinki region there's indeed a similar situation with the western metro line extension. The fire protection systems were not ready, but the top project management simply did not believe it. Then came the actual tests, with actual fire experts insisting that the systems must work and it must be tested. Poof, the opening is delayed by some months. Then by some more months. Now it looks like it's at least a year.
This seems to be common with public transit projects. In Finnish city of Tampere, there's a counter-example of a tunnel project that got ready in time, in budget. This was a tunnel for car traffic, and the project was intensely challenged by left-wing and green politicians. Thus the accepted plan got a lot of scrutiny. But once approved, the contract model worked. It's now been in use for a few months.
Public transit projects are "good", so if you question the plans, you're a bad person. I think this is one reason we the projects keep failing: if you've ideologically decided it must be built, the plans and budget will not be reviewed critically enough.
Very interesting. Cool to get some insight, but there's something that bothers me:
>Poof, the opening is delayed by some months. Then by some more months. Now it looks like it's at least a year
BER should have opened in 2011. It's now among one of the most expensive airports in the world, and it hasn't opened yet and it may yet end up costing much more. Its peers in terms of cost take more than double the traffic it will be able to take. BER is just abnormally awful.
Latest updates are that the new manager mentioned in Bloomberg article, Karsten Mühlenfeld, has fired technical director Jörg Marks, and that right after that Mühlenfeld himself had to go due to deep disagreements with the governing board. He will be replaced by an SPD politician, Lütke Daldrup.
Very cool site. I fly to Berlin a lot (mainly SXF) and it is such a pain this airport is still not open.
SXF is a horrendous airport. Not enough seating and i know of two plug sockets in the whole airport. Recent passenger growth combined with the appalling layout means it is horrendously congested.
Holger Klein has done some very good in-depth interviews with Martin Delius (part of the parlamentary inquiry) about this issue. Sorry it's only in german, but is definitly worth listening if you can overcome the language barrier.
Sorry, but that makes no sense. Skyscrapers are a stopgap measure that shortly lowers prices, which only serves to get more people into town if demand stays the same (and creating more demand: everyone needs a hairdresser, a school, a supermarket). In that way, it only increases people density, which is the main fuel of gentrification.
Point in case: Look at the cities with the highest skyscraper density (New York, Tokio, ...) - are they the cheapest cities or the most expensive? Heck, even Frankfurt (nicknamed Mainhattan for its skyline) is more expensive than Berlin.
On top, infrastructure can't keep up with the vertical stacking of people, so you grind to a halt in public transport and on the streets.
Berlin gets it totally right. Prices will increase either way and lead to a nash equilibrium. If I'd want to live in a concrete hellhole, I'd move somewhere else.
You set up some weird strawman about skyscrapers, do you have anything to back up your claims?
Housing units, population, jobs, and desirability of the area is what drives housing unit prices. Increasing the supply will always ease affordability.
Restrictions on development, and NIMBYism is what destroys the cost of living and development in cities.
But these cities still aren't building to the pace of
their population growth. To achieve price reductions,
these cities would need to implement an open market,
deregulating land so that housing supply can meet demand.
Assuming that urbanites view this as some crackpot
right-wing solution--'Reaganomics', according to one San
Francisco politician--they should look at Tokyo, where
it's actually being tried.
In Minato ward — a desirable 20 sq km slice of central
Tokyo — the population is up 66 per cent over the past 20
years, from 145,000 to 241,000, an increase of about
100,000 residents. In the 121 sq km of San Francisco, the
population grew by about the same number over 20 years,
from 746,000 to 865,000 — a rise of 16 per cent. Yet
whereas the price of a home in San Francisco and London
has increased 231 per cent and 441 per cent respectively,
Minato ward has absorbed its population boom with price
rises of just 45 per cent.
> Housing units, population, jobs, and desirability of the area is what drives housing unit prices. Increasing the supply will always ease affordability.
Within that price range. Skyscraper flats in many European cities are at such a high starting price that they might put a downwards pressure on really expensive flats but do nothing for the average person. The cost of building a flat in a Skyscraper are significantly higher than the cost of a flat in a 7 story building.
I used to live in Seattle in 20-something story building, paying $1250/month for 1 bedroom apt.
In San Francisco, a similar apt. is $3000+.
Clearly, the cost of building the skyscraper is such that the developer can earn their money at $1250/month. Not cheap but most standards but also not insanely expensive as SF.
The issue in SF is not that we're building 7 story buildings instead of 30 story buildings but that it's hard to get approval for 4 story building unless you promise to sell 125% of capacity for below-market rates and even if you do, there will be neighborhood organization bad mouthing every project at best and suing you under any pretext they can at worst. Even if they eventually loose the lawsuit, they'll successfully delay construction.
> Clearly, the cost of building the skyscraper is such that the developer can earn their money at $1250/month.
I can't talk about your house obviously but the vast majority of Skyscraper in Europe have economics where the bulk of the investment cost is carried by expensive flats and not cheap ones. So yes, some people might have cheap flats but that does not mean that you can take the unit count of the Skyscraper and say "N cheap flats".
If you take the Triiiple in Vienna for instance the current quoted costs are 3500 euro per square meter purchasing price for the cheapest flats going up to 9000 euro per square meter for higher up floors. And the Triiiple is considered one of the more affordable projects.
Skyscraper flats ... are at such a high starting price that they might put a downwards pressure on really expensive flats but do nothing for the average person.
False.
Without new units, the occupants of the (unbuilt) new luxury units would simply be driving out the occupants of other (more affordable) spaces in older units.
You left out a crucial part which is "Europe" and there it's undoubtably true in areas where I know how buildings are financied and what the costs are (central Europe).
> Housing units, population, jobs, and desirability of the area is what drives housing unit prices.
Well, if anything is driving up population density, it's increasing the number of inhabitants per square meter, just like skyscrapers do.
The real strawman here is "But these cities still aren't building to the pace of their population growth."
If they were, what good does it do for anyone? It's putting more gasoline to the fire instead of letting it burn out. Any effect from building more housing has only short-term positive (and long-time negative) effects on gentrification if the original desirability of the area doesn't change.
The only proven ways to decrease desirability of the area are getting rid of the original jobs (like Detroit) or increasing prices to so absurd levels that people seriously question if they should go there (London, Bay Area).
Well we don't want to actually reduce the desirability of the city...that the city is growing is a good thing. And Berlin is actually sorrounded by a lot of empty space.
You can build high density (4-8 stories not skyscrapers) apartment buildings to house a million more people (and required infrastructure) around berlin and there will still be plenty of space to continue growing.
Do you think that if the supply of new apartment suddenly increased dramatically it will have no effect on rents rising?
They are. NYC has massive cheap apartment blocks built with public funds. The suburbs of Long Island and Weschester use land much less efficiently and are more expensive. Notice how Soviet Russia made apartment blocks: per unit construction costs might be higher, but transit and land gets used more effectively.
The only way left to fight gentrification is, I am afraid to say, something between massive civil disobedience and outright violence.
The alternative to fighting - chilling in our sofas and doing nothing - is waking up one day in a city without teachers, cleaning/water/sewer personnel, supermarket staff and, funny enough, police. I just picked these examples as these people are already living near or below poverty line after paying rent and are vital to a healthy city.
And: it's not just Berlin that suffers from gentrification, e.g. Hamburg and Munich are falling victim to it. We as people can no longer trust the state (or the police) to serve our interest - both serve the interests of the ultra-rich investors only. Just look at London what awaits societies which do not fight with any means neccessary.
>The only way left to fight gentrification is, I am afraid to say, something between massive civil disobedience and outright violence.
Or you could just move someplace cheaper instead of resorting to this stuff.
>The alternative to fighting - chilling in our sofas and doing nothing - is waking up one day in a city without teachers, cleaning/water/sewer personnel, supermarket staff and, funny enough, police
And why exactly is this a problem? Every time I ask it in a discussion like this, no one has an answer. So what if there's no retail workers, teachers, or police? Then the problem will naturally correct itself, no? A city will eventually collapse and fail without these services, and then the real estate prices will rapidly fall to affordable prices, allowing these people to return. Meanwhile, a bunch of rich landowners will lose their shirts, which is a good thing.
>We as people can no longer trust the state (or the police) to serve our interest - both serve the interests of the ultra-rich investors only.
You as people need to move out of these unaffordable places and go someplace more affordable. You're part of the problem. You demand space in this limited market, along with everyone else, and this drives up the prices. Supply and demand, economics 101. If all the middle and lower income people abandon one of these places, the prices will drop like a stone; who wants to live in a city with no police or firefighters or restaurants? Ultra-high prices work OK for small portions of a city, so that service workers can live within commutable distance, but if the ultra-high priced zone grows too large, commuting becomes impractical and something's gotta give. So if you're a line cook at a restaurant, you need to decide whether you want to work for $10/hour in some cheap CoL town, or work for $20/hour in some ultra-expensive place and commute for 3 hours each way. If the wages aren't high enough to entice people to commute, and businesses shut down, the problem will naturally correct itself.
Fighting gentrification is stupid. Cities with growing populations need new housing supply and the market will put resources (to build) where it meets consumer demand. Unjustifiable barriers to new housing supply will only make prices go up even faster, and for crappier quality housing, too.
Not saying the market is infallible, but it's often smarter than you and I.
When the Invisible Hand builds luxury apartments, it is indeed for the rich, because if the rich don't get the luxury apartments they want, they will settle for middle-class apartments at good locations.
Since they are rich, they can outbid all the middle-class people, and only rich people will be able to live at places that used to house middle-class folk.
When nearly a whole city fights against the investor kind of world view why do people argue that scaring investors away is a bad thing? It's obviously what the people want and DO achieve. You may not be one of them, but they seem to be extremely successful and should be respected for that.
The whole thing is a romantic endeavour more than a logic one. But if you've spent some time in Berlin you can understand the desire to keep things as they are.
Question: does there exist a place today that was like Berlin in the 1990s: civilized but still a bit uncharted, with a lot of opportunities for living thriftily?
I'd say Vilnius and Lithuania in general is a bit like that. Nobody seems to know much about the country other than basketball - as long as you don't mind smaller cities it's a nice place.
Although since the Euro was adopted two years ago prices have gone up, but wages have stayed the same. A basic flat somewhat close to the city centre would be at least €300/mo, and a good white collar wage maybe €1000/mo.
I suspect such places will always emerge? A while ago I saw a documentary about Bremen, where apparently large amounts of flats are empty and can be rented for 1€/month. Maybe cities like that could become new destinations for artists?
The situation of Berlin is of course quite unique because of the wall.
Also, maybe artists not only need cheap rents, but also wealthy patrons. I don't know.
Many people will say Leipzig, and it's true to a certain extent. Berlin is very unique in its tolerance. As you move eastward in Europe, that may not be the case.
Of course if you're white or really attractive, these are non-issues.
Also came to my mind. But Leipzig also attracts many young people because of its affordability. Many things that are true for Berlin now are also true for Leipzig; it is very hip, rents are rising and there's a lack of living space [1][2].
Berlin is a great example of what happens if you have bad laws and regulations hit reality. The renter is king in his or her property. Friends wanted to buy a flat but ypu can realistically only rent a flat that comes with an occupant so you need to wait until they leave until you can move into your own property.
Then this gets paired with attempts to regulate the increase of the rent and people rent for a bloody long time in a city where there is more demand than housing.
The effects this causes in reality then are bizarre. All you have to do is build more stuff and none if this was necessary.
> so you need to wait until they leave until you can move into your own property.
That's simply false. You can cancel a lease with a renter because of "Eigenbedarf" (personal need) if you want to move into your own property. There's some limitations around it when you buy a property with a renter in it but in general that's how it works.
In Germany, the "basic law" (rougly: constitution) says:
> (2) Property entails obligations. Its use shall also serve the public good.
The state protects your property but this obliges you to also use it for the public good. It's not an absolute right.
> You can cancel a lease with a renter because of "Eigenbedarf"
Which has a 10 year "Sperrfrist" (freeze period) and you need to go to court if the renter refuses to honor and make your claim. Even in that case you need to prove your personal need and "living in your own property" does not satisfy that requirement.
On the flip side, this means that there is absolutely no need to buy the flat you are living in, because your landlord can't easily throw you out anyway. If you are after the savings in rent, you can still buy a flat and rent it out to pay your own rent.
As most german flats are rented without kitchen appliances there is a certain amount of investment (the landlord does not have to do) that deserves protection.
There are simply two markets. One for flats that produce rental income and one for flats for any use.
The situation in the US is different as e.g. there are more fixed term rental agreements.
Housing prices have soared in fashionable Berlin neighborhoods like Friedrichshain-Kreuzberg.
Ah, the New York Times. Yes, there is a borough (or district) called Friedrichshain-Kreuzberg, but no one would think of calling it a "neighborhood" (it's split by a river; and not too long ago, the pieces that comprise it were on different sides of The Wall).
Large areas of the city did the opposite of gentrify already. So what do you want, of course people in those areas want to move to nicer ones.
Stop crapping the whole place up, the few pockets that are still nice are of course going to see higher rent prices. If you don't like gentrification there are plenty of cheap areas in the city for you to live.
This article smacks of an agenda. They want the whole city to be bad, it's not enough yet.
Have to wonder how much of this is occupant-driven vs how much is foreign speculation (like Chinese investment in the Canadian property market). That prices are getting so out-of-whack relative to local incomes in so many places suggests some sort of international aspect...
Oh there absolutely is. In London we welcome anyone with cash to offload, no questions asked.
There is plenty of building going on in London, none of which will help anyone on an average wage.
It's simply about money. The government loves it because they get a nice payout from stamp duty, estate agents love it because they get to close £1,000,000+ sales, the foreign buyers love it because they can offshore their assets.
The only people who don't love it is everyone else.
I keep wondering whether negative interest rates and QE have made real estate a very attractive purchase for international investors. I'm trying to track down evidence that asset managers have started moving "safe money" investment in that direction to get higher returns than they do from Treasury etc. Which is where that money used to park.
It's too widespread of a problem at this point. lisbon, porto, london and Berlin and many other cities like Vancouver are seeing prices explode.
Presumably those boogeyman foreign investors are rich enough to buy in cash so interest rates have no bearing on their decisions, especially US interest rates.
It's not like Chinese peasants get million dollar loans to buy a property in London or that Russian walks into Wells Fargo and gets million dollar loan for a house, even if he's rich in Russia.
It's likely investor driven, foreign or otherwise.
Toronto for example is in the midst of an incredible real estate bubble, but a professor found that there's more than enough supply being created to keep up with population growth.
Would you please stop posting inflammatory political comments to HN? They're not what this site is for, and usually lead to flamewars. You evoked moderate responses from reasonable users in this case, but usually it's the opposite.
That's very very recent. Kreuzberg was cheap five years ago, and still is for most people who have been renting for a while; new rents mostly rise a lot faster than existing, for various reasons.
Are you under the impression that large-scale private housing developments are gentrification? In general we should expect that large-scale increases in housing supply would lower rents and prevent gentrification.
From a US perspective: The world is changing. The (American) ideal of a McMansion with a 2.5 kids and 3 cars is gone. People want to live in cities; in particular, tolerant, safe, cultured cities. Old timers in San Francisco (where I live) will blame the "tech boom" and "techies" for this phenomenon, but it's not limited to tech, and is not caused by tech. It's just the cycle we are in currently.
If there's a housing crisis in Germany, it's entirely the fault of politics.
There should be lots of investors in German housing construction projects, given Germany's comparatively low property quote, increasing urban population, and low general interest rates. What turns investors away is the asymetric legal situation unduely favouring the renter's over the owner's interests (I hear in Sweden it's even worse). That, plus excessive laws for energy efficiency that seem to be dictated by the construction industry to drive up initial and ongoing cost.
The SPD party's answer is new laws limiting rents (without also attempting to cut down on costs). They shure don't understand how to let the market work for you.
If I look around me, a significant percentage of people's income is already going into housing, healthcare and taxes.
The money that is left is used to buy some Ikea furniture, pacifiers^Wgadgets like phones and TVs and perhaps a vacation once a year.
In other words, just enough disposable income so that people don't revolt.
How can there be an efficient and actually free market for housing? At the very least, people should be allowed to build slums, otherwise they do not have any leverage to drive prices down by opting out of an overpriced market.
On the other hand that keeps the quality of life higher for people living in the cities. It's a balancing act between landlord profits and the promise of stability to the citizens.
Cities aren't only optimizing for profits of the investors (realtively few people), but also for making life in the city itself happy. And by responses of people moving to Berlin, they're doing something right.
It's not about profits for investors so much as it is about a self-sustainable housing economy. Comments like yours, and SPD policies always paint a juvenile "bad investors vs the working class" picture. In reality, investment in housing has always been attractive for smaller investors (eg. Grandma's rent). Especially since the ECB has been keeping interest rates low for the debt-ridden PIGS economies not to collapse. Look at the not-too-distant future, the demographics being what they are. What sustainable investment is there if you have a bit of money to spend for your old days? The problem the SPD is trying to solve with rent-limiting laws will come back massively in ten years time with the then-old generation not having enough to sustain themselves.
Noone is painting investors as bad, but it seems that like a lot of people in this thread you're looking at apartments (living space of citizens of a city) as an investment and not as a basic prerequirement for someone to actually live in a city.
Living space doesn't grow on trees (in Europe at least), and is extremely expensive to create and maintain. The quarters seeing "gentrification" (with their social status-indicating details such as stucko) were always attracting a bourgoise elite (its why they exist in the first place).
It's all a question to make economy work for the people. Saying goodbye to reality does no one good.
But noone is saying you should say goodbye to reality. But precisely BECAUSE it doesn't grow on trees, the cities shouldn't optimize for maximum investment value of real estate, but they should optimize for maximum living space and quality of life potential for their citizens. Empty apartments in city center used as a dumping ground for money are of no use to anyone but a select rich few individuals.
Looking at New York, it seems to me building taller houses with more flats does not automatically make a city less worthy of living in it.
And living in Berlin, I can tell you that not being able to move to another flat because of high prices, and wondering how long I may still be able to afford living here, doesn't make me very happy.
People like me, living in cities like Munich, Frankfurt or Hamburg, whose rents are much higher than Berlin's and whose taxes fund this, are always happy to help you, Berlin. Just tell us, when your airport is finished, (maybe in 10-20 years?) so we can take a look at what we paid for over there.
Berlin is complaining at very high level. If you want to talk about gentrification in Germany, Munich and Frankfurt are the cities to talk about. Berlin has a much easier situation, with much more open space. But when a developer comes along and wants to build skyscrapers on abandoned land, they also complain, because they want to keep their open spaces. The people over there complain about the Swabians, who want to live in these apartments, all that while being financed by the taxes of said people from Southern Germany.
I am all for liberal cities and unique culture, but Berlin does not seem to realize, that this is made possible, because Frankfurt, the exact opposite of Berlin, pays for it.