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.
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.