An upcoming referendum to ban real estate speculators is a protest against excessive rents. That message has already filled up the streets with demonstrators and can be seen hanging from the balconies and written on the walls of the German capital, which is becoming more “poor” and less “sexy,” to paraphrase the famous description of the city by former mayor Klaus Wowereit.
The referendum includes a plan to “re-nationalize” public housing that was sold off 15 years ago to giant corporations like Deutsche Bank, in a fight against the relentless gentrification of the city, which has caused monthly rents to skyrocket (up 34% over three years), forcing the city to contend with the fundamental question, repeated over and over on the protest signs: “Who owns this city?”
We are on Karl-Marx-Allee, in the Friedrichshain district, three kilometers east of Alexanderplatz. On both sides of the six-lane boulevard, we see the unmistakable “wedding-cake-style” buildings, ornate, baroque constructions built in 1961 as a living homage to the Soviet Union. Berliners will always know them as Arbeiterpaläste, the “workers’ palaces” of the GDR, built according to the architectural plans of the state authorities.
Until five years ago, this was a good place to live. Starting this year, however, it has turned into a nightmare for those who live there—as Uwe Möhlenbruch recounted, a 31-year-old university student interviewed by the Berliner Zeitung. Since last June, he has been sharing his 63 sqm apartment with a roommate who, like him, is paying €505 per month in rent. Such prices are simply impossible to meet for thousands of residents living under the same conditions, mostly retirees. For the past month, they have been hanging protest banners from their windows: “Rents accessible for all”; “Fight against speculation,” and—the most poignant one—“Kommerzallee”: from Karl Marx Avenue to “Moneymaking Avenue.”
This is one of the places on the frontline of the battle. Here, since April 6 last year, volunteers from Initiative Mietenvolkentscheid have been collecting the 20,000 signatures needed to put forward the proposal for the public referendum which would ban landowners from selling to large real estate groups and would enact forced expropriations of properties to be used for public housing. These are measures aimed at fighting the housing emergency, which has become an undeniable social crisis in Berlin, where 17% of the population survives only thanks to the Hartz IV benefits.
These measures are aimed first and foremost at the 65,000 apartments owned by Deutsche Wohnen Ag, the real estate branch of Deutsche Bank, which is number one on the list of large property holders, with 163,000 apartments purchased since 2004. The result was the skyrocketing of prices and rents, inflated out of all proportion for the company’s exclusive benefit. But this is not the only example of such an effect: in Kreuzberg, residents took to the streets last year to stop the construction of the new Google hub, which aimed to attract “skilled professionals,” the only ones who would still be able to pay the enormous rents which would have spread around the district.
It would be “a knock-on effect,” as the spokespersons for the protests explained, clearly invoking the example of the “Prenzlauer-Berg phenomenon,” the chic area around Pankow that was taken over by ultra-rich Bavarians and Swabians. You can count the original inhabitants still living there on the fingers of one hand: thirty years after the fall of the Wall, gentrification has been carried out in full.
A similar phenomenon is also happening in Kreuzberg, the border district of the old West Berlin that used to be the home of Turkish guest workers. After the Wall fell, its residents found themselves no longer at the periphery but in the center of their city overnight. As a consequence, at Moritzplatz the property values have reached €5,000 per square meter, double the price of a family home in the luxurious neighborhood of Dahlem.
But these prices are still small compared to the 8,000 per sqm in ultra-central Torstrasse, or the 15,000 per sqm price tag that agencies are offering for even the most modest place in Berlin’s own “City,” the business district in the heart of Mitte. Over the past 12 months, the prices for unbuilt land have also gone higher (by over 12%), despite the fact that the housing market has seen a decrease of 9%.
This is why the government of Berlin (a city-state in the German federal system), led by the SPD, die Linke and the Greens, is supporting the initiative for the referendum on housing measures, a proposal that came from the grassroots but is perfectly in line with Mayor Michael Müller’s aim to curb the price explosion, which he set out in his New Year’s speech. The most important result of these housing measures would be to bar companies owning more than 3,000 apartments from the Berlin market altogether, while it is estimated that the expropriations would allow the recovery of more than 200,000 housing units. The expropriations and compensations would cost about €20 billion from the public coffers, but this has become indispensable after the resounding failure of the rent control law approved in 2015, which proved ineffective in practice, as the average rent in 2019 is €10.30 per square meter (+5.6% from 2017). This average conceals truly outrageous extremes, such as the case of the Berlin woman who is being forced to pay €1,368 per month for a tiny 15 sqm apartment in Friedrichshain, whose case has made the front pages of the local papers.
One finds the same situation in the district of Neukölln, the latest Wild West of endless speculation. Since 2017, rents here have shot up by 42%, an unthinkable number for the district with the highest number of foreigners in the city. Here, the residents who are being priced out are forced to head out past the city limits, to the small satellite towns of nearby Brandenburg, another state entirely.
In this situation, it’s no surprise that the polls show that the referendum is supported by a majority of Berliners. The anti-speculation measures will need the signatures of 7% of the population (175,000 people) over the next four months to make it on the ballot.